Practice News:
- Matt Feehily has been named one of Legal 500’s United Kingdom Green Ambassadors 2027. For more information, see here.
- Leah Malone, Head of Sustainability and ESG Practice, presented on a panel entitled “Climate Risk and Sustainable Investing: Fiduciary and Strategic Considerations for Asset Managers,” sponsored by the Practising Law Institute, on September 18.
- Matt Feehily, Sustainability and ESG Partner, was quoted in the FT Ignites article, “Private markets managers to continue SFDR reporting despite rule changes,” on September 29. For more information, see here.
Americas
California Finalizes Initial Regulation Implementing SB 261 and SB 253
On October 12, the California Office of Administrative Law approved the California Air Resources Board’s (CARB) Initial Regulation implementing SB 261 and SB 253, California’s climate disclosure laws, with immediate effect. The regulation confirms November 10, 2026, as the first deadline for Scope 1 and 2 emissions reporting under SB 253. For this first cycle, companies may report prior fiscal year emissions based on information they already had or were collecting by December 5, 2024. Alternatively, they may submit a statement of non-reporting. The regulation also sets the revenue threshold for coverage at the lesser of an entity’s two previous fiscal years of revenue. In addition, it exempts certain tax-exempt nonprofits and establishes a framework for annual fees. Companies should continue to monitor CARB’s proposed amendments for 2027 and beyond, including phased Scope 3 reporting and limited assurance requirements. SB 261 reporting remains paused under a November 2025 Ninth Circuit injunction pending the outcome of an ongoing First Amendment challenge, and CARB has stated that it will not enforce the law while the injunction remains in effect. For more information, see our recent memo on SB 253 reporting guidance here.
SEC Closes Climate Coalition Inquiry and Warns of Reporting Risks
On October 7, the U.S. Securities and Exchange Commission (SEC) announced that it would not be pursuing an enforcement action against members of Climate Action 100+ (CA100) for alleged violations of the Securities Exchange Act of 1934 (Exchange Act), and also issued a report to “inform those asset managers and investors who would join, or would consider joining, an organization such as CA100 to take appropriate steps to ensure compliance with the Exchange Act.” The report focused on actions in connection with the 2021 election of dissident directors at a major oil and gas company. While the SEC found no evidence that two large asset managers agreed to vote proxies in certain ways or shared their voting intentions, the agency expressed “serious concerns” about CA100’s practice of designating lead investors and flagging votes, which it viewed as indicative of coordinated shareholder voting. The report cautions that such coordination, even when conducted through an intermediary, may result in the formation of a “group” under Section 13(d) of the Exchange Act.
States and Cities Challenge EPA’s Repeal of Power Plant Carbon Standards
On October 1, a coalition consisting of 21 states, the Governor of Pennsylvania, the District of Columbia and three major cities filed a petition in the U.S. Court of Appeals for the D.C. Circuit challenging the Environmental Protection Agency’s (EPA) partial repeal earlier this year of greenhouse gas (GHG) emissions standards for fossil fuel-fired power plants. The repeal eliminates carbon pollution limits that apply to electric generating units, one of the largest sources of U.S. GHG emissions. The coalition, led by New York Attorney General Letitia James, brought the challenge under Section 307(b)(1) of the Clean Air Act, which gives the D.C. Circuit jurisdiction to review nationally applicable final EPA actions. The coalition argues that the repeal will eliminate one of the nation’s key climate protection measures, which will clear the way for more GHG emissions that will significantly worsen climate conditions including extreme heat, flooding and wildfires.
Montana Attorney General Urges SEC Scrutiny of Credit Rating Agencies’ Use of ESG Factors
On September 24, the Montana Attorney General sent a letter to the SEC’s Office of Credit Ratings asking it to examine how three major credit rating agencies factor ESG considerations into their ratings. The letter builds on an earlier letter from 23 state attorneys general alleging that the agencies downgraded fossil fuel companies, states and municipalities based on speculative climate predictions. It argues that these downgrades depart from the agencies’ stated methodologies and suggest undisclosed conflicts of interest, potentially violating the agencies’ obligations as SEC-registered ratings organizations under the Exchange Act. As examples of possible conflicts, the letter points to one agency’s net zero commitments and its sale of ESG-related services.
States Sue Federal Government and Developers Over Offshore Wind Lease Buyouts
On September 22, a coalition of nine states led by California and New York filed three lawsuits in federal courts in New York, Maine and California challenging agreements in which the federal government paid two offshore wind developers to give up their leases. The administration has announced deals to buy back about a dozen offshore wind leases for roughly $4 billion in total, with the developers agreeing to redirect their investment to other energy infrastructure, including oil and gas. The states allege that the agreements violate the Administrative Procedure Act (APA) and the separation of powers doctrine. They also argue that the payments cannot lawfully come from the federal government’s Judgment Fund because the agreements rest on pretextual national security concerns rather than genuine legal claims against the United States. California went further, describing the settlements as “collusive.” The lawsuits ask the courts to vacate the agreements, and California also seeks to bar similar deals in the future.
New York Completes First Sustainability Bond Offering
On September 22, New York State Comptroller Thomas P. DiNapoli announced that the state had raised $318.9 million through its first-ever offering of sustainability-designated General Obligation bonds. The bonds carry a sustainability bond designation, meaning the proceeds are dedicated to projects with environmental and social benefits. The bonds will finance transportation, education and environmental projects previously authorized by voter-approved bond acts, in categories that include clean water, clean air, smart schools and green jobs. The offering was split between $59.5 million of taxable bonds maturing through 2032 and $259.4 million of tax-exempt bonds maturing from 2032 through 2046. In announcing the sale, Comptroller DiNapoli described the offering as a demonstration of the state’s commitment to finance solutions to environmental and social issues.
Virginia Governor Issues Executive Order Establishing Data Center Accountability Framework
On September 18, Virginia Governor Abigail Spanberger announced a Data Center Accountability Framework and issued Executive Order 22, which puts many of the framework’s core elements into effect immediately and creates a state-sponsored AI Task Force. The framework is intended to address the effects of data center development on residents’ electricity bills, water, land and air quality. Among other measures, it bans non-disclosure agreements that keep communities uninformed about planned projects, requires local approval of any data center using more than 25 megawatts, ends state site-development subsidies, mandates community benefits agreements, directs utilities to shift a greater share of transmission and generation costs to large-load customers and limits on-site natural gas generation. The action by Virginia, one of the largest data center markets in the country, follows New York Governor Kathy Hochul’s issuance in July 2026 of an executive order imposing the nation’s first statewide moratorium on new hyperscale data centers, which pauses state environmental permits for up to one year while regulators develop a comprehensive framework. Separately, on September 23, Maryland Governor Wes Moore signed an executive order establishing guardrails for data center development, including a state review of each project and a public Data Center Dashboard, and announced plans to seek repeal of the state’s data center sales and use tax exemption.
Federal Court Vacates EPA’s Termination of $7 Billion Solar for All Program
On September 18, the U.S. District Court for the District of Rhode Island ruled that the EPA’s termination of the $7 billion Solar for All program was unlawful under the APA and vacated the agency’s termination. Created under the 2022 Inflation Reduction Act’s Greenhouse Gas Reduction Fund, the program helps low-income households pay for rooftop solar and participate in community solar projects. The EPA ended the program in July 2025, arguing that the One Big Beautiful Bill Act had removed its authority and funding to administer it. The plaintiffs, who represent downstream beneficiaries of the grants, challenged the termination under the APA and the Constitution’s Spending and Presentment Clauses, and say the ruling now clears the way for grants to resume nationwide. The EPA is reviewing the decision and considering whether to appeal.
Large Coffeehouse Chain Settles State Lawsuit Over Diversity Policies
On September 17, Florida Attorney General James Uthmeier announced a settlement under which a large coffeehouse chain agreed not to adopt race-or sex-based quotas or preferences in hiring, promotion and pay. The settlement resolves a lawsuit filed by the state in December 2025 that alleged the company violated Florida anti-discrimination law by setting racial quotas and tying executive compensation to diversity goals. The company denied wrongdoing but agreed to pay $1 million in litigation costs, certify its compliance annually for four years and decline to join or participate in organizations that require it to increase the racial diversity of its board. According to the Attorney General’s office, the agreement applies to the company’s operations nationwide. The settlement reflects broader efforts by Republican state officials and the federal government to eliminate diversity, equity and inclusion (DEI) programs in the private sector. A federal court dismissed a similar lawsuit against the company brought by Missouri earlier this year, and that decision is now on appeal.
EU/U.K.
ESMA Publishes Thematic Notes on Impact and Transition Claims
On October 12, the European Securities and Markets Authority (ESMA) published two additional thematic notes on sustainability-related claims, focusing on impact and climate transition claims. The notes set out practical “do’s and don’ts” for marketing and other non-regulatory communications to support market participants’ understanding of existing expectations pursuant to the principle of clear, fair and not misleading communication. The impact note expects firms to explain intentionality, additionality and measurability, supported by a theory of change, and to distinguish investee impact from investor impact. The transition note asks firms to clearly communicate their transition ambition (including base year, time horizon, intermediate milestones, metrics and Paris-aligned scenarios or pathways), implementation strategy and progress achieved, and not to present portfolio decarbonization as real-economy emissions reductions. The notes create no new regulatory requirements and do not prejudge the ongoing SFDR review.
FCA Simplifies Product-Level TCFD Disclosures for Asset Managers and Asset Owners
On September 25, the U.K. Financial Conduct Authority (FCA) published Handbook Notice No 144, which, following consultation paper CP26/17 and the FCA’s 2025 review of the rules, simplifies the Task Force on Climate-Related Financial Disclosures (TCFD) product-level reporting requirements in the ESG Sourcebook for asset managers, life insurers and FCA-regulated pension providers. It introduces more targeted climate disclosure rules intended to reduce complexity and burden for firms while making climate information clearer and more usable for retail and institutional investors.
FCA Publishes Final Rules Aligning Listed Issuers’ Sustainability Disclosures with U.K. SRS
On September 24, the FCA published Policy Statement PS26/19, which sets out final rules aligning listed issuers’ sustainability and climate disclosures with the U.K. Sustainability Reporting Standards (U.K. SRS), the U.K.-endorsed version of the ISSB Standards. The new rules will replace the existing TCFD-aligned disclosure requirements. While the consultation paper proposed mandatory U.K. SRS S2 climate disclosures, the final rules instead adopt a “comply or explain” approach across all categories of disclosure: U.K. SRS S1 (non-climate), U.K. SRS S2 (climate) and Scope 3 emissions. The disclosure requirements apply to listed issuers in the U.K., international commercial companies with a secondary listing and depositary receipt issuers, while closed-ended and open-ended investment funds, shell companies and debt issuers remain out of scope. The rules apply to accounting periods beginning on or after January 1, 2027, with first reporting in 2028.
Revised ESRS and Voluntary Reporting Standard Published in the Official Journal
On September 24, Commission Delegated Regulation (EU) 2026/1563, which contains the revised European Sustainability Reporting Standards (ESRS), and Commission Delegated Regulation (EU) 2026/1560, which establishes a voluntary sustainability reporting standard, were published in the Official Journal. The revised ESRS replace Annexes I and II of Delegated Regulation (EU) 2023/2772. Among other changes, they reduce the number of data points, prioritize quantitative reporting and clarify how to apply the materiality principle. They enter into force on November 10, 2026, and apply to financial years beginning on or after January 1, 2027. The voluntary standard is designed for undertakings with up to 1,000 employees and also acts as a “value chain cap,” which limits the information CSRD-reporting companies may require from those undertakings. The voluntary standard enters into force three days after publication, and the value chain cap applies from financial years beginning on or after January 1, 2027.
EU Commission Proposes Mandatory Sustainability Labels for Data Centers
On September 21, the European Commission published a proposed delegated regulation establishing a common EU rating scheme for data centers under the recast Energy Efficiency Directive (EU) 2023/1791, as part of a wider data center energy efficiency package. The European database on data centers will generate annual, publicly available electronic labels covering four areas:
- energy efficiency, based on power usage effectiveness and graded A to G;
- water efficiency, based on water usage effectiveness and graded A to G;
- energy consumption broken down by source; and
- other sustainability features, such as grid flexibility and waste-heat reuse readiness.
Data centers with installed IT power demand of less than 500 kW, those not yet operational, and those supporting defense and civil protection are exempt. Because reported data will now be published in graded form, data quality issues could carry reputational and compliance risk. Ratings may also feed into other EU frameworks, potentially affecting green finance eligibility, public procurement and M&A diligence. The proposal is subject to a two-month scrutiny period by the European Parliament and Council, and the Commission expects the first labels to be displayed from August 2027.
Commission Publishes Guidelines on the EU Forced Labor Regulation
On September 3, the European Commission published guidelines in the Official Journal on the application of Regulation (EU) 2024/3015, the Forced Labor Regulation (FLR), which prohibits products made with forced labor on the EU market. The FLR applies to all products placed or made available on, or exported from, the EU market from December 14, 2027. It covers products made “in whole or in part” with forced labor at any stage of the supply chain, regardless of origin or sector. The guidelines cover areas such as (i) the definition of forced labor (including state-imposed and forced child labor) and risk indicators, (ii) the investigative process, enforcement and penalties and (iii) practical due diligence guidance for economic operators. While the FLR imposes an obligation of result rather than specific due diligence obligations, the guidelines position due diligence as a key tool for compliance. They draw on the OECD Guidelines, ILO instruments and the UN Guiding Principles.
APAC
Australia Proposes Mandatory National Standards for Large Data Centers
On September 17, the Department of the Prime Minister and Cabinet’s Office of Artificial Intelligence (AI) released a consultation paper on proposed legislated national AI standards. The proposals would introduce mandatory requirements for large data centers relating to renewable energy, water efficiency, community engagement, local workforce training and ensuring no net costs are imposed on consumers or local communities. The proposals would also introduce requirements for frontier AI training in Australia. The government is targeting legislation in early 2027. This consultation forms part of a broader shift in Australia’s approach to AI governance and infrastructure, following the release of the government’s Expectations of Data Centres and AI Infrastructure Developers in March 2026 and its efforts to support sovereign AI capability and domestic AI training.
Information provided by contributing law firm: Mallesons
Vietnam Introduces Disclosure Requirements for Green Bonds and for Green Projects
On September 25, Vietnam’s Ministry of Finance issued Circular No. 138/2026/TT-BTC, effective October 1, introducing disclosure requirements for green corporate bonds. Issuers must annually report on the use of proceeds, together with reports on disbursement progress, project implementation and environmental impacts. Separately, on September 17, Deputy Prime Minister Ho Quoc Dung signed Decision No. 46/2026/QD-TTg, establishing the country’s first official guidance on identifying green and circular projects and applying an ESG framework. Effective November 1, the Decision applies to private-sector enterprises and household and individual businesses. Green projects must meet emissions-reduction objectives and technical requirements across seven sectors, and all projects must be verified by an independent assessor. The ESG framework combines mandatory legal compliance with voluntary criteria scaled by business size, and applying it is a key condition for accessing preferential credit and interest rate support.
Information provided by contributing law firm: Le & Tran
Thailand Securities and Exchange Commission Amends Regulations on Sustainability-Related Debt Instruments
On September 16, the Thai SEC amended its regulations on sustainability-related debt instruments. The amendments expand Thailand’s sustainable finance framework by introducing two new instruments: transition bonds and Thailand amber bonds. Transition bonds are designed to finance projects supporting an issuer’s transition strategy or plan toward more environmentally sustainable operations, with reference to internationally recognized standards, including the ICMA Climate Transition Bond Guidelines and the Climate Bonds Initiative’s Climate Bonds Standard. Thailand amber bonds are intended to finance activities classified as “amber” under the Thailand Taxonomy, meaning transitional activities that have not yet reached net zero emissions but are on a credible decarbonization pathway, with eligibility ending in 2040. The Thai SEC also strengthened disclosure requirements for all ESG bonds to enhance transparency and credibility, including disclosure of the relevant bond framework and the appointment of an independent external review provider to assess or provide assurance on such framework. In addition, the existing exemption from application and filing fees for ESG bonds has been extended to transition bonds and Thailand amber bonds until May 31, 2028.
Information provided by contributing law firm: Chandler Mori Hamada
Notable Litigation
Polish Competition Authority Charges Global Cosmetics Company Over Environmental Product Labeling
On September 16, the Polish competition and consumer protection authority (UOKiK) formally charged a global cosmetics company with infringing on collective consumer interests through its Product Impact Labeling system, as applied to certain cosmetics. The system, featuring an A-to-E scale, green graphics and eco-friendly slogans, was displayed on the company’s website from August 2021 to June 2025. UOKiK found that consumers were not clearly informed that products were benchmarked solely against the company’s other products, rather than against objective, market-wide environmental standards. The rating therefore did not reflect compliance with any defined environmental criteria. The cosmetics company faces a fine of up to 10% of its annual turnover if the charges are upheld. UOKiK’s representatives have declared that investigating green claims remains their enforcement priority for 2027, with possible financial penalties extending to company managers.
Information provided by contributing law firm: Osborne Clarke
Standards and Associations
ISO’s Proposed Net Zero Standard Fails to Advance Following Record Consultation Feedback
On September 29, the International Organization for Standardization (ISO) confirmed that its draft net zero standard, ISO/DIS 14060, did not receive enough votes from member bodies to advance toward final publication in its current form. The draft would have required companies to set interim and long-term emissions reduction targets, publish a transition plan within two years of setting a target and obtain validation and verification. ISO did not disclose individual votes, but media reports indicated that the opposition mainly came from fossil fuel-producing countries. The draft received nearly 5,000 comments during its 12-week consultation, and the committee will now consider that feedback and decide on next steps.
GRI Announces Plans to Develop Food and Beverage Sector Standard
On September 28, the Global Reporting Initiative (GRI) announced plans to develop a new sector standard to help food and beverage companies report on sustainability impacts across their operations and value chains. The new standard will cover food processing, the manufacture of alcoholic and non-alcoholic beverages and tobacco products, including value-chain links to agriculture, aquaculture and fishing. GRI noted that food and beverage industries account for around one-third of global emissions, directly affect public health and pose safety risks to workers. It will be the first standard developed under GRI’s new streamlined process, which is designed to significantly shorten development timelines.
Contributing Law Firm Information
Le & Tran | Chandler Mori Hamada | Osborne Clarke | Mallesons