Upcoming Events:
Leah Malone, Head of Sustainability and ESG Practice, to present in partnership with PLI, Climate Risk and Sustainable Investing: Fiduciary and Strategic Considerations for Asset Managers 2026, on September 18. For more information, see here.
Americas
CARB Releases Additional Resources as SB 253 Reporting Deadline Quickly Approaches
On September 1, the California Air Resources Board (CARB) released new resources ahead of the November 10, 2026 deadline to support the first round of Scope 1 and Scope 2 greenhouse gas (GHG) emissions reporting under SB 253 (the Climate Corporate Data Accountability Act), including a guidance document for reporting entities. The guidance document reiterates that CARB will exercise enforcement discretion for the first reporting cycle, allowing entities to submit emissions data based on information they were already collecting as of the December 2024 Enforcement Notice. Entities that were not collecting emissions data at that time are not expected to submit reporting data, but CARB requests that they provide a statement of non-reporting on company letterhead. To help streamline fee implementation and first-year reporting, CARB also released a voluntary 2026 Reporting Intake Platform where reporting entities may submit their Scope 1 and Scope 2 emissions. Alternatively, reporting entities may submit data by emailing [email protected].
SEC Moves to Rescind Federal Shareholder Proposal Rule
On August 28, the Securities and Exchange Commission (SEC) submitted a proposal to the White House Office of Management and Budget to rescind Rule 14a-8, the federal regulation that requires public companies to include qualifying shareholder proposals in their annual proxy statements. The proposal would also amend Rule 14a-4, which governs proxy solicitation materials. If adopted, the rescission would eliminate the federal framework through which shareholders meeting minimum ownership thresholds can require companies to put proposals on topics, including executive compensation, climate policy and board governance, to a vote at annual meetings, and would shift jurisdiction over shareholder proposal disputes to the states where companies are incorporated. The proposal follows the SEC’s August 14 announcement that its Division of Corporation Finance would permanently stop issuing no-action letters under Rule 14a-8. The proposal is expected to be published for public comment in October 2026.
Large Accounting Firm Settles Lawsuit Alleging Employment Discrimination Violations
On August 25, the U.S. Department of Justice (DOJ) announced a settlement agreement whereby a large accounting firm agreed to pay $21.5 million to resolve allegations that it violated the False Claims Act by falsely certifying compliance with anti-discrimination requirements in its federal contracts while engaging in race- and sex-based employment practices. The settlement resolves allegations that, since 2017, the firm used demographic workforce composition goals to influence hiring, promotion and staffing decisions, and offered certain training and leadership development programs with eligibility limited on the basis of race or sex. The action was brought on a qui tam basis by the American Alliance for Equal Rights, a nonprofit organization that has brought several legal challenges to race-conscious programs. The resolution was secured under the DOJ’s Civil Rights Fraud Initiative, which was launched in May 2025 and uses the False Claims Act to pursue government contractors that allegedly misrepresent compliance with federal anti-discrimination obligations.
State Comptrollers and Financial Leaders Issue Letters to Companies on DEI Rollbacks
On August 17, state comptrollers from New York City, New York State, Connecticut, California, Maryland, and Massachusetts jointly sent letters to various large public companies raising concerns over the companies’ recent decisions to roll back diversity initiatives. The letters underscore that each company must still comply with federal anti-discrimination statutes, including Title VII, and that state and municipal civil rights laws preserve additional enforcement mechanisms. The officials warned that eliminating diversity and inclusion programs potentially exposes companies to significant litigation risk, material financial liability, and reputational harm, while also creating distinct business risks related to talent recruitment, employee retention, and operational performance. The signatories requested information on whether management had issued formal risk assessments of the rollbacks and whether boards had confirmed that sufficient compliance, monitoring, and disclosure mechanisms remain in place.
Court Upholds Oregon’s Extended Producer Responsibility Law
On August 27, the U.S. District Court for the District of Oregon upheld Oregon’s Plastic Pollution and Recycling Modernization Act (the “RMA”), an extended producer responsibility (EPR) law that requires producers of packaging, printing paper and food service ware to join a producer responsibility organization and pay fees covering the end-of-life costs of their products. The court rejected the plaintiff’s challenges brought under the dormant Commerce Clause and the Due Process Clause, finding that the RMA treats in-state and out-of-state producers identically, does not impose burdens on interstate commerce that are clearly excessive relative to local benefits and does not unconstitutionally delegate regulatory authority to a private entity. The court’s decision marks the first judicial ruling on the merits of a state EPR law for packaging waste.
Court Blocks New York Superfund Law
On August 31, a U.S. federal judge ruled that New York State’s Climate Change Superfund Act is preempted by federal law and “cannot be enforced.” The law, introduced and signed by Governor Kathy Hochul, would have required fossil fuel companies to pay approximately $75 billion through 2050—roughly $3 billion per year—toward infrastructure investments needed to adapt to climate change in the state. A coalition of 22 state Attorneys General, led by West Virginia, challenged the law in early 2025, arguing it violated the U.S. Constitution by interfering with federal authority under the Clean Air Act and by penalizing companies for emissions occurring beyond New York’s borders. The U.S. Justice Department subsequently filed a similar suit. The U.S. District Court found that the law “operates within an area of law in which the federal interest is so dominant” that it is preempted by the Clean Air Act and the foreign affairs doctrine.
California Sues Department of Interior Over Offshore Wind Lease Buyout
On August 28, California Attorney General Rob Bonta and the California Energy Commission filed a lawsuit against the Trump Administration and Golden State Wind LLC over the Administration’s buyout of Golden State Wind’s offshore wind energy lease off the Central California Coast. Under the challenged agreement, the U.S. Department of the Interior would terminate the lease and reimburse Golden State Wind $120 million from the federal Judgment Fund, while requiring the company to invest an equal amount in out-of-state fossil-fuel projects. The lawsuit alleges the deal violates the Outer Continental Shelf Lands Act, which limits DOI’s authority to cancel offshore wind leases, and the Judgment Fund Act, arguing the payment was not a legitimate settlement of existing litigation. According to California, the canceled lease jeopardizes over $30 million in workforce training and community benefit commitments and threatens an estimated 174,750 jobs tied to the state’s offshore wind industry.
Coalition of State Attorneys General Send Anti-ESG Letter to Big Four Accounting Firms
On August 24, a coalition of 16 state Attorneys General, led by the AGs of Florida, Texas, Nebraska, and Alaska, published a letter to the Big Four accounting firms concerning potential violations of state laws and duties of independence arising from their support for climate-related disclosure frameworks and alliances. The letter cited the firms’ endorsement of the Task Force on Climate-related Financial Disclosures and the International Sustainability Standards Board’s reporting standards, as well as their participation in the Net Zero Financial Service Providers Alliance. The AGs alleged that these commitments may violate the firms’ professional duties of integrity and objectivity by creating conflicts of interest, and that advertising about independence may contravene state unfair and deceptive acts and practices laws. The letter also warned that the firms’ commitments could result in penalties and termination of state and federal contracts.
New Proposed Rules Would Ban ESG Funds From Tax-Advantaged Trump Accounts
On August 20, the U.S. Department of the Treasury proposed eligibility guidance for Trump Accounts—the tax-advantaged savings accounts for children—that would explicitly ban any mutual fund or exchange-traded fund that tracks an ESG index or advertises an ESG focus. Under the proposed rules, eligible investments must track an equity index composed primarily of U.S. companies, carry no annual fees and have expenses of 0.1% or less. The ESG exclusion is broadly consistent with other administration anti-ESG initiatives, including a pending Department of Labor rule that would replace the Biden-era regulation allowing retirement plan fiduciaries to weigh ESG factors when selecting among otherwise comparable options.
Pennsylvania Governor Issues Executive Order on Data Centers
On August 18, Pennsylvania Governor Josh Shapiro signed Executive Order 2026-05, directing the Department of Environmental Protection to incorporate strict Responsible Infrastructure Development (GRID) Requirements into its permit review process for all data center proposals. Under the order, developers must make legally binding commitments to meet standards on energy affordability, environmental protection, workforce development, transparency, and community engagement—and must receive local approval—before DEP will evaluate permit applications. The order immediately removes all AI data center projects from the PA Permit Fast Track Program and prohibits the use of nondisclosure agreements for data center projects. The Department of Revenue will also update its Computer Data Center Equipment Exemption Program guidelines to ensure applicants comply with GRID Requirements. The action comes as the state faces over 100 proposed data center projects, with 58 engaged in formal permitting discussions.
Brazil Clarifies Shift to Voluntary ISSB-Based Sustainability Reporting
On August 27, the Brazilian Securities and Exchange Commission (CVM) issued Circular Letter No. 2/2026 clarifying the application of CVM Resolution No. 244, which replaced Brazil’s mandatory ISSB-based sustainability reporting framework with a voluntary regime. Brazil had originally become the first country to mandate ISSB-aligned reporting for all listed companies under CVM Resolution No. 193, but Resolution No. 244 revoked that requirement. The Circular Letter confirms that only reports fully complying with ISSB standards as incorporated by the Brazilian Sustainability Pronouncements Committee (CBPS), and containing an unqualified compliance statement, fall within the regulation’s scope. Reports prepared under other frameworks, such as GRI, may continue to be disclosed but must clearly identify the framework used. Companies that opt to report for fiscal years beginning on or after January 1, 2026 must commit to at least three consecutive years of reporting. From January 1, 2027, listed companies that choose not to file an ISSB-compliant sustainability report must publish a “comply or explain” market notice by the annual financial statement deadline, addressing management’s assessment of relevance, preparation challenges, and initiatives toward future disclosure.
Information provided by contributing law firm: Mattos Filho
Mexico Publishes ESG Fund Labeling and Disclosure Requirements
On August 7, Mexico’s National Banking and Securities Commission (CNBV) published a resolution amending the General Provisions Applicable to Investment Funds, establishing new requirements for the classification, naming, and disclosure obligations of funds identified or marketed as pursuing ESG objectives. Under the resolution, only funds that maintain at least 80% of their net assets in qualifying “ESG Investment Assets” may use designations such as “sustainable,” “environmental,” “social,” or “ESG” in their names, ticker symbols, or marketing materials. Qualifying assets must satisfy at least one of four criteria: alignment with Mexico’s Sustainable Taxonomy, a recognized foreign taxonomy from an IOSCO Board member or EU authority, an independent ESG rating, or a certified sustainability label. Fund prospectuses must disclose how ESG factors are incorporated into investment policies, including the 80% threshold, screening methodologies, and monitoring mechanisms. The resolution has a 12-month compliance deadline and aims to address greenwashing in the investment fund sector.
Information provided by contributing law firm: Cuatrecasas
EU/U.K.
EU Directive on Empowering Consumers for the Green Transition Begins to Apply
Beginning on September 27, Directive (EU) 2024/825 on empowering consumers for the green transition (ECGT Directive) begins to apply across the EU. The Directive amends the Unfair Commercial Practices Directive (2005/29/EC) and the Consumer Rights Directive (2011/83/EU), and is confined to business-to-consumer commercial practices. Practices prohibited in all circumstances include (i) making generic environmental claims, such as “eco-friendly,” “green” or “climate neutral,” unless the trader can demonstrate “recognized excellent environmental performance” relevant to the claim; (ii) displaying sustainability labels that are not established by a public authority or based on a compliant third-party certification scheme and (iii) claiming greenhouse gas neutrality on the basis of offsetting outside the product’s value chain. The ECGT Directive contains other obligations that relate to claims as to future environmental performance, pre-contractual information requirements on durability, reparability and software update periods and a harmonized notice on legal guarantee rights at the point of sale.
U.K. SDR Entity-Level Reporting Deadline Approaching for Firms with £5 Billion+ AUM
Beginning on December 2, the next tier of entity-level disclosure obligations under the U.K. Financial Conduct Authority’s Sustainability Disclosure Requirements (SDR) regime will take effect. Under SDR, in-scope managers that have assets under management in relation to in-scope business of more than £5 billion will be required to produce their first sustainability entity report by December 2, 2026. The disclosure requirement for in-scope managers that meet the thresholds for an enhanced SMCR firm has already taken effect, and such managers produced their first sustainability entity report by December 2, 2025, and will be required to produce their second report by the same deadline this year. The sustainability entity report must describe the overall entity-level approach to governance, strategy, risk management, targets and metrics, and will need to be accompanied by a signed compliance statement.
Serbia Amends GHG Emissions Tax Act and Carbon Intensive Imports Tax Act
On August 31, Serbia amended the GHG Emissions Tax Act and the Carbon-Intensive Imports Tax Act as part of its continued alignment with the EU. The amendments introduce an investment tax credit for qualifying electricity producers whose registered activity is electricity generation and who derived at least 80% of their revenue from that activity in the preceding tax period. Eligible taxpayers may claim a credit equal to 20% of qualifying investment costs incurred for prescribed measures aimed at reducing CO2e emissions, subject to a cap of 80% of the relevant tax liability. The credit constitutes state aid and may be combined with other aid only within the applicable permitted aid intensities. Taxpayers claiming the credit will also be subject to record-keeping, evidence-retention and disclosure requirements. Further regulations will specify eligible measures and procedural requirements. The amendments also provide that returns under both Acts must be filed between April 1 and May 31, 2027.
Information provided by contributing law firm: Gecic Law
APAC
South Korea Strengthens Climate Mitigation and Adaptation Framework Through New Legislation
On August 26, South Korea’s National Assembly passed an amendment to the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis and the Act on Climate Crisis Adaptation and Resilience Enhancement. The amendment establishes five-year national GHG reduction pathways toward 2050 carbon neutrality, including a 53–61% reduction target for 2035, creates a Climate Science Committee, and provides statutory bases for green sovereign bonds and the promotion of green and transition finance. The new Climate Adaptation Act establishes an integrated framework for climate adaptation information, climate impact and vulnerability assessments, and geospatial climate-risk data. It also requires adaptation plans for central and local governments and public institutions and provides support for climate-vulnerable groups and repeatedly affected areas. The two bills are expected to strengthen South Korea’s legal framework for science-based climate mitigation, resilience, and sustainable finance.
Information provided by contributing law firm: Yoon & Yang
China Updates Judicial Rules on Criminal Liability for Environmental Pollution
On August 15, China’s Supreme People’s Court and Supreme People’s Procuratorate issued further amendments to judicial interpretations concerning environmental pollution crimes, as part of the judicial framework accompanying the Ecological and Environmental Code. The rules continue to specify circumstances constituting “serious environmental pollution” for purposes of criminal liability, including the illegal discharge, dumping or disposal of three tons or more of hazardous waste; discharges of specified heavy-metal pollutants exceeding applicable standards by prescribed multiples; and certain pollution activities in legally protected areas. The revised framework underscores the potential escalation of serious environmental compliance failures from administrative enforcement to criminal liability.
Information provided by contributing law firm: Global Law Office
Australia Treasury Releases Voluntary Climate-Related Transition Planning Guidance
On August 24, the Australian Treasury released voluntary Climate-related Transition Planning Guidance to help organizations plan for the impacts of the net zero transition and changing climate on their operations. The guidance contains practical advice, examples and good practice resources focused on the Australian context. It is a key deliverable under the Sustainable Finance Roadmap and builds on the Transition Plan Taskforce Transition Planning Cycle. It is designed for organizations seeking to undertake transition planning as an internal strategic activity to improve their organizational risk management and build long-term business resilience. While voluntary, the guidance establishes a benchmark for transition planning practices in Australia and may inform future regulatory expectations as the sustainability reporting framework continues to evolve.
Information provided by contributing law firm: Mallesons
Notable Litigation
ASIC Secures First Greenwashing Civil Penalty Against Operator of a Managed Fund
On August 11, the New South Wales (NSW) Supreme Court, the highest state-level court in NSW, Australia, ordered Fiducian Investment Management Services to pay a $7.3 million penalty for breaching its duty to act with care and diligence as a responsible entity and engaging in conduct liable to mislead the public by making statements that the fund had “ethical” or “socially responsible” investment objectives and that Fiducian would monitor the fund to ensure its investments were consistent with these objectives. The decision is the Australian Securities and Investments Commission’s (ASIC) first successful greenwashing case against the operator of a managed fund and the first greenwashing-related civil penalty outcome arising from section 601FC(1)(b) of the Corporations Act 2001 (Cth). The decision signals ASIC’s continued willingness to pursue enforcement action against fund operators for inadequate ESG-related controls and may prompt responsible entities to reassess the rigor of their ESG governance frameworks.
Information provided by contributing law firm: Mallesons
Ireland Advertising Standards Authority Upholds Greenwashing Complaint Against Fuel Company
On August 5, the Advertising Standards Authority for Ireland (ASAI) published a decision upholding a complaint against fuel retailer Maxol over a YouTube advertisement promoting its premium fuel. The six-second video encouraged viewers to “make a better choice” and prominently displayed the URL “maxolcarbonneutral.ie,” which the complainant argued implied the fuel was carbon neutral, which ASAI considered inaccurate and unsubstantiated. Maxol contended that the advertisement did not claim the fuel was inherently carbon neutral but instead directed viewers to a website detailing its voluntary carbon offsetting program, which it said was limited to tailpipe emissions and supported by EY-audited reports confirming 26,593 metric tons of CO₂ offset through verified carbon credit retirements in 2024. The Complaints Council found the advertisement, particularly the prominence of the “maxolcarbonneutral.ie” URL, was likely to mislead by exaggeration, omission, and ambiguity in breach of Code Section 4.1, and ruled it must not reappear in its current form.
Information provided by contributing law firm: Matheson
Contributing Law Firm Information
Mattos Filho | Global Law Office | Gecic Law | Matheson | Cuatrecasas | Mallesons | Yoon & Yang LLC