Practice News:
- Leah Malone, Sustainability and ESG Partner, Toby Chun and Carleigh Rodriguez, Co-Heads of Environmental Practice, and Emily Holland, Sustainability and ESG Counsel, published an alert on April 10, “New Executive Order Targets State and Local Climate and Sustainability Laws.”
- Leah Malone and Matt Feehily, Sustainability and ESG Partner, and Emily Holland’s alert, EU Omnibus Proposals: Key Impacts on CSRD, CSDDD, Taxonomy Regulation and CBAM, was published in The Corporate Governance Advisor.
- Leah Malone, Matt Feehily and Emily Holland published an alert providing an update on the EU Omnibus, “European Parliament Approves Delay to CSRD and CSDDD,” on April 3.
- Emily Holland presented on a webinar with Sphera and Trellis Group on April 1, Linking Supplier Data and Corporate Sustainability in an Omnibus World. To view the recording, see here.
- Leah Malone spoke at PwC’s 2025 Proxy Season Webcast on March 24. To view the recording, see here.
- Matt Feehily and Emily Holland presented, in partnership with Sphera, All eyes on the Omnibus: The impact on the CSRD, CSDDD and the future of sustainability reporting, on March 19. For more information and to view the recording, see here.
Upcoming Events:
- Emily Holland to speak at the ABA Business Law Section Spring Meeting 2025 on a panel addressing EU, U.S. and state-level legislative and litigation developments on April 26.
- Emily Holland to speak on Sustainability & ESG regulatory developments at the Trellis Sustainability Communicators meeting on May 13.
- Leah Malone to moderate panel at the 13th Private Equity New York Forum entitled “Sustainable Investing: Strategies for Long-Term Success” on May 14. For more information and to register, see here.
Upcoming Reporting Deadlines:
- May 31: U.S. Conflict Minerals Rule filings for calendar year 2024 due.
- May 31: Reporting deadline for Canadian Fighting Against Forced Labor and Child Labor in Supply Chains Act reports.
- June 30: Australian Modern Slavery Act, Swiss Conflict Minerals and Child Labor Due Diligence and Reporting, and Norwegian Transparency Act reports due.
Americas
White House Issues Executive Order Targeting State and Local Climate and Sustainability Laws
On April 8, President Trump signed an Executive Order directing the U.S. Attorney General to review and take enforcement action against state and local laws which “burden[] the identification, development, siting, production, or use of domestic energy resources” and are, or could be, “unconstitutional, preempted by Federal law, or otherwise unenforceable,” with a particular focus on laws addressing climate change, environmental justice, carbon or greenhouse gas emissions, carbon penalties or taxes and environmental, social and governance. For additional information on this Executive Order, see our alert.
SEC Votes to End Defense of Climate Rules
On March 27, the U.S. Securities and Exchange Commission voted to end its defense of the agency’s final rules requiring disclosure of climate-related risks and greenhouse gas (GHG) emissions (Rules) and notified the Eight Circuit of the withdrawal of its defense. The Rules, adopted by the SEC on March 6, 2024, have faced numerous legal challenges consolidated in the Eight Circuit, where plaintiff states have now filed a motion for abeyance.
SEC Extends Deadlines for Compliance With Amended Names Rule
On March 14, the SEC extended the deadlines for compliance with amendments to the Investment Company Act “Names Rule” (Rule 35d-1) by six months. The amendments, adopted in September 2023, expanded the scope of Names Rule to apply to funds whose names indicate the funds focus on investments with particular characteristics, to include ESG-focused funds. With the extension, larger fund groups will have until June 11, 2026, to comply (from December 11, 2025) and smaller fund groups will have until December 11, 2026, (from June 11, 2026). For additional information on the 2023 Names Rule amendments, see our client memo here.
Following the extension announcement, the U.S. House of Representatives’ Financial Services Committee issued a letter to SEC Chairman Uyeda requesting that the SEC withdraw a number of its final and proposed rules, including the Names Rule and proposed rule on Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices.
Bill Prohibiting CSDDD Compliance Introduced in U.S. Congress
On March 12, Senator Bill Hagerty introduced the Prevent Regulatory Overreach from Turning Essential Companies into Targets (PROTECT USA) Act of 2025 (S 985) in the U.S. Senate. The bill would prohibit “entities integral to the national interests of the United States,” which would include federal contractors and U.S. companies deriving revenue from certain sectors such as production of raw materials, from complying with foreign sustainability due diligence regulations including the EU Corporate Sustainability Due Diligence Directive (CSDDD). Under the proposed bill, violators would be subject to a civil penalty of up to $1M USD and may be ineligible to submit bids for Federal contracts for up to three years.
U.S. Embassies Send Letters to European Companies on DEI Executive Order
On March 28, staff of the U.S. Embassy in Paris sent letters to several French companies warning them that President Trump’s rollback of DEI initiatives could also apply to companies outside of the U.S., citing to Executive Order 14173 and its request that all companies certify compliance with applicable federal anti-discrimination laws. French companies were asked to certify, sign and return the certification form within five days. France’s Ministry of Foreign Trade and French Economy Ministry have spoken out, calling the letters “unacceptable U.S. interference.” Similar letters have been sent to companies in other European countries such as Italy, Belgium and Spain.
OCC Ends Climate-Related Financial Risk Guidance for Large Banks
On March 31, the Office of the Comptroller of Currency (OCC) announced its withdrawal from participation in the interagency principles for climate-related financial risk management for large financial institutions stating that the principles are “overly burdensome and duplicative.” The principles were originally released in October 2023 in collaboration with the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System. The principles provide a high-level framework focusing on six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement and reporting; and scenario analysis. The OCC removed its web page dedicated to climate-related financial risks.
Peru Institute Launches New ESG Framework
On March 26, the National Institute of Quality (INACAL) approved the new Peruvian Sectoral Agreement “ASP-IWA 48:2025. ESG. 1st Edition.” This framework provides strategic guidelines for integrating sustainable practices into organizational culture, promoting transparency and competitiveness in the business sector, as well as a set of principles to guide organizations in the measurement, management, and reporting of ESG aspects. Its objective is to ensure the consistency, comparability, and reliability of ESG reports worldwide and aligned with international standards.
Information provided by contributing law firm: Cuatrecasas
EU/U.K.
European Parliament and Council Approve CSRD and CSDDD “Stop-the-Clock” Directive
On March 26 and April 3, the European Council and European Parliament respectively approved the “stop-the-clock” Directive, as proposed by the European Commission in its February Omnibus proposals, delaying the implementation of the second and third waves of reporting under the Corporate Sustainability Reporting Directive (CSRD) by two years (to 2027 and 2028) and the first wave of the application of the Corporate Sustainability Due Diligence Directive (CSDDD) by one year (to 2028). The legislative bodies will finalize the “stop-the-clock” Directive which will enter into force once it has been published in the Official Journal and will require Member States to transpose the delay provisions into national law by December 31, 2025. For additional information on the Parliament’s “stop-the-clock” vote and the Commission’s Omnibus proposals please see our previous alerts here and here.
EU Commission Issues Letter to EFRAG on CSRD-Related Amendments
On March 27, the European Commission sent a letter to the European Financial Reporting Advisory Group (EFRAG) mandating it to provide technical advice to the European Commission by October 31, 2025 regarding the Commission’s proposal (part of the Omnibus proposal discussed above) to adopt a delegated act simplifying the European Sustainability Reporting Standards (ESRS) under CSRD. In its letter, the Commission referred to its Omnibus proposal and emphasized that EFRAG should focus on the following priorities: (i) substantially reducing the number of mandatory ESRS datapoints; (ii) clarifying unclear provisions and (iii) providing clearer instructions on applying the double materiality principle. In particular, the Commission noted its desire to reduce the risk that “assurance service providers inadvertently encourage undertakings to report information that is not necessary or dedicate excessive resources to the materiality assessment process.” EFRAG is expected to inform the Commission by April 15 about its internal timeline and work plan to deliver the requested advice.
ESMA Publishes Fund Names Guidelines Compliance Table
On March 19, the European Securities Markets Authority (ESMA) published a table setting out which European competent authorities have complied, intend to comply or do not comply with ESMA’s Guidelines on funds’ names using ESG or sustainability-related terms. All European competent authorities have indicated that they comply or intend to comply, with the sole exception of the Czech National Bank, which has expressed that it holds the view that it lacks a sufficient legal basis to apply the requirements introduced by the Guidelines. ESMA has reiterated that national regulators are required to make every effort to comply. The Guidelines began to apply from November 21, 2024 and require funds that use ESG-, transition-, impact-, or sustainability-related terms in their names to adhere to certain quantitative criteria. For additional information on the requirements under the Guidelines, please see our previous alert.
EU Platform on Sustainable Finance Updates Handbook of Climate Transition and Paris-Aligned Benchmarks
On March 28, the EU Platform on Sustainable Finance published an updated version of its Handbook of Climate Transition Benchmarks and Paris-Aligned Benchmarks, supplementing responses to frequently asked questions (FAQs) regarding the EU Climate Transition Benchmark (CTB) and EU Paris Aligned Benchmark (PAB), and the benchmarks’ disclosure guidance on environmental, social or governance (ESG) issues. The CTB and PAB were introduced by way of amendment to the EU Benchmark Regulation, which sets out minimum requirements for administrators of such benchmarks. The Handbook covers the following topics in relation to the benchmarks: (i) clarifying the 7% reduction trajectory; (ii) terminology; (iii) anti-greenwashing measures; (iv) data sources and data estimation techniques; (v) classifications and (vi) ESG disclosure matters.
U.K. Proposes Mandatory Ethnicity and Disability Pay Gap Reporting
On March 18, the U.K. government launched an open consultation seeking views on a proposal to introduce mandatory annual ethnicity and disability pay gap reporting for large employers (defined as those with 250 or more employees) as part of the upcoming Equality (Race and Disability) Bill. Since 2017, large employers in the U.K. have been required to report gender pay gap data. The proposals seek to introduce a similar level of transparency with respect to ethnicity and disability pay gap data in the U.K. The consultation asks stakeholders for their views on specific questions regarding the proposals.
U.K. Home Office Updates Statutory Guidance on Modern Slavery: Transparency in Supply Chains
On March 27, the U.K. Home Office updated its statutory guidance for entities in scope of the U.K. Modern Slavery Act which are required to produce an annual slavery and human trafficking statement. The Guidance provides stronger expectations for in-scope business to prevent, identify and remediate modern slavery across their businesses and supply chains. The Guidance includes granular recommendations on specific policies and procedures, stakeholder engagement, grievance mechanisms, remediation, and example level 1 and level 2 disclosures, and seeks to integrate further with existing international frameworks with respect to the narrow set of human rights that the MSA focuses on.
Germany Moves to Strike Supply Chain Due Diligence Act
On April 9, the future governing parties in Germany published its coalition agreement, which foresees, among other things, the abolition of the German Supply Chain Due Diligence Act (LkSG) and its replacement by a “Law on International Corporate Responsibility.” This new law would aim to implement the EU’s CSDDD in a manner that is “bureaucratically efficient and enforcement-friendly.” Until the introduction of this new law, violations of the due diligence obligations under the LkSG will not to be sanctioned, except in the case of “severe human rights violations.” Furthermore, the coalition agreement specifies that the reporting obligations under the LkSG are to be “immediately” abolished. This suggests that, in the first step, the reporting requirement will be repealed, while the LkSG will remain in force until the new law implementing CSDDD comes into effect.
Information provided by contributing law firm: Gleiss Lutz
AMEA
China Securities Regulatory Commission Releases Administrative Measures on Listed Company Disclosures
On March 26, the China Securities Regulatory Commission released amended Administrative Measures on Information Disclosure by Listed Companies, including a reference to ESG disclosure for the first time. The new Measures require that listed companies release ESG reports in accordance with relevant stock exchange rules.
Information provided by contributing law firm: Global Law Office
Chinese National Certification and Accreditation Administration Releases Carbon Footprint Labeling Rules
On March 17, the National Certification and Accreditation Administration released the General Implementation Rules for Product Carbon Footprint Labeling Certification (Trial). This is China’s first standardized framework of carbon footprint labeling certification, defining the applicable product scope, verification and validation procedures and label design. The carbon footprint label features a green "footprint" icon, quantified emissions data, and a QR code linking to detailed certification information, enabling transparency on product carbon data.
Information provided by contributing law firm: Global Law Office
Japan’s SSBJ Issues ISSB-aligned Sustainability Disclosure Standards
On March 5, the Sustainability Board of Japan (SSBJ) issued sustainability disclosure standards designed to be compatible with the ISSB’s international IFRS standards. The standards are made up of three key disclosure frameworks: (i) the Application Standard, which provides for basic sustainability reporting requirements, tracking IFRS S1; (ii) the General Standard, which covers sustainability risk and opportunities, aligned with IFRS S1 and (iii) Climate-related Disclosures, which provides guidelines for climate disclosures, mirroring IFRS S2.
The SSBJ standards can be voluntarily applied beginning in fiscal years ending after March 31, 2026, and will become mandatory for the largest companies (measured by market cap) beginning with fiscal years ending March 31, 2027, with further phase-in over the following two years. The timing for full application to all Tokyo Stock Exchange Prime Market listings is yet to be determined.
Australian Securities & Investments Commission Releases Regulatory Guide for Sustainability Reports
On March 31, the Australian Securities & Investments Commission (ASIC) announced the release of its new Regulatory Guide 280 (RG 280) for companies required to prepare a sustainability report (under Ch 2M of the Corporations Act) containing climate-related financial information under Australia’s new mandatory climate reporting law. To improve the quality, consistency and comparability of climate-related financial disclosures to enable users of that information to make informed decisions, RG280 provides reporting entities with information regarding (i) the preparation of the sustainability report; (ii) specific issues about the contents of the sustainability report; (iii) sustainability-related financial disclosures outside the sustainability report; and (iv) ASIC’s administration of the sustainability reporting requirements, including its review of sustainability reports and the exercise of its relief powers.
Australian Association of National Advertisers Environmental Claims Code Enters Into Force
On March 1, the Australian Association of National Advertisers’ (AANA) new Environmental Claims Code came into force, setting new rigorous standards for environmental and sustainability claims in advertising to increase public trust in marketing communications. Under the Code, an “Environmental Claim” is any message that gives the impression that an industry, business, product, or service has a neutral or positive impact on the environment, is less environmentally harmful than alternatives, or has specific environmental benefits. Among the Code’s five rules, the first mandates that Environmental Claims must be truthful and factual, considering the overall impression created by the claim within its overall advertising context. Additionally, Environmental Claims must be substantiated and verifiable by evidence at the time made; advertisers must use clear, specific language and include important limitations or qualifications; advertisers cannot exaggerate an environmental benefit or understate an environmental harm; and if an Environmental Claim relates to aspirational targets or goals, the claim must be based reasonable grounds, as shown by verifiable data and clear plans for such goal.
Standards
STBi Releases Draft Revised Corporate Net-Zero Standard for Consultation
On March 18, the Science Based Targets initiative (SBTi) published an initial draft of its revised Corporate Net-Zero Standard for public consultation. The draft standards seek to introduce flexibility for net-zero target setting, focus on direct suppliers and emissions-intensive sectors, increase opportunities to scale carbon removal technologies and introduces interim carbon removal targets. Businesses will also be required to track and communicate progress against targets. The SBTi will provide a transition pathway allowing companies to set near-term targets for 2030 under the current version of the Corporate Net-Zero Standard (V1.2) and Near-Term Criteria (V5.2) in 2025 and 2026. Companies would be expected to apply the new standards from 2027. The deadline to respond to the consultation is June 1.
GRI Issues Draft Reporting Standards for Banking, Capital Markets and Insurance Sectors
On March 5, the Global Reporting Initiative (GRI) released exposure drafts for three sector-specific reporting standards—for banking, capital markets and insurance—which will open for public comment until May 31. The sector-specific standards aim to promote consistency and comparability of sustainability reporting, and are aligned with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, the Paris Climate Agreement and the Kunming-Montral Biodiversity Protocol. GRI will be hosting webinars on the proposed standards on March 25 and March 27.
B Lab Publishes New Standards for B Corp Certification
On April 8, B Lab Corporation published new standards for companies verified to meet B Lab’s standard of social and environmental performance, transparency and accountability, receiving B Corp Certification. The new standards introduce requirements that all certified B Corps must meet across seven “Impact Topics,” covering areas related to governance, climate, human rights, employment, stewardship, justice and equality and incorporate data and methodologies from other certification schemes and international frameworks, including GRI, SBTi and Fairtrade. Certified B Corps will be required to demonstrate continuous improvement over time, including 3- and 5-year milestones. B Corps with a recertification date in 2025 may use the old standards (Version 6), provided they submit by June 30, and companies recertifying in 2026 will receive a 12-month extension to their recertification due date.
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