Omnibus I: state of play on the Requirements Proposal

The Requirements Proposal forms part of the Omnibus I package and proposes substantive changes to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD or CS3D). The Council agreed its negotiating position (general approach) on the Requirements Proposal on 23 June 2025. The Council position includes an additional EUR 450 million turnover threshold for the CSRD and further restricts the scope of the CSDDD by requiring 5,000 employees and EUR 1.5 billion net turnover. The Council position also pushes back the application date of the CSDDD by one year to 26 July 2029. For more information on the Council position, see our blog post.

The draft Parliament JURI Report on the Requirements Proposal is now in circulation (see here). The JURI committee had until 27 June to submit amendments to the draft report. The Parliament will then vote on its final negotiating position in October 2025.

As we reported in last month’s edition of the ESG newsletter, on 18 April 2025, a number of non-governmental organisations (NGOs), including ClientEarth, filed a formal complaint with the European Ombudsman concerning the manner in which the European Commission prepared the first Omnibus proposal. The European Ombudsman announced on 21 May 2025 that it had opened an inquiry to investigate the complaint.

ClientEarth commissioned a law firm to assess the legal risks of the Omnibus I proposal should it be passed into law. In a legal opinion published on 24 June 2025, the firm identified several grounds for legal challenge to the proposal, including violations of the principles of proportionality, legal certainty, legitimate expectations, coherence, and environmental integration, as well as the Charter of Fundamental Rights. The analysis warns that breaches of essential procedural requirements could lead to the Omnibus I being found invalid. The report also notes that these legal challenges could be brought before European Union courts by EU institutions, Member States, civil society organisations, and private operators. However, ClientEarth have not indicated that they intend to commence legal proceedings against the Commission at this stage.

To stay on top of all Omnibus developments, see our Omnibus Tracker.

EFRAG delivers progress report to the Commission on simplification of ESRS

On 20 June 2025, EFRAG published its Progress Report to the European Commission on the simplification of the European Sustainability Reporting Standards (ESRS). During the SRB meeting on 19 June, EFRAG announced that the first draft of the amended ESRS will be shared by the end of June and will be discussed at the SRB meeting scheduled for 2 July 2025. The final draft of the revised ESRS is expected to be opened for public consultation at the end of July. For more information, see our blog post.

Omnibus I: political agreement reached on CBAM simplification

On 18 June 2025, the European Parliament and the Council reached a political agreement on amendments to simplify the Carbon Border Adjustment Mechanism (CBAM) Regulation. Although the compromise text is not yet available, the European Parliament’s press release indicates that the co-legislators supported the Commission’s proposal for the introduction of a new de minimis mass threshold. Under this provision, imports up to 50 tonnes per importer per year will not be subject to the CBAM rules, replacing the current threshold that exempts goods of negligible value (set within the customs duty framework). The agreed text will now need to be formally adopted by the Parliament first, followed by the Council. According to the Council press release, they expect the formal adoption process to be finalised by September 2025. For more information, see our blog post.

Omnibus IV: Council agrees its negotiating position on due diligence rules for batteries

On 19 June 2025, the Council approved its negotiating position (general approach) on the Battery Due Diligence Proposal (see Council press release). The text of the Council position is not available yet. The Batteries Regulation sets due diligence rules for operators who must verify the source of raw materials used for batteries placed on the EU market. These due diligence obligations are set to apply from 18 August 2025. Also, the Commission is currently required to publish guidelines on these due diligence requirements by 18 February 2025. The Battery Due Diligence Proposal postpones the due diligence requirements until 18 August 2027, and the date of publication of the Commission’s guidelines until 26 July 2026. The proposal forms part of the Omnibus IV package adopted by the Commission on 21 May 2025 (for more information on this package, see our previous blog post).

In the Parliament, the Rapporteur’s draft Report is expected to be approved by the ENVI Committee on 3 July. Once the Parliament has adopted its negotiating position, trilogue discussions with the Council can start.

EU: sustainable finance and environmental elements of the Defence Readiness Omnibus

On 17 June 2025, the European Commission adopted the Defence Readiness Omnibus. According to the Commission, this package aims to facilitate up to EUR 800 billion in defence investments over the next four years. The package comprises a Commission Communication alongside several legislative and non-legislative proposals, covering both defence-specific and broader regulatory areas.

One of the elements of this Omnibus package is the Commission Notice on the application of the sustainable finance framework and the Corporate Sustainability Due Diligence Directive (CSDDD) to the defence sector. In the Notice, the Commission explores the risk mitigation provisions in different legislative files of the sustainable finance framework and the CSDDD. The Commission also approved the Commission Delegated Regulation where it clarified that only companies involved in prohibited weapons must be considered in the context of the Paris-Aligned and Climate Transition Benchmark exclusions.

Another element of the Defence Omnibus are several proposed changes to existing environmental and chemicals legislation - including a draft Regulation amending the REACH, CLP, Biocidal Products and POPs Regulations.

Read our blog post for more details on the sustainable finance and environmental aspects of this package.

Global: Basel Committee publishes international voluntary climate risk disclosure framework for banks

On 13 June 2025, the Basel Committee on Banking Supervision (the primary global standard setter for the prudential regulation of banks) published its framework for the voluntary disclosure of climate-related financial risks. At a high level, the framework is intended to guide banks across jurisdictions on disclosing their climate-related financial risks. It includes both qualitative and quantitative guidance on how banks can report their exposures. The framework is voluntary (a departure from the original proposal to make some elements mandatory). Implementation will only become mandatory where required by national supervisors at a jurisdictional level. For more information, see our blog post.

EU Green Bond Regulation: Commission adopts voluntary pre- and post-issuance disclosure templates

The EU Green Bond Regulation establishes (i) an official label for issuers that can meet the stringent requirements of the EU Green Bond Standard and (ii) creates a standalone voluntary disclosure regime for bonds marketed as environmentally sustainable and sustainability-linked bonds. On 16 April 2025, the Commission adopted (i) its Communication establishing non-binding guidelines for pre-issuance disclosures (and templates) and (ii) delegated acts (and templates) relating to the post-issuance disclosures, under the voluntary disclosure regime of the EU Green Bond Regulation.

If there are no comments from the European Parliament and the Council of the EU on these delegated acts, the scrutiny period will end on 16 July 2025. The delegated acts will be published in the Official Journal of the EU in the weeks thereafter. The official publication of the Commission Guidelines relating to the voluntary pre-issuance disclosures will follow the expiration of scrutiny period applicable to the delegated acts (i.e. 16 July 2025). We expect these Guidelines will also be published in the Official Journal in the weeks after the scrutiny period has ended. For more detail on the European Green Bond Regulation, see our EU Green Bond Regulation Hub.

Global: IOSCO Sustainable Bonds Report

On 21 May 2025, the International Organization of Securities Commissions (IOSCO) published its Sustainable Bonds Report which looks at the key characteristics and trends tied to the sustainable bond market. The report aims to provide a comprehensive analysis of the sustainable bond market and support initiatives of IOSCO's member jurisdictions in this area. The report includes several key considerations, designed to address market challenges, including enhancing investor protection, ensuring sustainable bond markets are operating in a fair and efficient way, and improving accessibility. For more information, see our blog post.

Global: ICMA publishes new materials at Annual General Meeting of Green, Social, Sustainability and Sustainability-Linked Bond Principles

On 26 June 2025, the International Capital Market Association (ICMA) released new materials and guidance to support the Green, Social, Sustainability and Sustainability-Linked Bond Principles. The new materials and guidance include Sustainable Bonds for Nature: A Practitioner’s Guide, an updated 2025 version of the Green Bond Principles, and a new annex to the Green Enabling Projects Guidance containing dedicated FAQs. Additionally, a new annex with dedicated FAQs has been added to the Sustainability-Linked Loan Financing Bonds Guidelines. For more information, see our blog post.

EU: ESAs launch consultation on how to integrate ESG risks into the financial stress tests for banks and insurers

On 26 June 2025, the European Supervisory Authorities (ESAs) launched a consultation on their draft joint guidelines on ESG stress testing. The consultation closes on 19 September 2025. The final guidelines are expected to be finalised and published by 10 January 2026.

The guidelines provide proposed guidance on the design and features of stress tests with ESG elements, as well as the organisational and governance arrangements such stress tests would need to have. There is an expectation that, given the evolving nature of ESG risks and stress testing methodologies, competent authorities should regularly review and refine their stress testing frameworks. For more information, see our blog post.

EU: ESMA Final Report on amendments to EU Prospectus regime

The EU Listing Act, amending (in particular) the Prospectus Regulation, entered into force on 4 December 2024. However, many of the new provisions, including new requirements for product specific ESG disclosures for non-equity securities, will not apply until 5 June 2026 since they are reliant on level 2 measures (technical standards and delegated acts).

ESMA was mandated by the Commission to provide technical advice on many aspects of the delegated acts. Following its consultation in autumn 2024, ESMA published its Final Report on technical advice concerning the Prospectus Regulation on 12 June 2025, which includes its proposed changes to Commission Delegated Regulation (EU) 2019/980 setting out format amendments and updated disclosure annexes. For more information, see our client briefing.

EU: ESMA finds improvements needed in supervision of sustainability risks and disclosures

On 30 June 2025, European Securities and Markets Authority (ESMA) published its final report on the 2023-2024 Common Supervisory Action on the integration of sustainability risks and disclosures (see also the ESMA press release) . ESMA launched this supervisory action in July 2023 to assess how sustainability risks are integrated and disclosed within the investment fund sector (for more information on the Common Supervisory Action, see our previous blog post).

The results show that, while most national competent authorities (NCAs) found an overall satisfactory level of compliance, there is still scope for improvement in managers’ adherence to the framework for integrating sustainability risks and disclosures. The report provides examples of both good and non-compliant practices.

ESMA acknowledges the challenges reported by NCAs, noting that key concepts in the Sustainable Finance Disclosure Regulation (SFDR) - such as the definition of sustainable investment under Article 2(17) of the SFDR - are currently left to the discretion of market participants. A future review of the SFDR, establishing product categories with clear criteria, would help mitigate this issue. In the interim, market participants must continue to comply with the current rules, and NCAs are encouraged to use their enforcement powers as appropriate in cases of regulatory breaches.

ESMA also highlights that concrete changes resulting from a future review of the SFDR will not be applicable in the near term. It is therefore important that NCAs remain vigilant in supervising the current framework, and that supervised entities continue to apply the existing provisions.

EU: ESMA calls for proportionate approach to ESRS supervision

The European Securities and Markets Authority (ESMA) has published a statement on the supervision of the initial ESRS-compliant disclosures. ESMA highlighted the uncertainty created by the concurrent introduction of the first European Sustainability Reporting Standards (ESRS), inconsistent transposition of the Corporate Sustainability Reporting Directive (CSRD), and the Omnibus legislative proposals. This has raised questions about how national competent authorities (NCAs) will supervise sustainability reporting.

ESMA further noted that applying the ESMA Guidelines for Enforcement of Sustainability Information (GLESI) in the early years of ESRS implementation will involve a learning curve for all parties. Supervisory efforts will need to be “proportionate and realistic” (for more information on GLESI, see our blog post). ESMA also observed that NCAs can play a supportive role by identifying areas where issuers can enhance their reporting. NCAs in Member States where the CSRD has not yet been transposed will continue to fulfil their supervisory responsibilities in line with current national law. While these NCAs cannot formally declare compliance with the GLESI, they will apply comparable procedures consistent with ESMA’s guidance on sustainability information.

EU: EIOPA report on biodiversity risk management by insurers

On 30 June 2025, EIOPA published a report exploring the extent to which (re)insurers in the EU are already identifying, measuring and managing biodiversity risks and the tools that they are using to do so. EIOPA’s press release provides an overview of the report.

Despite the challenges that EIOPA says exist in assessing biodiversity risks due to their complexity and their interconnectedness with other environmental risk factors, the report notes what EIOPA describes as “promising market practices” among (re)insurers. At the same time, EIOPA points to areas where it believes further engagement will be essential to strengthen the industry’s ability to respond to biodiversity-related risks going forward.

Global: UN Ocean Conference

The UN 2025 Ocean Conference was held in France from 9 - 13 June 2025. Key outcomes of the Conference include:

• Nice Ocean Action Plan: The Conference adopted a declaration titled “Our ocean, our future: united for urgent action”, stressing that the ocean plays an essential role in mitigating the adverse effects of climate change. This is a two-part framework that comprises a political declaration and over 800 voluntary commitments by governments, scientists, UN agencies, and civil society since the previous conference. The declaration reaffirms the goal of protecting 30 percent of the ocean and land by 2030, while supporting global frameworks like the Kunming-Montreal Biodiversity Agreement and the UN International Maritime Organization’s (IMO) climate goals.
• High Seas Treaty: Progress was made towards the ratification of the Biodiversity Beyond National Jurisdiction (BBNJ) agreement, also known as the High Seas Treaty. The Treaty was adopted in 2023 to safeguard marine life in international waters. Sixty ratifications are needed for it to enter into force. During the Conference, 19 countries ratified the Treaty, bringing the total number, as of 13 June, to 50.
• Deep sea mining: Many world leaders, including heads of state from France and Costa Rica (the host countries), renewed calls for a global moratorium on deep sea mining. Their position was that no commercial mining should be allowed until there is solid scientific evidence demonstrating that it can be done without harming marine ecosystems. The Conference did not establish new legal restrictions or frameworks for deep sea mining, but it firmly reinforced global calls for a pause or moratorium.
• Global Plastics Treaty: 95 countries issued the “Nice Call for an Ambitious Treaty on Plastic Pollution,” urging for a global target to reduce plastic production and to reach agreement on the treaty by August 2025. The next meeting for the treaty negotiations will take place in Switzerland from 5 to 14 August 2025.

EU: European Ocean Pact

On 5 June 2025, the European Commission published the European Ocean Pact. It includes Communication, Factsheet and a Q&A document. The Commission describes the Ocean Pact as a comprehensive strategy designed to better protect the ocean, promote a thriving blue economy, and support the well-being of people living in coastal areas. The Pact brings together the European Union’s ocean-related policies and actions, creating a unified and coordinated plan for ocean management.

The Pact is structured around six priorities: protecting and restoring ocean health; boosting the competitiveness of the EU sustainable blue economy; supporting coastal and island communities and outermost regions; advancing ocean research, knowledge, skills and innovation; enhancing maritime security and defence; and strengthening EU ocean diplomacy and international ocean governance.

The Pact envisages that, by 2027, the Commission will propose an “Ocean Act” building on a revision of the Maritime Spatial Planning Directive. This Act would provide a single framework to facilitate the implementation of the Pact’s objectives, while reducing administrative burden. It aims to strengthen and modernise maritime spatial planning through increased cross-sectoral coordination at national level and by promoting a more organised sea basin approach.

The Commission will also establish an Ocean Board composed of representatives from relevant sectors linked to the ocean. The Board will assist the Commission in the monitoring and implementation of the Ocean Pact.

EU: Water Resilience Strategy

On 4 June 2025, the European Commission adopted its Communication on the European Water Resilience Strategy. Water resilience was identified as a priority within the European Commission’s 2024-2029 Political Guidelines. According to the Strategy, it aims to help all regions of the EU improve the management of their waterbodies, address water scarcity, enhance the competitive and innovative edge of the water industry, and foster a clean and circular approach. The Strategy primarily sets out non-legislative actions.

The Strategy outlines three key objectives: (i) restoring and protecting the water cycle as a basis for sustainable water supply; (ii) building a water-smart economy that supports EU competitiveness, attracts investment, and promotes a thriving water industry; and (iii) ensuring clean and affordable water and sanitation, as well as empowering citizens for water resilience.

The Communication establishes a target to improve water efficiency by at least 10 per cent by 2030. During the scheduled review of the Strategy in 2027, the Commission intends to develop common benchmarks. Member States are encouraged to set their own targets for water efficiency, tailored to national circumstances.

The Strategy also addresses the simplification of EU water rules, including streamlining and enhancing the efficiency of electronic reporting under the Water Framework Directive and revising the Marine Strategy Framework Directive. In relation to the extended producer responsibility system introduced by the Urban Wastewater Treatment Directive, the Commission intends to conduct an updated study on costs and potential impacts for the sectors concerned.

The Commission has emphasised the importance of assessing and, wherever feasible, limiting additional water demand associated with the clean industrial and digital transformation, supporting this through water-smart planning. Specifically, to encourage water savings in data centres, the Commission will rate their energy efficiency and overall sustainability, and propose minimum performance standards, including for water consumption.

EU: upcoming Danish Presidency publishes its programme

The upcoming Danish Presidency of the Council published its programme, outlining the working areas on which it intends to focus by priority. The programme provides that the green transition will be continued in a way that maintains the level of ambition while also supporting EU competitiveness, security of supply, and ensuring Europe’s independence from Russian energy. The Presidency will prioritise negotiations on a forthcoming proposal for a new EU climate target for 2040 and the Commission’s Omnibus packages and other proposals aimed at simplification. The first Omnibus package, centred on sustainability reporting and due diligence, will be given particular priority (for more information on Omnibus I, see our previous blog post).

EU: Commission proposes EU Space Act

On 25 June 2025, the European Commission published a Proposal for a Regulation of the European Parliament and of the Council on the safety, resilience, and sustainability of space activities in the Union (EU Space Act). According to the press release, the Act introduces a set of measures designed to make Europe’s space sector cleaner, safer, and more competitive, both within Europe and in export markets.

The EU Space Act aims to cut administrative burdens, protect space assets, and establish a fair and predictable environment for businesses. The three key pillars of the proposed Act include sustainability: operators will be required to assess and minimise the environmental impact of their space activities, while benefiting from support for innovation in emerging technologies such as in-orbit servicing and debris removal. The new rules would apply to both EU and national space assets, as well as to non-EU operators providing services in Europe. Regulatory requirements are intended to be proportionate, taking into account company size and maturity, and calibrated according to the associated risks.

The legislative proposal will be subject to the ordinary legislative procedure, which may take approximately 18 months.

EU: Commission publishes draft Implementing Regulation on the disclosure of information on unsold goods

On 12 June 2025, the European Commission published a consultation on a draft Implementing Regulation setting out the details and format for the disclosure of information on discarded unsold consumer products as required by the Ecodesign Regulation for Sustainable Products (ESPR).

The ESPR requires economic operators that discard unsold consumer products directly or have unsold consumer products discarded on their behalf to disclose certain information relating to the destruction (e.g., on the weight and number of the discarded products). The Implementing Regulation will specify the delimitation of the product types concerned, the format for the disclosure of information and how such information is to be verified. The consultation closes on 10 July 2025.

For more information on the ESPR, see our client briefing.

UK: FRC’s streamlined Stewardship Code 2026 redefines long-term sustainable value

The Financial Reporting Council (FRC) has finalised revisions to its UK Stewardship Code. The Stewardship Code 2026 will begin to take effect next year and aims to maintain high standards in relation to investments in a wide range of asset classes, including listed equities and private capital. At the same time, the new streamlined Code seeks to encourage competitiveness and growth by reducing reporting obligations for the investors, asset managers, and related service providers that choose to follow it. One of the key changes in the Code is an updated definition of what stewardship is for. This now emphasises the FRC’s view that it is for shareholders to decide what long-term sustainable value means for their own investments. This may, but does not need to, include the pursuit of environmental, social or governance benefits. For more information, see our blog post.

Webinar: Transition plans in focus

As part of London Climate Action Week, we ran a webinar discussing transition plans and what the evolving regulatory landscape looks like, including in the UK and under the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). We also looked at practical legal considerations, including alignment with broader strategies and communications and key legal issues to bear in mind when developing and preparing transition plans. Click here to watch the recording of our webinar.

Global: IFRS Foundation publishes guidance on transition plans

On 23 June 2025, the IFRS Foundation (which is responsible for the ISSB) published new guidance on disclosures about transition plans (see press release). The IFRS guidance builds on the disclosure-specific materials developed by the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024. The guidance is intended to support entities in applying IFRS S2 on Climate-related Disclosures. It is intended to help preparers determine what information is relevant to disclose regarding their strategy and goals related to their climate-related transition. The guidance does not add to or change the requirements in IFRS S2. Also, the guidance document does not provide guidance on the transition planning process – e.g. how to develop a transition plan. Importantly, IFRS S2 does not require a preparer to produce a transition plan if it does not yet have one or to publish a transition plan where it has one. What it requires is the disclosure of certain information about how the preparer is preparing to transition.

UK: Government consults on draft UK SRS, transition plans and sustainability assurance

On 25 June 2025, the UK government published three related consultations:

• The Department for Energy Security and Net Zero (DESNZ) published a consultation on transition plans.
• The Department for Business and Trade (DBT) published Exposure Drafts of the UK Sustainability Reporting Standards (UK SRS) for consultation. The UK SRS will implement the ISSB's sustainability disclosures standards (IFRS S1 and IFRS S2) into UK law.
• The DBT has also published a consultation on the government's proposal for greater regulatory oversight of third-party assurance services for sustainability-related financial disclosures.

See our blog posts for more information:

• UK consults on draft UK SRS: implementation of ISSB sustainability disclosure standards
• UK government consults on transition plans: keeping its options open
• UK government proposals for overseeing third-party assurance of sustainability related financial disclosures

Global trends in climate litigation

On 25 June 2025, the Grantham Research Institute on Climate Change and the Environment published its seventh annual ‘Global Trends in Climate Change Litigation: 2025 Snapshot’ Report. The report focuses on developments in global climate change litigation over the calendar year 2024 through to May 2025. Key takeaways include:

• Climate litigation continues to evolve and mature with more cases reaching highest level courts (i.e. supreme or constitutional courts). In 2024, claims were brought against a wider range of actors - including governments, companies, professional services firms and financial institutions - and concerned a diverse range of topics, including climate strategies, climate-washing, financed emissions and climate-related damage.
• Courts are increasingly recognising that companies may have responsibilities in relation to the consequences of their emissions but remain cautious about imposing on companies binding emissions reduction targets or plans.
• More strategic litigation is expected on the standard of care to which companies should be held, particularly in high emitting sectors in relation to their emissions, although these cases are likely to continue to face legal, procedural and evidentiary hurdles.

For more information, see our blog post.

EU Council sets fight against environmental crime as key priority for coming years

The EU Policy Cycle for organised and serious international crime (commonly known as the “European Multidisciplinary Platform Against Criminal Threats” or EMPACT) was launched by the EU Council in 2010. EMPACT works in four-year cycles. Each cycle starts with an EU Serious and Organised Crime Threat Assessment (EU SOCTA), which highlights the most pressing threats and serves as an input for the Council conclusions that define EU crime priorities. The 2025 EU SOCTA, drawn up by Europol, underpins the priorities for the 2026-2029 EMPACT cycle. It highlights seven key threats to EU’s internal security, including waste crimes. In line with the EU SOCTA, the Council has set, in conclusions issued on 13 June 2025, the fight against environmental crime as one of the key priorities of the next EMPACT cycle. The Council also calls on Member States, and Europol, to integrate the relevant actions developed within EMPACT into their security strategies and planning and allocate resources to support a common EU approach. For more information, see our blog post.

EU: uncertainty on withdrawal of the Green Claims Directive 

An European Commission spokesperson indicated during a daily press briefing on 20 June 2025 that the Commission intended to withdraw the legislative proposal for a Green Claims Directive. This announcement came after the European Parliament’s European People’s Party (EPP) requested the withdrawal of the proposal in a letter sent to Commissioner Jessica Roswall. Following the Commission’s announcement on its intention to withdraw the legislative proposal, the Council cancelled the third trilogue meeting scheduled for 23 June. The Parliament’s co-rapporteurs gave a press conference on 23 June where they confirmed that the Parliament remains ready to negotiate the file. Commission Executive Vice-President Teresa Ribera, responsible for a Clean, Just and Competitive Transition, clarified at a press conference on 25 June that the Commission has not officially withdrawn the Green Claims Directive, despite its previous announcement.

At Council level, there is now a blocking minority of EU countries, including Italy and Germany, against the previously agreed position of the Council, preventing negotiations from moving forward. We are following these developments closely and will be reporting on them on our blog.

Read our previous blog post for more information on the Commission proposal, and these blog posts here and here on the agreed positions of the Council and the Parliament before the start of their trilogue negotiations.

South Korea reintroduces human rights and environmental due diligence bill

South Korea’s “Legislative Bill for the Act on the Protection of Human Rights and the Environment for Sustainable Business Management” was reintroduced to the National Assembly on 13 June 2025 by Representative Jung Tae-ho (referred to as the Corporate Human Rights and Environmental Due Diligence Act (the Act)). The draft legislation was originally introduced in September 2023 (see our October 2023 ESG newsletter). The Act requires companies to identify and address potential adverse human rights and environmental impacts throughout their business operations and supply chains. If passed, it will require companies in-scope (including both domestic and certain foreign entities operating in South Korea) to conduct due diligence processes, report their findings, and potentially implement remedial measures. If passed, the Act would be Asia’s first mandatory human rights due diligence law. (** This newsletter is intended merely to highlight developments and is not intended to provide Korean law advice.)

Hong Kong SAR Government welcomes publication of the IFRS jurisdictional profiles

On 12 June 2025, the Hong Kong SAR Government welcomed the publication of jurisdictional profiles by the International Financial Reporting Standards Foundation, which confirms Hong Kong as among the initial set of jurisdictions having set a target of fully adopting the International Financial Reporting Standards - Sustainability Disclosure Standards (the ISSB Standards) (see press release). On 12 December 2024, the Hong Kong Institute of Certified Public Accountants published the Hong Kong Sustainability Disclosure Standards that are fully aligned with the ISSB Standards, with an effective date of 1 August 2025 (see our previous blog post) and on 10 December 2024, the Government launched the Roadmap on Sustainability Disclosure in Hong Kong (see our previous blog post).

Singapore consults on draft voluntary carbon market guidance

On 20 June 2025, the National Climate Change Secretariat, the Ministry of Trade and Industry, and Enterprise Singapore jointly issued draft guidance on how companies can voluntarily use carbon credits as part of a credible decarbonisation plan. The guidance is intended to be a live document to be updated as new information becomes available. It is not meant to provide exhaustive guidance on all aspects of using carbon credits but covers issues such as the need for carbon credits to have high environmental integrity and criteria to assess that; and that companies should prioritise all feasible abatement efforts before considering the use of credits to address remaining emissions. The guidance also covers the Article 6 mechanism and clarifies that “corresponding adjustments” do not apply to credits purchased by companies looking to meet their voluntary climate commitments as these credits are not counted towards Nationally Determined Contributions. The consultation closes on 20 July 2025.

Singapore, UK and Kenya launches first government alliance to restore confidence in the voluntary carbon market

A new coalition between Singapore, the United Kingdom, and Kenya (named “The Coalition to Grow Carbon Markets”) — launched during London Climate Action Week on 24 June, and is now joined by France, Panama and endorsed by Peru. This coalition seeks to grow and improve the global voluntary carbon market by encouraging companies to voluntarily buy carbon credits as part of their emission-cutting efforts. The Coalition to Grow Carbon Markets plans to release a document at the 2025 UN Climate Change Conference in November, outlining shared principles to guide businesses in their voluntary use of high-quality carbon credits.

Thailand issues the Thailand Taxonomy Phase 2

On 27 May 2025, the Thailand Taxonomy Board (which consists of 13 agencies from Thailand’s public and private sectors, notably, the Bank of Thailand (BOT), the Securities and Exchange Commission and the Thai Bankers’ Association) published Phase 2 of the Thailand Taxonomy (see BOT’s press release). The Thailand Taxonomy Phase 2 covers the following sectors: agriculture, construction and real estate, manufacturing, and waste management sectors. The Thailand Taxonomy Phase 2 follows the Thailand Taxonomy Phase 1, which focused on the energy and transportation sectors (see our September 2023 ESG newsletter).

China issues guidelines to advance market-based allocation of resources and environmental factors

On 29 May 2025, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued the Guideline on Improving the System for Market-based Allocation of Resources and Environmental Factors (Chinese language) (the Guideline). The Guideline sets out a roadmap to accelerate China’s green transition, with a focus on strengthening market mechanisms for carbon emission rights, water use rights, and pollutant discharge rights. Key reforms include optimising quota allocation, expanding the scope of tradable factors, strengthening trading mechanisms, and improving foundational capacities. Building on China’s green transition goals set in October 2022 (see our November 2022 ESG Newsletter), the Guideline aims to foster dynamic markets, better price-setting processes, and efficient flows of resources and environmental factors. The Guideline supports China’s vision to establish a comprehensive national trading system for carbon emission rights and water use rights, and a better well-functioning trading system for pollutant discharge rights by 2027.

China publishes national plan to strengthen climate change standards

On 30 May 2025, the Ministry of Ecology and Environment, together with 15 other government departments jointly published the Plan for Constructing a National Standard System for Addressing Climate Change (Chinese language) (the Plan). The Plan sets out a phased strategy to build a unified national system of climate standards, focusing first on the essential standards across sectors while progressively expanding the system’s scope and operability. The Plan aims to enhance inter-agency coordination for consistency and encourages participation in international standard-setting to enhance China’s global engagement. The Plan is structured around three key functional categories: basic capabilities, climate change mitigation, and climate change adaptation. Under these pillars, the Plan sets out 15 secondary and 45 tertiary standard categories to ensure comprehensive coverage of climate action priorities.

China launches nationwide hydrogen pilot to scale up commercial deployment

On 10 June 2025, China’s National Energy Administration announced a nationwide Pilot Programme for Hydrogen Energy in the Energy Sector (Chinese language) (the Programme) to scale up hydrogen technology, infrastructure, and applications across the nation. The Programme covers 11 specific areas across the hydrogen value chain, spanning four major categories: hydrogen production, hydrogen storage and transport, hydrogen application, and general support. Each pilot project is required to demonstrate technological progression, commercial potential, carbon reduction impact, and the ability to serve as a replicable industry model. The Programme targets comprehensive commercial deployment of the pilot projects by June 2028.

China releases draft application guidelines for corporate sustainability disclosure standards

On 23 June 2025, China’s Ministry of Finance released the Draft Application Guidelines for Corporate Sustainability Disclosure Standards (Chinese language) (the Guidelines) for public consultation. The Guidelines form part of China’s ongoing effort to develop a unified sustainability disclosure standards system, comprising three key components: Basic Standards, Specific Standards, and Application Guidelines. The Basic Standards, namely the Corporate Sustainability Disclosure Standards (Chinese language), were issued in December 2024 (see our February 2025 ESG Newsletter). The Guidelines serve as another pillar of the sustainability disclosure standards system, providing further clarifications and operational guidance, by explaining key concepts in the Basic Standards (such as value chains, reporting entities, information linkage and primary users of sustainability information) and setting out a framework for materiality assessment aligned with international standards. The principle of proportionality is also introduced by the Guidelines to ease reporting burdens, while further guidance is provided on the financial impacts of sustainability risks, resilience assessment, and disclosure of sustainability-related information. The public consultation is open until 18 July 2025.

UAE enacts new Climate Change Law

The United Arab Emirates (UAE) has enacted Federal Decree-Law No.11 of 2024, known as the Climate Change Law. The new Climate Change Law marks a pivotal moment in the nation's ambitious decarbonisation strategy and is a key element of the UAE's Net Zero 2050 Strategy, aiming to drastically reduce greenhouse gas emissions. The Climate Change Law introduces a sector-based framework that mandates businesses to measure, report, and reduce their emissions. For the first time, businesses have mandatory legal obligations to reduce their emissions and must regularly measure and report on their emissions, current and planned emission reduction measures and their expected results via a new online platform to be set up by the Ministry. Under new record-keeping obligations, businesses must hold records of emissions measure for a period of five years from the date of analysis. The new law applies to businesses operating onshore in the UAE and the free zones (including the Dubai International Financial Centre and the Abu Dhabi Global Market). Affected businesses must be compliant with their obligations under the Climate Change Law by May 2026, which is the end of the one-year transition period following the law coming into force in May 2025. Financial penalties for non-compliance may be imposed of up to AED2 million. Businesses engaged in activities that result in greenhouse gas emissions, both those in the private sector and Government-owned entities, need to understand and take steps to comply with the new obligations imposed on them by the Climate Change Law. The UAE is also paving the way for emissions trading, with the recent establishment of a National Register for Carbon Credits through Cabinet Resolution No. 67 of 2024. These developments promise to increase the pace of action towards decarbonisation in more energy intensive sectors.

Federal Agency Actions and Litigation

On 18 June 2025, the U.S. Supreme Court ruled by a 6-3 vote that Texas and a mineral owner could not challenge the Nuclear Regulatory Commission’s (NRC) approval of a temporary nuclear waste storage facility in Texas because they had not formally intervened in the NRC licensing process. The U.S. Supreme Court decided the matter on procedural grounds and avoided addressing whether the NRC has the authority, under federal law, to license such interim facilities. This decision reversed the Fifth Circuit's ruling, which had allowed the challenge and questioned the NRC’s legal authority to approve temporary storage sites under the Atomic Energy Act and Nuclear Waste Policy Act.

On 16 June 2025, the Department of the Interior’s Office of Surface Mining Reclamation and Enforcement issued a proposal to rescind the 2024 “10-Day Notice and Corrective Action” rule (2024 Rule), which governs how states and the federal government work together to oversee surface coal mining. The proposal is in direct response to President Trump’s executive order issued on 20 January 2025 titled “Unleashing American Energy”, which directed the Interior Secretary to take action to revise or rescind the 2024 Rule. The 2024 Rule had reversed a Trump administration 2020 rule that gave states more response time and restricted notices to site-specific violations. Public comments will be accepted on the proposal through July 16, 2025.

On 11 June 2025, the U.S. Environmental Protection Agency (EPA) announced two separate rulemaking proposals to rescind two major Biden administration Clean Air Act (CAA) rules: one to rescind a Biden administration rule that set greenhouse gas (GHG) emissions standards for power plants and another to rescind a Biden administration rule that updated the Mercury and Air Toxics Standards (MATS) in 2024 for power plants. In doing so, the EPA is proposing that power sector GHG emissions do not significantly endanger public health - meaning the CAA does not permit such regulation - and that previous approaches were overly burdensome, particularly on the coal industry. This move would roll back requirements for carbon dioxide reduction through measures like carbon capture and revert MATS to 2012 standards.

That same day, a New Jersey federal judge dismissed an amended lawsuit by an advocacy group seeking to block federal approvals of offshore wind project activities, claiming they harm marine life. The judge found that plaintiffs failed to demonstrate personal harm sufficient for legal standing, noting that their whale-watching experiences were insufficient to establish impact. The district court ruled that federal agencies had required developers to take steps to minimize harm to whales and other marine life and that several challenged permits were either short-term or expired, making them largely unreviewable. The judge also highlighted increased uncertainty about future offshore wind project approvals due to President Trump’s recent executive memorandum issued on 20 January 2025 titled “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects,” which halted new or renewed wind leases.

On 6 June 2025, the U.S. Department of Transportation (DOT) published a final interpretive rule titled “Resetting the Corporate Average Fuel Economy (CAFE) Program,” which explains that vehicle fuel economy standards set by the Biden administration were overly stringent because they improperly included electric vehicles in their calculations. The DOT explains that earlier standards exceeded statutory authority by factoring in the effects of electric, hydrogen, and other alternative fuel vehicles, as well as credit trading, which the DOT claims are explicitly prohibited under the Energy Policy and Conservation Act. Among other things, the rule identifies factors statutorily prohibited from consideration when setting maximum feasible fuel economy standards under applicable federal laws and describes the National Highway Traffic Safety Administration’s (NHTSA) authority to bring the CAFE program into compliance with applicable federal statutory requirements in accordance with President Trump’s recent executive order issued on 20 January 2025 titled “Unleashing American Energy.” Although the rule doesn’t change existing CAFE or medium- and heavy-duty standards, the NHTSA is now preparing to revise these standards for model years dating back to 2022.

On 5 June 2025, the DOI announced the allocation of $130 million under the Abandoned Mine Land Economic Revitalization Program to support states and tribes in redeveloping former coal mine sites. The funding enables eligible states and tribes to partner with community and economic development organizations to advance projects for energy infrastructure, manufacturing, recreation, and commercial redevelopment at legacy mining locations. Kentucky, Pennsylvania, and West Virginia will each receive $28.7 million; Alabama, Ohio, and Virginia will each get $11 million; and the Crow Tribe, Hopi Tribe, and Navajo Nation will receive $3.67 million each.

On 4 June 2025, DOT announced that it is preparing to withdraw nearly $4 billion in federal funding from the California high-speed rail project after a federal review found persistent delays, mismanagement, and rising costs, indicating “no viable path” to timely completion. The Federal Railroad Administration (FRA) concluded that the California High-Speed Rail Authority (CHSRA) had defaulted on grant terms, citing that the original 800-mile project is now reduced to a 171-mile stretch from Bakersfield to Merced, which may not be fully operational until 2034. The CHSRA has 37 days to respond before the grants may be terminated. CHSRA disputed the findings, asserting its commitment to the project and noting that most funding comes from the state, which has proposed $1 billion per year for the next two decades. The CHSRA pledged to formally respond to the FRA’s notice and defend its progress.

On 3 June 2025, a coalition of groups opposed to the Empire Wind offshore wind project near New York and New Jersey sued the Trump administration in New Jersey federal court, alleging that officials failed to justify its recent decision to lift a stop-work order on the project. Construction on Empire Wind, which was federally approved in early 2024, was halted in mid-April after President Trump called for an investigation into potential environmental and economic impacts. However, four weeks later, the U.S. Bureau of Ocean Energy Management (BOEM) allowed work to resume without explanation, which the plaintiffs claim violates the Administrative Procedure Act (APA). The plaintiffs allege that unresolved concerns about navigation, fisheries, and endangered whales, as well as the eligibility of the lease awarded to the sponsor of the project (a Norwegian company), remain unaddressed. The lawsuit seeks to restore the stop-work order and to void BOEM's lease to the sponsor.

On 2 June 2025, the DOI announced plans to rescind a 2024 Biden administration rule restricting fossil fuel production in Alaska’s 23-million-acre National Petroleum Reserve, asserting that the rule imposes undue barriers to energy development and exceeds the DOI’s statutory authority under the Naval Petroleum Reserves Production Act of 1976 (NPRPA). According to the announcement, the NPRPA, enacted during the 1970s oil crisis, was intended to foster competitive oil and gas leasing while protecting surface resources. Pursuant to the proposed rule rescission, the DOI would revert to the regulations in place prior to the 2024 Biden administration rule. The DOI made this announcement in alignment with President Trump’s recent executive orders issued on 20 January 2025 titled “Unleashing Alaska’s Extraordinary Resource Potential” and “Declaring a National Emergency.”

On 30 May 2025, the U.S. Department of Energy (DOE) announced it has rescinded $3.7 billion in funding for 24 clean energy projects issued by the Office of Clean Energy Demonstrations, including a prominent hydrogen initiative in Texas and several major carbon capture projects across the country. DOE Secretary Chris Wright explained that most of these awards, many granted late in the Biden administration, did not align with national energy needs, were deemed economically unviable, and would not generate adequate investment returns.

On 29 May 2025, the U.S. Supreme Court reversed the D.C. Circuit and upheld the federal government's approval of Uinta Basin Railway project intended to transport crude oil out of Utah's Uinta Basin. In doing so, the U.S. Supreme Court held that (1) courts are to give agencies substantial judicial deference in NEPA cases and should not micromanage agencies’ choices, such as scope, alternatives, and amount of detail, so long as they fall within a “broad zone of reasonableness”; and (2) NEPA does not require agencies to consider the environmental effects of upstream and downstream projects that are separate in time or place from the project in question. Further, an agency is not required to assess the environmental effects of separate projects simply because those projects and effects might not materialize but for the project at hand or are in some sense foreseeable. For more information see Linklaters’ client alert.

On 28 May 2025, the U.S. Department of Labor (DOL) informed the Fifth Circuit that it is initiating a new rulemaking to replace Biden administration regulations that permit retirement plan fiduciaries to consider environmental, social, and governance (ESG) factors - such as climate change and social justice - when selecting investments. This development follows a legal challenge by Utah and 24 other Republican-led states, who argue that the 2022 rule, which relaxed Trump-era ESG restrictions, violates federal administrative laws and the Employee Retirement Income Security Act. Although a Texas federal judge upheld the rule in September 2023, the Fifth Circuit vacated this decision in July 2024 in light of the U.S. Supreme Court's Loper Bright Enterprises v. Raimondo decision, which overturned the Chevron doctrine that had allowed federal agencies wide latitude in interpreting statutes. The DOL now promises to move quickly to revise the rule.

On 21 May 2025, the EPA issued guidance to states and tribes warning that their authority under Section 401 of the Clean Water Act (CWA) should be used strictly to ensure water quality compliance, not to veto or condition projects based on non-water-related concerns such as air quality, traffic, noise, project preference, or economic factors. EPA Administrator Lee Zeldin stated that some states had previously sought to use Section 401 to block energy, critical mineral, and infrastructure projects for reasons not grounded in the CWA. The memorandum clarified that decisions on certification must be tied directly to water quality considerations and made within a “reasonable period of time,” not exceeding one year. The EPA announced plans to publish a Federal Register notice and recommendations docket to address additional challenges and uncertainties with the 2023 Section 401 rule, which is currently subject to legal challenge by several Republican-led states and industry groups in Louisiana federal court. The litigation has been stayed while the EPA reviews the rule.

Presidential Actions and Litigation

On 16 June 2025, President Trump signed an executive order formalizing a trade deal between the U.S. and the United Kingdom. Under the agreement, the U.S. has agreed to cut tariffs from 25% to 10% on 100,000 imported British automobiles and auto parts while also removing tariffs on certain aerospace goods. In exchange, the U.K. has agreed to grant U.S. exporters - especially those in the agricultural sector-expedited access to British markets and has also agreed to future discussions on meeting American security requirements for steel and aluminum supply chains and negotiating “significantly preferential treatment” of British pharmaceuticals.

That same day, the nation’s largest association of lawyers sued numerous federal officials and departments in the U.S. District Court for the District of Columbia, alleging that the Trump administration has used the power of the executive office to “coerce lawyers and law firms to abandon clients, causes and policy positions” it opposes. The lawsuit specifically points out the administration’s use of executive orders, public statements, and other actions to create “pervasive fear” in the legal profession. This lawsuit comes after several victories by law firms seeking to overturn executive orders targeting them, which we covered in our April and June newsletters.

On 13 June 2025, Chinese and U.S. officials met to discuss frameworks for a “trade truce” that could benefit both countries. Announcing this framework on social media, President Trump revealed that the U.S. agreed to ease restrictions on Chinese student visas, among other things, in exchange for increased access to Chinese rare earth elements. In particular, President Trump’s announcement details that U.S. tariffs would be set at 55% on Chinese goods (up from 30%) while China's tariffs would remain at 10%. Importantly, however, this agreement is still subject to review by Presidents Trump and Xi.

On 6 June 2025, a split panel in the U.S. Court of Appeals for the Fourth Circuit blocked a South Carolina federal judge’s order restoring 32 congressionally funded grants that were frozen by the Trump administration. The Fourth Circuit held that the government was likely to succeed in its argument that the district court lacked subject matter jurisdiction over the plaintiffs’ claims. However, the decision did not address the merits of the Trump administration’s activities and noted that the stay would only be in effect while the case is on appeal.

On 30 May 2025, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit denied the government’s emergency motion to stay a federal injunction blocking President Trump’s executive order mandating large-scale staff reductions across federal agencies. The government has since asked the U.S. Supreme Court to intervene, arguing that the injunction interferes with “bedrock principles and other well-established doctrines”; however, plaintiffs - a coalition of labor unions, nonprofits and local governments - contend that the federal government is unlikely to succeed on the merits, the order likely exceeds President Trump’s constitutional and statutory authorities, and the public interest overwhelmingly disfavors a stay. Recently, the district judge who originally issued the injunction stated that planned staff reductions of the State Department would violate the order, noting that she is “not persuaded” by the government's assertion that the department's reorganization was planned before the order. The emergency motion is still pending.

That same day, the Trump administration revealed plans to use the DOE’s $400 billion green bank - originally targeted for elimination during Trump’s first term - to finance new loans for nuclear reactors, geothermal projects, and critical minerals as outlined in its fiscal year 2026 budget request. The plan prioritizes funding for small and advanced nuclear reactors that have faced market barriers, with the DOE seeking authorization for more than $67 billion in loan guarantees and other financial support over the next two fiscal years. Additionally, the administration requested $750 million for the costs associated with making these loans. The budget also proposes rescinding approximately $2.3 billion from the Advanced Technology Vehicles Manufacturing Direct Loan Program - after the program’s funds were already proposed to be cut in the “One Big Beautiful Bill Act” tax and spending bill passed in the House - effectively terminating the initiative, which previously provided a $465 million loan to Tesla in 2010 and expanded significantly under the Biden administration.

On 29 May 2025, a three-judge panel of the U.S. Court of International Trade struck down certain tariffs implemented by President Trump, stating that the International Emergency Economic Powers Act (IEEPA) does not impart “unbounded authority” on the president. The tariffs, which President Trump stated were implemented to deal with threats posed by international criminal cartels, set 25% duties on Mexican and Canadian products and 20% duties for Chinese products, as well as a lower 10% rate on Canadian energy and energy resources. However, the Court ruled that the law does not authorize “worldwide” or “retaliatory” tariffs. On 10 June 2025, the Court of Appeals for the Federal Circuit stayed this decision pending appeal, with oral argument scheduled for 31 July 2025.

That same day, the U.S. District Court for the District of Columbia similarly ruled in a separate tariffs lawsuit brought by various U.S. toymakers that the IEEPA does not empower the president to impose tariffs of this nature. Relying on the Court of International Trade’s decision, the Court stated that the “power to regulate is not the power to tax,” and “[t]he Constitution treats the power to regulate and the power to impose tariffs separately because they are not substitutes.” This decision has since been appealed by the Trump administration to the D.C. Circuit. However, the Federal Circuit’s stay (as described above) of the International Trade Court’s decision led to a stay in this case as well. This led to the plaintiff toymakers in this case to petition the U.S. Supreme Court to consider the appeal on a fast-track consideration basis before the D.C. Circuit could do so. However, on 20 June 2025, the U.S. Supreme Court denied the fast-track consideration request, and the appeal will remain pending before the D.C. Circuit first.

On 28 May 2025, the Council on Environmental Quality (CEQ) withdrew its Biden-era guidance directing federal agencies to consider climate change and environmental impacts in reviews conducted under NEPA. The CEQ stated that the guidance is “inconsistent with the objectives articulated” in President Trump’s “Unleashing American Energy” executive order.

Climate Change Litigation

On 29 May 2025, a group of 22 youths filed a lawsuit in the U.S. District Court for the District of Montana challenging President Trump’s recent executive orders that expand fossil fuel development and roll back climate policies, alleging violations of their constitutional rights. The complaint argues that President Trump’s orders - which declared a national energy emergency, accelerated fossil fuel permitting, and rescinded climate-focused measures - violate the youths’ Fifth Amendment rights to life and liberty, deliberately increase GHG emissions, and unlawfully override laws such as the CAA. Plaintiffs claim the orders exceed presidential authority and directly harm current and future generations, specifically citing policy changes affecting coal projects in Montana. The plaintiffs seek declaratory and injunctive relief.

Oil & Gas Litigation

On 3 June 2025, a New Mexico state appellate court dismissed a lawsuit alleging that the state failed to adequately control pollution caused during the extraction and production of oil and natural gas in violation of the New Mexico State Constitution. The Court found inter alia that pollution control policymaking is within the exclusive authority of the legislature and the relief plaintiffs seek in their complaint exceeds the boundary of that which the judiciary is authorized to grant.

Climate Disclosure Legislation and Regulations

On 12 June 2025, the U.S. Securities and Exchange Commission (SEC) withdrew over a dozen Biden-era rule proposals—including those on cybersecurity risk management, environmental disclosures, equity market reform, and enhanced requirements for funds marketed as ESG investments—as part of new Chair Paul Atkins’ effort to reshape the agency’s regulatory agenda. Among the withdrawn measures were “Regulation Best Execution,” an order competition rule for broker-dealers, and a proposal that would have required ESG-focused funds to disclose their portfolios’ GHG emissions and substantiate ESG-related claims, bringing U.S. regulation closer to European standards. These withdrawals reflect the deregulatory focus of the current administration, following prior decisions not to defend contested climate rules, and move the SEC toward what Atkins described as a “clean slate” and an innovation-friendly approach.

Among these rules, the SEC withdrew a long-proposed rule seeking to combat greenwashing in ESG funds. The so-called “Names Rule” was intended to apply to certain registered investment companies and business development companies, requiring that they could only use a name suggesting an investment focus in certain types of investments, industries, countries or geographic regions, or investments that have particular characteristics if, among other requirements, they have adopted policies to invest, under “normal circumstances,” at least 80% of the value of their assets in investments in accordance with the investment focus that the fund’s name suggests. However, following a six-month extension for compliance with the rule in April, the SEC officially stated that it does not intend to issue final rules with respect to these proposals and noted that any future regulatory action would be issued as a new proposed rule. Our Financial Regulation team previously covered the Names Rule in great detail, and the SEC’s previous extension was discussed in our ESG Newsletter April 2025.

On 12 June 2025, New York’s Senate failed to pass two major climate reporting bills - SB S3456 and SB S3697A, which closely mirrored California’s requirements - before the legislative session ended, despite Democrats holding a supermajority. After California adopted climate reporting requirements in 2023, expectations rose for other states to follow suit, especially after the SEC rolled back federal climate risk rules following the 2024 Trump election win. Advocates focused their efforts on Democrat-controlled states, particularly New York, given its economic influence and political alignment. However, this setback - mirrored in other states like Colorado - reflects a growing, bipartisan resistance to mandatory sustainability reporting at the state level, countering earlier assumptions that state legislation would offset federal rollbacks. Coupled with ongoing international debates and proposed rollbacks, particularly concerning the European Union’s Corporate Sustainability Reporting Directive (CSRD), these developments suggest California may remain isolated in mandating climate disclosures for the foreseeable future.

On 29 May 2025, the California Air Resources Board (CARB) affirmed statutory disclosure deadlines under SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act) during a virtual public workshop, where it announced it is working to publish regulations by the end of the year. This further delays the original 1 January 2025 deadline for CARB to adopt implementing regulations, which was extended to 1 July 2025 in September 2024 by an amendment bill (SB 219). However, CARB noted that there will be no delay in the following timelines for reporting disclosures: (1) Scope 1 and 2 disclosures required starting in 2026 for fiscal year 2025 and (2) Scope 3 emissions required in 2027 for fiscal year 2027. CARB also announced that there will be no penalties in 2026 for companies showing a good faith effort to comply with SB 253 and retain all data relevant to GHG emissions reporting for their prior fiscal year. It stated that companies may use existing data for initial 2026 emissions reports.

State Anti-ESG Actions

On 3 June 2025, the Texas Comptroller’s office removed BlackRock from its list of companies subject to divestment for "boycotting energy companies" after BlackRock exited climate-focused investment groups and updated its energy investment policies. This list was created as part of an anti-environmental, social and governance (ESG) movement, which has gained traction in Republican-led states since 2022, with Texas at the forefront due to its role as the largest net energy supplier in the United States. Texas law mandates that the Comptroller must regularly update this list and allows companies 90 days to cease boycotting energy companies to avoid divestment by state entities. Although BlackRock was initially included on the 2022 list, the Texas Comptroller welcomed its eventual policy changes, including withdrawal from the Net Zero Asset Managers initiative and a reduction in oil and gas investment restrictions, crediting Texas’s leadership for a “monumental shift” in the sector. Now, 15 companies (notably major international banks and asset managers) remain on the list, along with hundreds of specific funds. BlackRock thanked the Comptroller for the resolution and highlighted its continued significant investment in Texas’s economy.

DEI Developments and Litigation

On 16 June 2025, a federal judge in the U.S. District Court for the District of Massachusetts delivered an oral ruling blocking the National Institutes of Health (NIH) from terminating hundreds of grant programs to universities, hospitals, and other organizations. The action stemmed from a lawsuit filed by sixteen states, which alleged that the Defendants unlawfully delayed grant application reviews and ended previously approved grants, in violation of the Constitution and the APA. In his remarks on the record, the judge noted that he had never encountered such “palpable” racial and LGBTQ discrimination by the government, and criticized the NIH for relying on unsupported, conclusory statements when justifying the cancellation of grants connected to vaccines, transgender issues, diversity and inclusion, COVID-19, and climate change. This decision was formalized in a court order dated 23 June 2025.

On 5 June 2025, the U.S. Supreme Court issued a landmark decision removing evidentiary barriers for majority group member plaintiffs in discrimination lawsuits. Prior to this ruling, majority-group member plaintiffs were required to make an additional showing that their employer is an “unusual employer who discriminates against the majority.” However, the Court’s unanimous decision clarifies that plaintiffs who are not discrete and insular minorities are not subject to heightened pleading standards under Title VII - stating that the language of the law applies to all individuals without a majority/minority distinction.

On 19 May 2025, the U.S. Department of Justice announced the establishment of the Civil Rights Fraud Initiative, which aims to utilize the False Claims Act to investigate and prosecute recipients of federal funds that “knowingly violate federal civil rights laws.” This includes policies that promote anti-Semitism and “illegal DEI,” which the U.S. Equal Employment Opportunity Commission outlined earlier this year.

Greenwashing Litigation

On 6 June 2025, a three-judge panel in the U.S. Court of Appeals for the Sixth Circuit revived drivers’ claims alleging that an American automotive manufacturer and a German engineering and technology company deceptively marketed certain vehicles as environmentally friendly. While the plaintiffs’ claims were originally dismissed due to federal preemption, the Sixth Circuit stated that the remaining claims may proceed if they are based on theories existing independently of the EPA’s emissions standards. This eight-year long case will be remanded back to federal district court in Michigan to determine whether such an independent basis exists.

On 28 May 2025, consumers filed putative class action lawsuits in California, Illinois, Massachusetts, Minnesota, and New York federal courts alleging that a multinational consumer goods corporation deceptively marketed its commitment to environmental causes. The complaints allege that the defendant’s messaging implied that its products were environmentally responsible and utilized conservationist methods in their production, when in reality they contribute to “forest degradation,” misleading use of environmentally focused certifications, and clearcutting practices. The plaintiffs seek class certification, injunctive relief, as well as restitution, compensatory damages, punitive damages, disgorgement, and attorneys’ fees.

EPA Litigation

On 20 June 2025, the U.S. Supreme Court reversed a D.C. Circuit decision in a case brought by fuel producers challenging EPA’s approval of California California's CAA waivers that require automakers to increase electric vehicle production and reduce production of gasoline-powered vehicles with a goal of decreasing fuel emissions. The D.C. Circuit held that the fuel producers lacked Article III standing, finding that they failed to satisfy redressability by establishing that automakers would likely respond to invalidation of the regulations by producing fewer electric vehicles and more gasoline powered vehicles. SCOTUS disagreed, holding that the fuel producers do have Article III standing and have demonstrated injury, causation, and redressability by showing that decreased purchases of fuel for gasoline-powered vehicles resulting from California’s regulations constitutes monetary injury and invalidating the regulations would therefore likely result in more revenue from additional fuel sales.

On 18 June 2025, the U.S. Supreme Court clarified in a decision that disputes under the CAA, if they claim to have nationwide effect, should be heard only in the D.C. Circuit, rather than regional circuit courts. This decision comes from cases initiated by small refiners against EPA for denying biofuel waivers.

That same day, the U.S. Supreme Court clarified that state-level disputes over ozone air quality standards belong in regional circuit courts. This decision comes from a case against EPA by Utah and Oklahoma over the rejection of their ozone control plans.

On 17 June 2025, the U.S. District Court for the District of Maryland ruled that EPA exceeded its authority and acted arbitrarily in terminating certain “environmental and climate justice block grants” without providing a reasoned explanation beyond a shift in administrative priorities away from “environmental justice.” The judge found that EPA’s blanket termination letters, which used generic language untethered to the circumstances of the affected groups, violated the APA by lacking proper justification for reversing established policy directed by Congress. The three affected environmental organizations had already committed substantial efforts and subgrants under these programs before EPA abruptly halted funding in February. The judge vacated the grant terminations and remanded the matter to EPA for further review but denied a permanent injunction, stressing that EPA’s decision directly conflicted with congressional mandates to fund environmental justice projects.

On 12 June 2025, environmental groups sued President Trump in U.S. District Court for the District of Columbia over his decision to exempt 68 coal-fired power plants in 23 states from the stricter 2024 MATS rule. The groups argue that the president lacked legal authority under the CAA to issue the exemptions, since Section 112(i)(4) only allows such action if the required pollution control technology is unavailable and national security is at stake - neither of which, they claim, was demonstrated. The groups allege the exemption was instead a political favor aimed at deregulating the coal industry.

That same day, California and 10 other states sued the Trump administration in U.S. District Court for the Northern District of California shortly after he signed resolutions repealing California's CAA waivers, which allowed the state to set its own stringent vehicle emissions standards. The complaint alleges that the actions were unconstitutional, irrational, and politically motivated. The states claim the administration and Congress unlawfully targeted three EPA-approved waivers for zero-emission vehicle mandates and stricter nitrogen oxide standards by invoking the Congressional Review Act, which they argue does not apply to state waivers but only to federal rules. The lawsuit, which criticizes the move as a retaliatory and unprecedented attack on state authority, seeks to void the resolutions and maintain California’s authority to regulate vehicle emissions.

On 21 May 2025, the U.S. Court of Appeals for the Fifth Circuit dismissed a challenge brought by several environmental groups against EPA’s decision to approve Louisiana's request for primary enforcement responsibility (“primacy”) of carbon sequestration wells, finding the groups lacked standing due to insufficient evidence of imminent injury. The panel held that the groups' claims about potential harms from Louisiana’s management of Class VI injection wells were too speculative and noted that neither organizational nor associational standing had been established, as any alleged reallocation of resources did not amount to direct interference with core activities. The panel emphasized that possible economic, health, property, or recreational harms cited by the groups required too much guesswork to link directly to EPA decision.

UK sustainability disclosure regimes in a state of flux: read our publication

UK sustainability disclosure regimes: focus on climate transition plans: read our publication

Unlocking the Potential of Carbon Capture in the Energy Transition: read our publication 

A timeline of UK and EU sustainable finance regulation: read our publication