Linklaters was awarded ESG Risk Team of the Year by Chambers & Partners at their UK Awards for our advice to clients on complex Environmental, Social and Governance-related risk factors.

The Linklaters team was praised for its “impressively broad scope of risk advisory mandates for these clients and for the global nature of its work”.

To learn more about our ESG offering, visit our ESG webpage.

Upcoming webinar: EU’s first Omnibus package: what do its sustainability proposals mean for the financial services?

On Wednesday, 5 March, a team of Linklaters experts will unpack what the new Omnibus package means for both buyside and sell side firms; explore what it means practically for implementation work already in progress / to come; and delve a little deeper into the CSRD, CSDDD and Taxonomy proposed changes.

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Spring Outlook: Regulatory Agenda for 2025

Join us on Wednesday, 19 March 2025 in London for our in-person half-day conference where we will be joined by speakers from the Bank of England and the FCA to discuss the key regulatory topics for 2025. The session is aimed at all types of financial services firms, and we will be covering the following topics: (i) AI in financial services; (ii) the evolving UK & EU MIFID landscape; (iii) sustainability reporting: interoperability and simplification; and (iv) enforcement and its role in the growth agenda.

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Webinar: Global Energy Transition: Future of offshore wind

Carrying on our new global energy transition webinar series, join us for the second session to explore the future of offshore wind. On Thursday, 20 March our panel of industry experts will discuss key trends of the global offshore wind sector and share their insights on market developments.

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Webinar: Greenwashing enforcement trends across the globe: where are we now and where do we go from here?

Greenwashing continues to be a serious concern for many organisations who disclose information about their sustainability strategies and management of sustainability risks. Join us on Thursday, 27 March to explore greenwashing enforcement trends across the globe. In this webinar, drawing on recent enforcement action and claims brought in various forums and contexts, we offer practical guidance for legal teams trying to protect their business. What are regulators and stakeholders challenging, and how can you guard against the risks?

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EU: Commission publishes Clean Industrial Deal with a roadmap for marrying up competitiveness with decarbonisation

On 26 February 2025, the European Commission published a Communication entitled “The Clean Industrial Deal: a joint roadmap for competitiveness and decarbonisation” (CID). The CID is a non-legislative initiative that outlines the Commission’s roadmap to enhance competitiveness and accelerate the decarbonisation of industry in Europe, with the focus on energy-intensive industries and the clean-tech sector. Circularity is also put the centre of the CID with the aim to maximise the EU’s limited resources and reduce overdependencies on third country suppliers for raw materials. It aims to make the EU the world leader in the circular economy by 2030. For more information, see our blog post.

EU: Commission proposes changes to Carbon Boarder Adjustment Mechanism (CBAM) as part of first Omnibus package

As part of the first Omnibus simplification package published on 26 February 2025, the European Commission has proposed certain changes to the CBAM. Key changes include exemption for importers bringing in small quantities of CBAM goods, representing minimal quantities of embedded emissions entering the EU from third countries. The Commission has suggested a new CBAM cumulative annual threshold of 50 tonnes per importer. The new threshold suggests eliminating CBAM obligations for approximately 182,000 or 90% of importers, many of which are SMEs. For companies that remain in CBAM scope, the proposal aims to ease compliance with CBAM reporting obligations by moving certain deadlines and simplifying some reporting requirements which rely on complex calculations and data collection processes. The proposal will now need to be debated and agreed on by the European Parliament and Council under the ordinary legislative procedure. For more information, see our blog post.

EU: Commission’s Work Programme sets out key ESG / sustainability initiatives for 2025

On 12 February 2025, the European Commission published its new Work Programme setting out a list of the main policy and legislative initiatives it is planning for 2025. This year’s Work Programme is heavily focused on simplification – with 11 out of the 18 legislative initiatives aimed at simplification (not limited to just sustainability aspects). The Commission is aiming to cut the administrative burden across the board by at least 25% for all companies and by at least 35% for SMEs. For more information on the list of the key EU initiatives that are the most relevant to ESG and sustainability, see our blog post.

Global: IFRS Foundation publishes guide on applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2

On 30 January 2025, the IFRS Foundation published a guide entitled “Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2” (the Guide). The Guide is aimed at helping preparers understand which requirements in IFRS S1 are applicable when a company discloses information on only climate-related risks and opportunities in accordance with IFRS S2. In response to concerns about data availability and preparers’ readiness, the ISSB decided to provide transition reliefs in IFRS S1 and IFRS S2. A company is required to apply IFRS S1 and IFRS S2 together but paragraph E5 of IFRS S1 allows a company, in its first year of applying the ISSB Standards, to disclose information on only its climate-related risks and opportunities (in accordance with IFRS S2) - the so-called ‘climate-first’ approach. This transition relief temporarily narrows the scope of reporting in accordance with IFRS S1 from the provision of information about all sustainability related risks and opportunities that could reasonably be expected to affect a company’s prospects to the provision of information about only climate-related risks and opportunities. It does not otherwise alter the requirements of IFRS S1. Companies choosing to apply this transition relief are required to apply the requirements of IFRS S1 insofar as they relate to disclosing information about climate-related risks and opportunities in accordance with IFRS S2 and the Guide explains this in more detail.

EU: Commission publishes first Omnibus package with changes to CSRD and CSDDD

On 26 February 2025, the European Commission published the much-anticipated first Omnibus package, with proposals to simplify the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This included (i) a proposal for a Directive amending the dates of application of the CSRD and CSDDD (also known as the “stop-the-clock” proposal); and (ii) a proposal for a Directive amending certain reporting and due diligence requirements in the CSRD and CSDDD. The proposals remain subject to negotiation with the European Parliament and Council. In addition to changes to the CSRD and CSDDD, the first Omnibus package also includes separate proposals for changes to the EU Taxonomy and the Carbon Border Adjustment Mechanism. For more information, see our blog post.

EU: European Commission sets out proposals to simplify Taxonomy Delegated Acts

To accompany the European Commission’s Sustainability Omnibus package, published on 26 February 2025, the Commission has published a call for evidence on proposed amendments to the (i) Taxonomy Disclosures Delegated Act; (ii) Taxonomy Climate Delegated Act; and (iii) Taxonomy Environmental Delegated Act. The purpose of the amendments is to simplify reporting requirements, most notably by introducing a financial materiality threshold and reducing reported data points by around 70%. Only open for four weeks, the consultation is due to close on 26 March 2025, and its adoption has been tentatively planned by the Commission for Q2 2025. It applies from 1 January 2026. For more information, see our blog post.

EU CSRD: EFRAG discussed Transition Plan Implementation Guidance

In January and February 2025, the European Financial Reporting Advisory Group (EFRAG) held several meetings of the Sustainability Reporting Technical Expert Group (TEG) and Sustainability Reporting Board (SRB) to discuss the draft Implementation Guidance on Transition Plan for Climate Change Mitigation (TP IG). The Guidance is non-authoritative and accompanies the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) but does not form part of them. The draft Guidance was first published by EFRAG on 4 November 2024 (see our previous blog post). During the SRB meeting on 26 February 2025 SRB members confirmed that the latest version presented for the meeting (see here) reflects the results of their discussions. However, the document cannot be treated as final as EFRAG needs to check whether any changes are required as a result of the Omnibus proposals (see our blog post). EFRAG will also agree with the Commission on the dates for putting the Guidance to public feedback. EFRAG noted in the draft Guidance that they cannot provide detailed guidance on what compatibility with the 1.5-degree target means as the European Commission considers this as being outside EFRAG authority. EFRAG expects that this will be addressed by the Commission in the next FAQs, although the timing is unclear.

UK: FRC review of climate-related financial disclosures by AIM and large private companies

The UK’s Financial Reporting Council (FRC) has published a thematic review of climate-related financial disclosures (CFD) by AIM and large private companies. This follows the first year in-scope companies and LLPs were required to report on this under the Companies Act 2006. Overall, the review found that, while preparers have endeavoured to meet the CFD requirements, there was inconsistent quality among the companies selected. The review sets out examples of good practice and key areas for improvement. It also sets out the FRC’s key expectations for future CFD reporting by AIM and private companies. In particular, the FRC report highlights that the CFD requirements in the Companies Act are not identical to the TCFD framework and that good CFD disclosures do not have to be long or complex. Better disclosures are generally more concise and often conveyed information using tables or diagrams. For more information, see our blog post.

EU: Platform on Sustainable Finance details proposals for simplification of the EU taxonomy

In response to its 2023 mandate from the European Commission, on 5 February 2025, the Platform on Sustainable Finance (PSF) published a report presenting a set of evidence‑based recommendations to simplify taxonomy reporting and enhance its effectiveness. In a nutshell, the proposals aim to significantly reduce the burden of reporting (by over a third for non-financial companies, and the proposals would have the effect of “rapidly and significantly reducing” the reporting burden for financial companies, through the use of estimates, proxies, combined with a streamlined DNSH assessment approach). The PSF also hope that both financial and non-financial companies would benefit from the introduction of a materiality approach (through proportionality and efficiency gains). Finally there is a focus on the need for interoperability between the approach taken by the EU, and other taxonomies being developed in other jurisdictions. For more information, see our blog post.

EU: EIOPA recommends changes to standard formula capital calibrations for natural catastrophe risks

On 30 January 2025, the European Insurance and Occupational Pensions Authority (EIOPA) published an opinion in which it recommends that updates are made to the way certain natural catastrophe risks are accounted for in insurers’ Solvency II standard formula calibrations. This follows a consultation in this area, launched by EIOPA in April 2024. Drawing on new scientific insights, recent climate data and advanced risk modelling, EIOPA proposes adjusting standard formula risk factors for perils such as flood, hail, earthquake and windstorm for certain regions, whilst expanding the number of countries considered. EIOPA says that it is also analysing whether natural hazards like wildfire, coastal flood and droughts are material enough to be included in standard formula calibrations. EIOPA says that it has submitted its proposals to the European Commission and that the European Commission will consider its advice for a potential (re)calibration of the relevant standard formula parameters.

EU: ESG bonds and the arrival of the Gold Standard

In our podcast, we discuss the sustainable bond market and the arrival of the first European Green Bond. The discussion covers insights from A2A’s groundbreaking European Green Bond transaction, the first using the EU's official label under the EU Green Bond Regulation and examines the Regulation’s broader implications for the market.

EU: ESMA publishes final report on RTS and ITS on EU Green Bonds Regulation - external reviewer regime

On 14 February 2025, the European Securities and Markets Authority (ESMA) published its Final Report on the Technical Standards on the European Green Bond Regulation. The EU Green Bond Regulation empowers ESMA to develop regulatory technical standards (RTS) and implementing technical standards (ITS) specifying certain of its provisions for external reviewers. In 2024, ESMA published a Consultation Paper on the proposed draft technical standards on senior management requirements and analytical resourcing, sound and prudent management, analytical knowledge, and experience, outsourcing of assessment activities and forms, templates and procedures for registration (see our previous blog post). The public consultation closed on 14 June 2024. During this period, ESMA sought the advice of the Securities and Markets Stakeholder Group (SMSG) and received recommendations from the Proportionality and Coordination Committee (PCC). The Final Report includes the revised draft RTS and ITS following that consultation. For further information on the EU Green Bond Regulation, see our webpage.

UK: FCA sets out climate change adaptation challenges faced by firms

The UK’s Financial Conduct Authority (FCA) has published its 2025 Adaptation Report (the Report) on climate change adaptation challenges faced by firms. The Report focuses on risk management adjustments that firms need to make due to climate change, including changes to insurance and loan underwriting practices and due diligence in investment markets. It also considers the importance of financial products in enabling and supporting adaptation in the wider economy. The Report is based on informal engagement with firms and the FCA's understanding of market dynamics. It is not a comprehensive assessment, and further research is needed to verify the findings. The FCA also notes that the Report is not intended to set out regulatory expectations for firms. For more information, see our blog post.

UK: FCA delays the publication of the final rules on applying SDR to portfolio management

The UK’s Financial Conduct Authority (FCA) has announced that it no longer intends to publish its policy statement on extending its Sustainability Disclosure Requirements (SDR) and investment labels to portfolio managers in Q2 2025. The FCA consulted on the rules in April 2024 and had been expected to publish its final rules in the second quarter this year, after already delaying them from the second half of 2024. In an update to its webpage on 14 February 2025, the FCA states that it wants to take the necessary time to deliver the stated outcomes of ensuring “an extension of SDR to portfolio management delivers good outcomes for consumers, is practical for firms and supports growth of the sector”. For more information, see our blog post.

UK government responds to House of Lords Select Committee Report on Modern Slavery Act 2015

The UK government has published its response to the House of Lords Select Committee on the Modern Slavery Act 2015 report on the impact and effectiveness of the Modern Slavery Act 2015, which had set out recommendations to align the UK regime with international best practices. In our blog post, we explore the UK government’s response to the key recommendations, highlighting significant areas such as supply chain due diligence, import bans, mandatory reporting, new guidance, and enforcement.

UK: AGMs Update 2025 - A guide for UK-listed companies

We have published a guide that summarises and comments on major developments relevant to UK-listed companies preparing for AGMs in 2025. The guide includes analysis of a variety of ESG issues, including climate and other sustainability-related resolutions, “say on climate” votes, and DEI. For further information, see our briefing.

The legal issues to consider when amending or withdrawing from diversity initiatives

As the political backlash against corporate DEI continues, many organisations are considering whether to review, double-down, or withdraw from their workplace diversity initiatives. Wherever an organisation sits on the spectrum of reaction to the DEI backlash, there are legal and commercial risks to consider. In our briefing, we discuss the key legal issues to consider where an organisation is looking to amend or withdraw its DEI initiatives. For more information, see our briefing.

UK: FTSE Women Leaders Review – 2024 report

On 25 February 2025, the FTSE Women Leaders Review published its 2024 report on the representation of women on the boards and leadership teams of the FTSE 350 and 50 of the UK’s largest private companies. Whilst progress has been made in increasing the number of women on boards, the FTSE 350 are set to miss the target of having 40% of women in leadership roles by 2025. With a significant lack of female representation in executive roles, there is more to be done to bring women into the “four key roles” across the FTSE 350 and 50 largest private companies. For further information, see our blog post.

UK: Dismissal for expression of beliefs on social media was discriminatory

The expression of controversial beliefs in the workplace can be a complex issue for employers to navigate. Over the last few years, courts and tribunals have held that a wide range of minority beliefs, including beliefs that are offensive to some, are capable of protection. As a result, employers must tread carefully when considering whether expressions or manifestations of belief at work warrant disciplinary action. In Higgs v Farmor’s School, the Court of Appeal found that the dismissal of a school worker for Facebook posts, which criticised the teaching of same sex relationships as part of sex education in primary schools and which expressed gender critical views, was discriminatory. The posts were the manifestation of a protected belief and, in the circumstances, the decision to dismiss was not proportionate. In delivering its judgment, the Court of Appeal endorsed the considerations laid down by the Employment Appeal Tribunal in determining when employers may legitimately take action in response to beliefs manifested in the workplace. For more information, see our briefing.

Hong Kong SAR: Cross-Agency Steering Group sets 2025 priorities to support growth of sustainable finance in Hong Kong

The Green and Sustainable Finance Cross-Agency Steering Group has set out three key priorities this year to enhance the development of sustainable finance in Hong Kong after their meeting on 6 February 2025. The key priorities are (i) establishing a comprehensive sustainability disclosure framework; (ii) reinforcing Hong Kong’s role as a leading sustainable and transition finance hub; and (iii) harnessing data and technology to facilitate sustainability reporting and promote sustainable financing activities. For more information, see our blog post.

Hong Kong SAR: HKMA publishes guide on the use of greentech in the banking sector

On 18 February 2025, the Hong Kong Monetary Authority (HKMA) issued a circular highlighting the publication of an Adoption Practice Guide on Greentech in the Banking Sector (the Guide). The Guide explores adopting fintech solutions that can help Authorised Institutions (AIs) address environmental sustainability and climate related challenges. The Guide includes practical insights for AIs to advance their net zero transition agenda with greentech solutions, e.g. around streamlining data management, enhancing transparency, improving risk management, and strengthening customer communication around sustainability commitments. The Guide includes three case studies: case study #1 – an AI partnered with a greentech platform to address challenges with providing sustainability-linked loan products to SMEs by assessing SMEs based on industry and location-specific ESG criteria without the need for SMEs to invest heavily in extensive ESG evaluations; case study #2 – an AI collaborated with greentech providers to access a wider range of sustainability data to help with their climate risk modelling; and case study #3 - an AI partnered with a greentech service provider to integrate a carbon impact module into its mobile banking app.

China releases its sovereign green bond framework

On 20 February 2025, China’s Ministry of Finance (MOF) released the People’s Republic of China Sovereign Green Bond Framework (the Framework). The Framework is a cornerstone document for the MOF to issue Chinese green sovereign bonds overseas as an international green bond issuer. The Framework consists of five chapters, including use of proceeds, process for project evaluation and selection, management of proceeds, information disclosure and external reviews. As China’s first green bond issuance framework backed by sovereign credit, the Framework is expected to increase the supply of green financial products and establish a new approach to attracting more international capital to participate in China’s green and low-carbon transition.

China advances market reform of its renewable power pricing systems

On 9 February 2025, China’s National Development and Reform Commission and the National Energy Administration jointly released the Notice on Deepening the Market-oriented Reform of Pricing for Grid-connected Renewable Power and Promoting High-quality Development of Renewable Energy (the Notice). The Notice focuses on “new energy projects” being wind and solar power plants. The Notice marks China’s acceleration of the market-oriented reform of its renewable power pricing systems in a bid to build a new power system and promote the development of renewable energy generation. Before the issuance of the Notice, renewable energy projects are subject to a fixed pricing mechanisms. The reform introduced by the Notice instead focuses on three key aspects: allowing market forces to determine renewable power pricing, establishing a pricing and settlement mechanism that supports long-term sustainability, and adopting differentiated policies for existing and new projects.

Singapore submits 2035 Nationally Determined Contribution

On 10 February 2025, Singapore submitted its 2035 Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) (see NCCS’ press release). NDCs represent each country’s plan for how they plan to achieve the goals of the Paris Agreement. Countries need to submit their updated NDCs under the Paris Agreement by February 2025, ahead of COP30 in Brazil. Countries are strongly encouraged to ramp up their climate ambition in the next round of NDCs - dubbed “NDCs 3.0” by the UNFCCC. As part of its 2035 NDC, Singapore has committed to reduce emissions to between 45 and 50 million tonnes of carbon dioxide equivalent (MtCO2e) in 2035. The 2035 NDC is intended to build on Singapore’s 2030 NDC and paves the way to achieve the target of net zero emissions by 2050.

Singapore’s budget for FY 2025 includes funding for clean energy and coastal and flood protection

On 18 February 2025, Singapore’s Prime Minister Lawrence Wong introduced various sustainability initiatives / measures in his Budget speech. The Singapore government will add S$5 billion to its Future Energy Fund to further support infrastructure investments for Singapore’s transition towards decarbonisation. PM Wong said that expanding access to clean energy is a “major national imperative”, given Singapore’s growing energy needs and to bring down carbon emissions. The Singapore government will also consider the potential development of nuclear power in Singapore and build up its capabilities in the area. PM Wong also announced that another S$5 billion will be injected into the Coastal and Flood Protection Fund, which was set up in 2020 to protect Singapore against rising sea levels and enhance flood resistance.

Japan revises tender offer guidelines for offshore wind projects

On 29 January 2025, the Ministry of Economy, Trade and Industry (METI) and the Ministry of Land, Infrastructure and Transport (MLIT) jointly published the revised version of the Guidelines for Public Tender for Offshore Wind Project (the Guidelines). With respect to offshore wind projects generally, changes in the business environment, such as recent global inflation and the depreciation of Japanese yen, have led to project suspensions worldwide. In order to ensure the completion of power investment in offshore wind power generation under such circumstances, METI and MLIT have revised the Guidelines. Key updates are: (i) an increased focus on risk scenario analysis, (ii) a review of requirements to change major facilities/components of the project, (iii) revision of valuation measures of price, and (iv) sea area inspection by an independent administrative institution (JOGMEC). More details will be provided in the occupancy plans for each sea area.

First CCS project area designated in Japan

In 2024, the Act concerning CO2 Storage Business (the CCS Act) was enacted and partially came into effect. Tomakomai, Hokkaido has been designated as a project area for the first time in Japan, and METI is inviting a business operator for prospect drilling. The remaining part of the CCS Act (including regulations for storage business) will be enforced by May 2026.

Japan’s new target for greenhouse gases emission and 7th Strategic Energy Plan

On 18 February 2025, Japan published the Global Warming Countermeasures Plan (currently in Japanese only) and announced that it has set a new target for greenhouse gas emission reduction of 73% by FY 2040 compared to FY 2013, as a part of its Nationally Determined Contribution (NDC). In order to reflect the new target, Japan has also (i) updated its Strategic Energy Plan from the previous version which was published in 2021, and (ii) published the GX 2040 Vision. GX 2040 Vision includes some proposed regulatory updates, such as full operation of its emission trading system from 2026 and introduction of a fossil fuel charge from 2028.

Thailand carbon tax proposal for oil and oil products

In Thailand, the Ministry of Finance has proposed a draft ministerial regulation to integrate carbon pricing mechanisms into excise tax rates for oil and oil products to the Cabinet. This proposal aims to raise public awareness of the costs associated with carbon emissions and prepare for the forthcoming mandatory carbon pricing measures which will be implemented upon the enactment of the Climate Change Bill. On 31 January 2025, the Cabinet approved this draft ministerial regulation in principle, and it is expected to be issued and come into effect in the next few months. This draft ministerial regulation proposes including a carbon tax in the existing excise tax rates for specific oil and oil products, namely gasoline, diesel, jet fuel and liquefied petroleum gas (LPG). Including this carbon tax will not affect the retail prices of these oil and oil products, as the draft ministerial regulation requires that the current excise tax rates for these oil and oil products remain unchanged, despite the incorporation of the carbon tax. The carbon tax to be incorporated will be calculated based on a carbon price initially set at Baht 200 per tonne of carbon dioxide equivalent. However, this carbon price may be increased in the future to better reflect the carbon market price in Thailand, which could subsequently affect the excise tax rates. The revision to the current excise tax rates is an initial step to prepare business operators and consumers in Thailand for the more comprehensive mandatory carbon pricing mechanisms expected to be implemented once the Climate Change Bill, currently in its early drafting stage, comes into effect.

Climate change litigation

On 14 February 2025, a Minnesota state court issued an order mostly preserving the state’s lawsuit brought against several oil corporations and industry stakeholders, alleging the defendants engaged in deceptive practices to mislead Minnesotan consumers about the climate change risks of fossil fuels. The judge declined the defendants’ motion to dismiss the state’s claims that the defendants engaged in fraudulent misrepresentation and deceptive trade practices, failed to warn consumers, and violated the state’s False Statement in Advertising Act. The only claim the judge dismissed was that of the defendants’ alleged violation of the Minnesota Consumer Fraud Act, which the judge found had no evidence of the defendant’s intent to deceive.

On 5 February 2025, a New Jersey state court granted the defendants fossil fuel companies’ motion to dismiss plaintiffs’ climate change litigation with prejudice. Plaintiffs, including the Attorney General of New Jersey and two state agencies, alleged the defendants were liable for the effects of global climate change due to their campaign of disinformation. The court held that all claims against defendants were preempted by federal common law, and stated that its decision was “reliant upon and consistent with both federal and state courts across the country that have rejected the availability of state tort law in the climate change context.”  In doing so, the court cited several recent cases in Maryland, New York, and other jurisdictions, which have decided similarly.

Oil & gas litigation

On 4 February 2025, conservation and public health groups in California sued the U.S. Bureau of Land Management (BLM) in the United States District Court for the Eastern District of California for issuing drilling permits without assessing the impact or seeking input from the community. The complaint accuses the BLM of violating the Clean Air Act, the National Environmental Policy Act, the Mineral Leasing Act, and the Federal Policy and Management Act.

In another oil and gas lawsuit, landowners in Colorado sued an oil and gas company, alleging that it buys aging oil wells and sells them to small companies that declare bankruptcy, leaving the cleanup costs of the wells to the state. The allegations include fraudulent transfer, trespass regarding equipment left on land, negligence, unjust enrichment, and failure to meet statutory obligations. In January, the U.S. District Court of Colorado denied the defendant’s motion to dismiss, allowing the claims to go forward.

Climate disclosure legislation and regulations

On 11 February 2025, the Acting Chairman of the Securities and Exchange Commission (SEC) stated that the Commission would be asking the Eighth Circuit Court of Appeals to not schedule for argument a case reviewing the SEC’s climate disclosure rules, so that the SEC may have time to determine next steps following its recent change in leadership. The Acting Chairman described the rules, which mandate certain climate-related disclosures from SEC registrants, as “deeply flawed” and expressed his belief that the Commission is “without statutory authority or expertise” to address the climate change issues in the rule. The SEC’s sole Democratic Commissioner opposed this stance, stating that the SEC did not act outside of its remit in enacting the rule.

On 3 February 2025, a federal judge in the U.S. District for the Central District of California dismissed two legal challenges to California’s climate disclosure laws, which require certain companies to report their greenhouse gas emissions and disclose climate-related financial risks. The plaintiffs argued that these rules violate the constitution and extraterritoriality rules, but the court determined that the laws only require companies to disclose their emissions - not actively reduce them in violation of extraterritorial regulation limits - and that one of the constitutional issues was not yet ripe due to regulations enacting the law not yet being approved. Nevertheless, this does not mean the case is dismissed; the court has yet to rule on whether the disclosure laws violate the First Amendment by unconstitutionally compelling speech.

On 27 January 2025, New York’s Senate Bill S3456 (the Climate Corporate Data Accountability Act) was referred to the Senate Environmental Conservation Committee. The bill requires reporting entities (those that “do business” in New York and derive receipts from activity in New York; and have total revenues in excess of USD $1 billion in the previous calendar year)  to publicly disclose (1) starting in 2027 (on a date to be determined and annually thereafter), their Scope 1 and Scope 2 emissions from the previous calendar year, and (2) starting in 2028 (on a date to be determined and annually thereafter), their scope 3 emissions.

On 28 January 2025, Colorado House Bill 25-1119 was introduced, mandating greenhouse gas emissions reporting for entities that do business in Colorado and have over USD $1 billion in total revenues. The legislation empowers the Air Quality Control Commission to enforce rules, allows freedom of speech exceptions, requires third-party verification of emissions data, and provides for substituted compliance with comparable external regulations. The bill requires reporting entities to publicly disclose (1) starting in 2028, their Scope 1 and 2 emissions from the previous calendar year, and (2) starting in 2029, their Scope 3 emissions data as they relate to certain categories, with additional categories progressively added in 2030 and 2031.

Also in January, a new bill called S.B. 222, or the Affordable Insurance and Climate Recovery Act was introduced in California. The bill seeks to allow victims of climate disasters and insurers to sue fossil fuel companies for damages caused by climate change, aiming to improve insurance affordability. The bill creates a private right of action for those affected by climate events to recover losses from oil and gas companies alleged to have misled the public about the impact of their products.

Anti-ESG actions

On 6 February 2025, 22 states and four industry groups filed suit in the U.S. District Court for the Northern District of New York against the State of New York, challenging its passage of the Climate Superfunds Act, which requires large-scale emitters to pay into a superfund that is then administered by the New York State Department of Environmental Conservation for climate adaptation infrastructure projects. The plaintiffs assert that the law is unconstitutional and is preempted by the Clean Air Act. The plaintiffs seek declaratory and injunctive relief.

On 27 January 2025, attorneys general from 10 states issued a letter to several major financial institutions concerning their diversity, equity, and inclusion (DEI) practices and ESG considerations in investments. In the letter, the attorneys general argue that the focus on DEI and ESG breaches these institutions’ fiduciary duty to maximize financial returns for state clients. The letter requests information from each financial institution concerning their DEI policies and ESG commitments. Furthermore, the letter warns of potential litigation and enforcement action if any of the financial institutions’ policies are found to be in violation of state and federal law. 

Presidential actions

On 21 February 2025, President Trump issued a memorandum entitled “America First Investment Policy”, which details measures to facilitate investments from allied nations while countering “new and evolving threats” associated with foreign investment. Among other things, the memorandum states that for investments in key areas, such as critical technologies, critical infrastructure, personal data, and other sensitive areas, “restrictions on foreign investors’ access to United States assets will ease in proportion to their verifiable distance and independence from the predatory investment and technology-acquisition practices” of foreign adversaries or other “threat actors.” The memorandum states that, using “objective standards,” the administration will create an expedited review process for investments from yet-to-be-specified allied and partner sources. This “fast-track” will apply to investments in advanced technology and “other important areas,” and it will require investors to “avoid partnering” with foreign adversaries. In addition, the memorandum states that the administration will expedite environmental reviews for any inbound investment over USD $1 billion, and calls on the U.S. Environmental Protection Agency, instead of the U.S. Department of Energy or U.S. Department of the Interior, to implement.

On 5 February 2025, President Trump issued an executive order mandating that educational institutions receiving federal funds must adhere to Title IX requirements by ensuring that women’s sports are exclusive to biological females. The executive order states that it aims to protect fairness, safety, and privacy for women and girls in athletic settings. It directs federal agencies to rescind funding from non-compliant educational programs and emphasizes policy enforcement against institutions allowing male participation in female sports.

President Trump also issued an executive order mandating the revocation of prior policies allowing gender-diverse identities in the military, instead mandating service members align strictly with their birth sex, eliminating inconsistent pronoun usage, and reinforcing separate facilities for males and females. The order requires updates to Department of Defense (DoD) instructions and the revocation of Executive Order 14004, ensuring that all military departments comply with the new directives. A hearing on the order is scheduled in federal court.

Recent presidential executive orders have also impacted federal government hiring practices. On 21 January 2025, President Trump issued an executive order mandating a halt to practices deemed to violate civil rights under the “guise of [DEI] or diversity, equity, inclusion, and accessibility’ (DEIA)”, emphasizing a return to merit-based hiring and operations within federal agencies and their contractors, and encouraging the same in the private sector. The order revokes several previous executive orders related to DEI, instructs a review and potential revision of federal policies concerning DEI, and requires agencies to ensure compliance with civil-rights laws by federal contractors. The order also directs comprehensive oversight and recommendations to eliminate discriminatory DEI practices in critical sectors. In that vein, President Trump also issued a directive ordering the Secretary of Transportation and the Federal Aviation Administrator to shift hiring practices back to a merit-based system, rescinding DEI initiatives.

DEI developments and litigation

On 5 February 2025, following President Trump’s executive orders on DEI, the U.S. Attorney General published a memorandum for all employees at the U.S. Department of Justice (DOJ), outlining plans to investigate and eliminate DEI practices in the private sector and educational institutions receiving federal funds. The memo requires the DOJ’s Civil Rights Division and the Office of Legal Policy to submit a report by 1 March 2025 with recommendations to enforce these new directives, including potential criminal and civil compliance investigations.

On 11 February 2025, the Federal Communications Commission (FCC) launched an investigation into a U.S.-based multinational media corporation and its subsidiary over its DEI policies. In a letter to the company’s leadership, the FCC Chair stated that he is “concerned” about potential promotion of “invidious forms of DEI that [do] not comply with FCC regulations,” citing the corporation’s promotion of DEI as a “core value” of its business and noting that some of the company’s DEI-related activities could violate the Communications Act’s prohibition on discrimination based on race and other factors. The letter requests the company provide an accounting of its “DEI initiatives, preferences, mandates, policies, programs, and activities.”  Also in February 2025, the Attorney General of Missouri sued a multinational coffee chain over its DEI policies, claiming that the company “ties compensation to racial and sex based quotas, discriminates on the basis of race and sex in training and advancement opportunities, and discriminates on the basis of race and sex with respect to its board membership.” The state plaintiff seeks declaratory and injunctive relief and monetary damages.

On 3 February 2025, several industry associations and the City of Baltimore, Maryland filed suit in the U.S. District Court for the District of Maryland, seeking to block the Trump Administration’s recent executive orders directing federal agencies to defund DEI programs. The plaintiffs argue that the President’s orders are unconstitutionally vague and grant excessive discretion to federal agencies, allowing them to arbitrarily revoke funding without clear guidelines and limit free speech protected under the First Amendment. The plaintiffs seek declaratory and injunctive relief. In response, the defendants argue that the plaintiffs lack standing because their case relies on speculative future actions and has not shown an irreparable harm.

Greenwashing litigation

On 19 February 2025, the U.S. District Court for the Southern District of Florida granted an athleisure company’s motion to dismiss a lawsuit alleging it had misled consumers by overemphasizing the significance of its environmental initiatives through a sustainability campaign which led to plaintiffs paying a premium for their products. The court found that the plaintiffs’ allegations fail to tie any aspect of the company’s statements to the purported price premium and the assertions on their own are insufficient to constitute an economic injury.

On 10 February 2025, a class action lawsuit was filed in the U.S District Court for the Eastern District of Washington against an outdoor apparel and gear company, claiming that the company misled consumers by marketing one of its waterproof fabrics as environmentally friendly while using PFAS, or harmful “forever chemicals”, in its production process. The complaint further alleges that the company fails to disclose that its waterproof fabric sheds PFAS chemicals via ordinary use, which means that consumers are inadvertently contaminating environmental areas and water supplies when venturing out in their waterproof gear.

On 16 January 2025, a class action lawsuit was filed in the U.S. District Court for the Western District of Washington against a toilet paper manufacturer alleging the company was engaging in greenwashing as it claimed to use certified wood pulp and engaged in extensive replanting efforts and forest restoration, despite heavily relying on destructive logging practices. The complaint argues that the company is misleading consumers by (i) utilizing clear cutting and burning practices throughout the Canadian boreal forest, one of the world’s most important biological ecosystems and (ii) failing to disclose that its suppliers are replanting single species conifers that are the most valuable for logging.

EPA litigation

Also in January, a coalition of states and electric utility companies filed separate briefs with the U.S. Court of Appeals for the D.C. Circuit, challenging the EPA’s final rule entitled “Hazardous and Solid Waste Management System: Disposal of Coal Combustion Residuals From Electric Utilities; Legacy CCR Surface Impoundments”, claiming that the rule exceeds the EPA’s regulatory authority. The petitioners further claim that the regulation contravenes the statutory scheme crafted by Congress to limit the EPA’s authority over disposal of coal combustion residuals and grants states authority to regulate solid waste management practices.

On 6 February 2025, the Supreme Court of the United States denied without explanation the Trump administration’s request to pause three energy cases so the EPA can review Biden-era regulatory decisions that may alter the Trump administration’s legal positions. On 24 January 2025, acting Solicitor General Sarah Harris argued in each case - Diamond Alternative Energy v. EPA, Oklahoma v. EPA, and EPA v. Calumet Shreveport Refining - that it should be held in abeyance to allow the EPA time to reevaluate its decision to grant California a Clean Air Act waiver that would allow it to implement its own greenhouse gas emissions standards for automobiles. Although there has generally been a tradition of the federal government maintaining the same legal position in cases already before the court on the merits regardless of a change in administration, both the Trump and Biden administrations have departed from that tradition in recent years.

Federal agency action

• EPA administrator gives Congress chance to invalidate CA auto waivers – On 14 February 2025, EPA Administrator Lee Zeldin announced that the EPA will be transmitting to Congress the Biden administration’s approvals of Clean Air Act (CAA) waivers that allow California to preempt federal vehicle standards for greenhouse gas emissions and create its own standards. Zeldin characterized the approvals as “rules”, the phrasing of which would set the approvals to be qualified for revocation under the Congressional Review Act (CRA). The CRA requires federal agencies to submit rules to Congress and the Government Accountability Office for review and grants Congress the power to invalidate these rules. Zeldin’s move to classify the CAA waiver approvals as “rules” for Congress contradicts a 2023 GAO decision that CAA waiver approvals are not considered “rules” under the CRA’s definition. Additionally, the Congressional Research Service issued a report stating that the CAA waiver is considered an “order not subject to the CRA”. Recently, the Supreme Court of the United States declined to take up a challenge by several red states to EPA’s CAA waiver authority.
• DOT directs states to stop spending EV funding allocated by Biden Administration – On 6 February 2025, the Federal Highway Administration (FHA) within the U.S. Department of Transportation issued a letter directing states to stop spending money on electric vehicle charging infrastructure that was allocated under the Biden administration while the new administration reviews the policies underlying implementation of the National Electric Vehicle Infrastructure (NEVI) Formula Program. Because the money was already allocated by the Biden Administration, it was believed that it would be difficult for the Trump administration to hold back or rescind the NEVI Formula Program funds. However, FHA stated in the letter that it had revoked prior guidance surrounding NEVI, invalidating the plans states had submitted over the years and casting uncertainty over billions in unspent funds for charging infrastructure.
• CEQ NEPA regulations replaced by guidance – On 19 February 2025, the Council on Environmental Qualify (CEQ) submitted to the Federal Register an interim final rule rescinding its National Environmental Policy Act (NEPA) regulations, which have been the foundation for the environmental impact assessment in the U.S. for over 50 years. Concurrently, CEQ posted general guidance to agencies to update their NEPA procedures within a year. The guidance outlines that agencies must revise or establish agency-specific NEPA implementing procedures “to expedite permitting approvals and for consistency with NEPA as amended by the [Financial Responsibility Act of 2023].” The CEQ guidance includes some direction on the implementation of NEPA, such as calling into question the consideration of the “cumulative” nature of “reasonably foreseeable” effects; however, the CEQ guidance will not be legally operative until it is implemented in the form of updated NEPA regulations adopted by various agencies, subject to CEQ coordination “for consistency.”
• OMB announces grant pauses – On 27 January 2025, the Office of Management and Budget (OMB) issued a memorandum pausing the disbursement of federal financial assistance to several climate programs, in furtherance of President Trump’s energy-related executive orders. While the memorandum refers to a “temporary pause” in funding for such programs, and President Trump’s “Unleashing American Energy” executive order states that federal agencies have 90 days to review their funding and provide findings to the OMB, the memo does not provide a set date when funding will resume.

IN CASE YOU MISSED IT

ESG Disputes Bulletin (February edition): read our publication

UK Litigation, Arbitration and Investigations 2025: A look ahead: read our publication

U.S. Presidential Action to “Unleash” American Energy: read our briefing

President Trump’s Recent Actions are a Mixed Bag for the Global Battery Supply Chain: read our briefing