Practice News:
- Leah Malone and Matt Feehily, Sustainability and ESG Partners, and Counsel Emily Holland published an alert, “EU Omnibus Proposals: Key Impacts on CSRD, CSDDD, Taxonomy Regulation and CBAM,” on March 5.
- Leah Malone, Matt Feehily and Emily Holland hosted a webinar on March 6 to discuss the EU Omnibus Proposals. To view the recording, see here, and to review the accompanying slide deck see here.
- Emily Holland moderated the Fund for Peace’s Human Rights and Business Roundtable, focusing on Heightened Human Rights Due Diligence (hHRDD) and Indigenous Peoples and Mining, on March 6.
- Matt Feehily quoted in Global Water Intelligence article, “What is left of the EU’s water reporting framework?,” on March 13.
Upcoming Events:
- Matt Feehily and Emily Holland to present, 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 register, see here.
- Matt Feehily and Emily Holland to present to the Ethical Trading Initiative on EU sustainability regulatory developments on March 20.
- Leah Malone to speak at PwC’s 2025 Proxy Season Webcast on March 24. To register, see here.
- Emily Holland to present to Georgetown University Law Center’s Global Law Scholars on April 4 on the field of Business & Human Rights and key regulatory developments.
Americas
SEC Issues Updated Guidance on Section 13(d), Section 13(g) and Regulation 13D-G
On February 11, the SEC’s Division of Corporate Finance published updated guidance in the form of a compliance and disclosure interpretation on the Securities Exchange Act of 1934 (the Act) Sections 13(d) and 13(g) and Regulation 13D-G beneficial ownership reporting. The new guidance could impact an institutional investor’s ability to disclose its holdings in a short-form Schedule 13G filing, rather than on the long-form Schedule 13D filing, based on its engagement practices. Notably, the guidance provides that the short-form 13G filing may be unavailable to a shareholder that either: (i) recommends that the issuer make governance-related changes, change its executive compensation practices, or undertake specific actions on a social, environmental, or political policy and, as a means of pressuring the issuer to adopt the recommendation, explicitly or implicitly conditions its support of one or more of the issuer’s director nominees at the next director election on the issuer’s adoption of its recommendation; or (ii) discusses with management its voting policy on a particular topic and, to apply pressure, states or implies that it will not support one or more of the issuer’s director nominees unless management makes changes to align with the shareholder’s expectations.
Wyoming Senate Anti-ESG Bill Targeting State Funds and Pecuniary Investments Set to Become Law
On March 6, the Wyoming Senate enrolled Senate Bill 191 (SB 191), a measure requiring state fiduciaries to base fiduciary decisions solely on “pecuniary factors,” defined broadly as those “that have been prudently determined and are expected to have a positive effect on the risk‑adjusted return of investments, based on appropriate investment horizons consistent with the objectives of the applicable funds and investment policies while adhering to compliance, statutory and regulatory guidance,” and excluding factors in furtherance or ESG, political or ideological interests. SB 191 entrusts the Wyoming state treasurer and retirement board to change policies, vote proxies to force change, and divest or replace investment partners, managers or vendors with “competitive alternatives” in order to ensure all fiduciary decisions are based on pecuniary factors. The bill will now be presented to the governor for signature. For information on enacted anti- and pro-ESG laws in U.S. states, see our Battlegrounds alert, updated monthly.
Texas Judge Rules in Favor of Biden Administration Labor Department ESG Fiduciary Rule
On February 14, the U.S. District Court for the Northern District of Texas ruled in favor of the Biden administration Department of Labor’s “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” regulation, which allows fiduciaries to consider ESG and other collateral factors as a tiebreaker. The judge found that the regulation does not violate the Employment Retirement Income Security Act (ERISA) of 1974, because it “never allows fiduciaries to stray from exclusively achieving financial benefits for beneficiaries alone.” Additionally, the judge ruled that the Biden administration’s guidance is still valid under the Loper Bright ruling, which overturned Chevron. The Department of Labor rule was initially challenged by a coalition of 26 Republican-led states arguing that the regulation ran afoul of ERISA and exceeded the Labor Department’s statutory authority. The Northern Texas decision will likely be appealed, and it is unlikely that the Labor Department, under the new administration, will defend or enforce the rule.
Maryland Court Issues Preliminary Injunction on President Trump’s Private-Sector DEI Executive Orders
On February 21, the U.S. District Court for the District of Maryland issued a preliminary injunction enjoining provisions of two DEI-related executive orders, Executive Order 14151 and Executive Order 14173. The lawsuit was brought by the National Association of Diversity in Higher Education and other plaintiffs that argue provisions within the orders violate the First and Fifth Amendments and the separation of powers clause of the U.S. Constitution. The judge ruled that the plaintiffs were likely to succeed on their First and Fifth Amendment claims and granted a preliminary injunction on those grounds without addressing the other claim. On March 3, the court denied President Trump and his administration’s request to stay or narrow the preliminary injunction, and on March 10 clarified the scope of preliminary injunction to apply to President Trump and all federal executive branch agencies, departments, and commissions.
U.S. Senators Introduce Bill Targeting CSDDD
On March 12, U.S. Sen. Bill Hagerty and Rep. Andy Barr introduced the PROTECT USA Act of 2025 in the U.S. Senate, which would prohibit certain U.S. entities from complying with any foreign sustainability due diligence regulation, including the Corporate Sustainability Due Diligence Directive (CSDDD), prohibit adverse action against covered entities for action or inaction related to the bill, and establish a private right of action for aggrieved entities to bring civil actions. The bill excludes from its scope compliance with any foreign law, regulation or legal instrument that is substantively similar to a law, regulation or legal instrument adopted or approved by an Act of Congress, contains carveouts (for compliance with U.S. law or ordinary business activities), and establishes a petition and review process led by the U.S. President.
U.S. States and Agencies Express Concerns on CSRD and CSDDD
On February 25, officials from 21 states sent a letter to President Trump requesting an investigation into the EU's Corporate Sustainability Reporting Directive (CSRD), the EU Corporate Sustainability Due Diligence Directive (CSDDD), and the European Green Deal overall, along with a request that President Trump consider the impact of these laws as part of any overarching EU trade initiatives. On February 27, Senate Banking Committee Chairman Tim Scott and four other GOP lawmakers voiced concerns regarding CSDDD on competitiveness grounds in a letter to the Department of the Treasury and National Economic Council, urging the administration to support European calls to indefinitely pause CSDDD. The letter also asserts that CSDDD’s extraterritorial application is untenable and detrimental to global productivity, and advocates for the removal of CSDDD’s civil liability provision, and clarification that U.S. companies are not bound by net zero transition plans akin to those imposed on EU firms.
U.S. Representative Denounces the United Nations Sustainable Development Goals
On March 4, the U.S. Minister Counselor to the United Nations Economic and Social Council (ECOSOC) Edward Heartney delivered remarks at the 58th Plenary Meeting of the UN General Assembly “reject[ing] and denounce[ing]” support of Agenda 2030 and the Sustainable Development Goals (SDGs). The Minister Counselor stated that “Although framed in neutral language, Agenda 2030 and the SDGs advance a program of soft global governance that is inconsistent with U.S. sovereignty and adverse to the rights and interests of Americans,” and that the U.S. “will no longer reaffirm them as a matter of course.”
California Climate-Disclosure Information Solicitation Comment Deadline Approaches
On March 21, the comment period for responding to the California Air Resource Board’s (CARB) information solicitation on the implementation of the California climate-disclosure statutes SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Greenhouse gases: climate-related financial risk) will close. Under SBs 253, 261 and 219 (amending SBs 253 and 261), CARB must promulgate implementing regulations by July 1, 2025, six months ahead of the first reporting period for in-scope entities. For additional information on the California climate disclosure laws, please see our previous alert.
Office of the Comptroller of the Currency Exits Central Bank Climate Coalition
On February 11, the U.S. Office of the Comptroller of the Currency (OCC) announced its departure from the Network of Central Banks and Supervisors for Greening the Financial System. Acting Comptroller of the Currency Rodney E. Hood stated that “participation in the Network of Central Banks and Supervisors for Greening the Financial System extends well beyond the OCC’s statutory responsibilities and does not align with our regulatory mandate.” The OCC’s departure follows exits by the U.S. Federal Reserve Board, Federal Deposit Insurance Corporation and U.S. Treasury Department in January.
Canada’s Department of Finance Proposes Diversity-Related Regulations for Federally Regulated Financial Institutions
On February 15, Canada’s Department of Finance initiated a 30-day consultation seeking comments on draft regulations for distributing banks and bank holding companies, federally-regulated trust and loan companies and insurance companies and insurance holding companies requiring mandatory reporting on the diversity of senior management. The regulations, if made, would require covered companies to disclose required information to their owners (e.g. shareholders) about the representation of women, Indigenous (First Nations, Inuit and Métis) peoples, persons with disabilities and members of visible minorities in senior management positions. Covered companies will also be required to disclose their policies and targets respecting diversity in senior management and the board of directors for each designated group or explain why they do not have a policy and targets.
Information provided by contributing law firm: Gowling WLG
Implementation of ESG Listing Rules Issued by the Brazilian Securities and Exchange Commission and Brazilian Stock Exchange
On August 19, 2023, the Brazilian Securities and Exchange Commission (CVM) and the Brazilian Stock Exchange (B3) implemented new requirements under listing rules, imposing compliance with ESG standards going into effect for the year ended in 2025 and applicable to all companies listed in the B3. Affected companies will have to address certain ESG-related topics, including board and executive committee diversity and the appointment and compensation of members, in their annual reports due by the end of May 2026.
Uruguayan Ministry of Agriculture Issues No-Deforestation Certificate Requirement
The Uruguayan Ministry of Agriculture has launched, through the National Forestry Agency (DGF), a mechanism for the issuance of a free No-Deforestation Certificate to help cattle, soy and wood producers comply with EU Directive 2023/1115. The certificate identifies the plot number of the property, states whether the plot is or is not a no-deforestation plot of land, and is valid for 30 days.
Information provided by contributing law firm: Guyer & Regules
EU/U.K.
EU Commission Publishes Long-Awaited Omnibus Proposals to Simplify EU Sustainability Reporting
On February 26, the EU Commission released its Omnibus Proposals, which aim to simplify the EU’s sustainability reporting requirements; namely, the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), Taxonomy Regulation and Carbon Border Adjustment Mechanism (CBAM), among others. The Omnibus package includes proposed directives which would (i) delay the application of CSRD by two years for EU companies not yet in scope and CSDDD by one year for companies due to be in scope for the first wave of compliance; and (ii) amend the scope of CSRD and the substance of obligations under CSDDD. The Omnibus package also includes proposed regulations to simplify the Taxonomy Regulation and introduce a new de minimis exemption from CBAM. The proposals on CSRD, CSDDD and CBAM will now be considered by the European Council and Parliament and are subject to amendments, as part of the EU’s ordinary legislative process, while the Taxonomy Delegated regulation is open for public consultation until March 26, following which it will be adopted by the Commission. On March 10, the first public debate on the Omnibus Proposals took place in the EU Parliament. On April 1, Members of Parliament will vote on a request for an urgent procedure to consider the proposals to delay the application of CSRD and CSDDD. For a more in-depth look at the Omnibus Proposals, see our alert and view our recent webinar.
FCA Delays Publication of Final Rules on Applying SDR to Portfolio Managers
On February 14, the U.K. Financial Conduct Authority (FCA) announced that it no longer plans to publish final rules on extending the Sustainability Disclosure Requirements (SDR) regime to portfolio management in Q2 2025. The FCA held a consultation (CP24/8) on the rules in April 2024, and already postponed the publication of the initial results that were previously expected to be published in H2 2024. In its announcement, the FCA noted that it wants “to ensure an extension of SDR to portfolio management delivers good outcomes for consumers” and, therefore, “will take the necessary time to deliver these outcomes.”
FCA Publishes Letter on Diversity & Inclusion
On March 12, the FCA published a letter to the U.K. Treasury Select Committee noting that, following a joint consultation with the Prudential Regulation Authority in September 2023, the parties concluded that diversity and inclusion can deliver “improved governance, decision making and risk management” as well as support regulated firms’ competitiveness by ensuring they access the widest pool of talent. The FCA further stated that it does not currently plan to publish new rules on diversity and inclusion and will, instead, continue to support voluntary initiatives.
France Adopts PFAS Ban in Consumer Products
On February 27, France adopted a new law aimed at reducing the public exposure to per- and polyfluoroalkyl substances (PFAS) in certain consumer uses, joining Denmark in proposing an internal measure banning PFAS in consumer products. The bill, published in France’s official journal on February 28, bans the manufacture, import, export, and marketing of footwear, cosmetics, consumer textiles, and ski wax containing PFAS from 2026; adds PFAS to the list of substances monitored in drinking water in France; and imposes fees on companies for PFAS emitted into the environment. The process to adopt an EU-wide PFAS restriction covering a broad range of uses is still ongoing.
Germany Issues Additional Guidance on Supply Chain Due Diligence
In February 2025, the German Federal Office for Economic Affairs and Export Control (BAFA) issued new FAQs on risk analysis and prioritization (available in German here) under Germany’s Corporate Due Diligence Obligations in Supply Chains Act (LkSG). The FAQ describes a four-step approach to risk analysis, involving (1) developing an understanding of procure processes, supply chain relationships, internal responsibilities, structure of direct suppliers and groups of people who may be affected by business activities; (2) conducting a general risk assessment of industries and geographies in which the company operates and sources products from; (3) concrete risk assessment, applying results from the general risk assessment to its suppliers and (4) prioritizing risks. The FAQ also provides information on what suppliers should be included in a risk assessment and how Germany will monitor compliance with risk approaches in supply chain due diligence.
EU/U.K.
EU Commission Publishes Long-Awaited Omnibus Proposals to Simplify EU Sustainability Reporting
On February 26, the EU Commission released its Omnibus Proposals, which aim to simplify the EU’s sustainability reporting requirements; namely, the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), Taxonomy Regulation and Carbon Border Adjustment Mechanism (CBAM), among others. The Omnibus package includes proposed directives which would (i) delay the application of CSRD by two years for EU companies not yet in scope and CSDDD by one year for companies due to be in scope for the first wave of compliance; and (ii) amend the scope of CSRD and the substance of obligations under CSDDD. The Omnibus package also includes proposed regulations to simplify the Taxonomy Regulation and introduce a new de minimis exemption from CBAM. The proposals on CSRD, CSDDD and CBAM will now be considered by the European Council and Parliament and are subject to amendments, as part of the EU’s ordinary legislative process, while the Taxonomy Delegated regulation is open for public consultation until March 26, following which it will be adopted by the Commission. On March 10, the first public debate on the Omnibus Proposals took place in the EU Parliament. On April 1, Members of Parliament will vote on a request for an urgent procedure to consider the proposals to delay the application of CSRD and CSDDD. For a more in-depth look at the Omnibus Proposals, see our alert and view our recent webinar.
FCA Delays Publication of Final Rules on Applying SDR to Portfolio Managers
On February 14, the U.K. Financial Conduct Authority (FCA) announced that it no longer plans to publish final rules on extending the Sustainability Disclosure Requirements (SDR) regime to portfolio management in Q2 2025. The FCA held a consultation (CP24/8) on the rules in April 2024, and already postponed the publication of the initial results that were previously expected to be published in H2 2024. In its announcement, the FCA noted that it wants “to ensure an extension of SDR to portfolio management delivers good outcomes for consumers” and, therefore, “will take the necessary time to deliver these outcomes.”
FCA Publishes Letter on Diversity & Inclusion
On March 12, the FCA published a letter to the U.K. Treasury Select Committee noting that, following a joint consultation with the Prudential Regulation Authority in September 2023, the parties concluded that diversity and inclusion can deliver “improved governance, decision making and risk management” as well as support regulated firms’ competitiveness by ensuring they access the widest pool of talent. The FCA further stated that it does not currently plan to publish new rules on diversity and inclusion and will, instead, continue to support voluntary initiatives.
France Adopts PFAS Ban in Consumer Products
On February 27, France adopted a new law aimed at reducing the public exposure to per- and polyfluoroalkyl substances (PFAS) in certain consumer uses, joining Denmark in proposing an internal measure banning PFAS in consumer products. The bill, published in France’s official journal on February 28, bans the manufacture, import, export, and marketing of footwear, cosmetics, consumer textiles, and ski wax containing PFAS from 2026; adds PFAS to the list of substances monitored in drinking water in France; and imposes fees on companies for PFAS emitted into the environment. The process to adopt an EU-wide PFAS restriction covering a broad range of uses is still ongoing.
Germany Issues Additional Guidance on Supply Chain Due Diligence
In February 2025, the German Federal Office for Economic Affairs and Export Control (BAFA) issued new FAQs on risk analysis and prioritization (available in German here) under Germany’s Corporate Due Diligence Obligations in Supply Chains Act (LkSG). The FAQ describes a four-step approach to risk analysis, involving (1) developing an understanding of procure processes, supply chain relationships, internal responsibilities, structure of direct suppliers and groups of people who may be affected by business activities; (2) conducting a general risk assessment of industries and geographies in which the company operates and sources products from; (3) concrete risk assessment, applying results from the general risk assessment to its suppliers and (4) prioritizing risks. The FAQ also provides information on what suppliers should be included in a risk assessment and how Germany will monitor compliance with risk approaches in supply chain due diligence.
AMEA
Australian Competition and Consumer Commission Announces Annual Compliance and Enforcement Priorities
On February 20, the Australian Competition and Consumer Commission (ACCC) announced its Compliance and Enforcement priorities for 2025-2026, which include environmental claims regarding greenwashing and anti-competition concerns relating to sustainability coordination. The Compliance and Enforcement priorities document emphasizes that the ACCC has a particular and long-term focus on anti-competitive behavior, and discusses the variety of mechanisms the ACCC may use for enforcement, including administrative resolution, infringement notices, Section 87B enforceable undertakings and litigation.
Chinese Ministry of Finance Releases Green Bond Framework
On February 20, China’s Ministry of Finance (MOF) released the People’s Republic of China Sovereign Green Bond Framework (Framework). Aligned with China’s commitment of carbon peaking by 2030 and carbon neutrality by 2060, the Framework directs bond proceeds to finance the defined eligible green expenditures under the clean transportation, sustainable water management, land resource and marine ecosystem protection, pollution control, and resource recycling. Proceeds are managed by the MOF, fully allocated within 3 fiscal years, prioritizing at least 50% within the first and the second fiscal year. Annual disclosures on proceeds allocation and environmental impacts are mandatory. The Framework is verified by third-party audits for its compliance with China’s Green Bond Principles and ICMA’s Green Bond Principles. The initiative aims to attract global ESG capital and strengthen China’s leadership in sustainable finance, exemplified by plans to debut RMB-denominated green sovereign bonds in London in 2025.
Information provided by contributing law firm: Global Law Office
Hong Kong Publishes Circular on Enhancing Disclosure Requirements for ESG Constituent Funds
On February 24, Hong Kong’s Mandatory Provident Fund Schemes Authority published a circular providing guidance to mandatory provident fund (MPF) trustees on enhanced disclosure requirements for ESG constituent funds (CF). The enhanced disclosure requirements cover: (i) name of ESG CF, (ii) disclosure in MPF scheme brochures, (iii) disclosure of additional information, and (iv) periodic assessment and disclosure.
Japanese Government Adopts Carbon Emissions Trading Bill, Now Moves to National Diet
On February 25, the Japanese Cabinet moved forward a bill requiring companies that emit more than 100,000 metric tons of C02 to participate in a carbon emissions trading scheme. It is expected that this obligation will capture 300-400 companies, including those in high-emissions industries such as steelmaking. The bill will now be submitted to the National Diet of Japan, and if approved will become law, with companies subject to the quota expected to be required to trade carbon emissions from fiscal year 2027. The trading market will be operated by the public-private “GX Acceleration Agency.” Under this system, companies will be allocated annual emission allowances by the government, and those that emit less than their allowance may sell surplus emissions units to the market. Those exceeding their allowance must buy additional emissions units from the market. Companies that fail to purchase additional units for excessive emissions shall be required to pay a surcharge of 10% on top of the maximum trading price in the market.
Standards
IIGCC Publishes Climate Resilience Investment Framework Consultation
On March 4, the Institutional Investors Group on Climate Change launched a consultation on the Climate Resilience Investment Framework (CRIF), which aims to complement the Net Zero Investment Framework, to encourage more investors to consider climate risk as part of their investment strategies. CRIF outlines the benefits of managing the physical risks of climate change from a financial materiality perspective and encourages a shift in focus from passively assessing environmental impacts to actively incorporating climate resilience into investment strategies. The CRIF also incorporates the TCFD, TNFD and ISSB, in an attempt to enhance accountability in managing physical climate risks.
Contributing Law Firm Information