ESG Newsletter – February 2026

ESG Legal Outlook 2026                                              

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Energy & Infrastructure Legal Outlook 2026 webinar

Join us for the third session in our exclusive Energy Transition Webinar Series as we explore the Energy & Infrastructure Legal Outlook 2026 and what it means for those shaping and investing in the energy transition. On Tuesday 10 February our panel of experts will explore the latest global developments across key markets, highlighting the legal and regulatory changes to watch in 2026 and beyond.

Register here 

EU Omnibus I: CSRD and CS3D amendments finalised: what do you need to know?

The European Parliament and Council have formally approved the provisional political agreement that was reached on 9 December 2025 on the changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D or CSDDD) under the Omnibus I package. This will now need to be published in the Official Journal of the EU and will enter into force on the 20th day after publication. For a summary of the main changes to those regimes and key takeaways, see our blog post and watch our video.

EU: Commission publishes Environmental Omnibus

On 10 December 2025, the European Commission published the Environmental Omnibus containing six legislative proposals to simplify environmental legislation in the areas of industrial emissions, circular economy, environmental assessments and geospatial data. The aim of the changes is to reduce administrative burden and cut red tape for businesses while maintaining existing environmental objectives and standards. For more information, see our blog post. 

EU: Two elements of Defence Readiness Omnibus published in Official Journal of the EU

The European Commission adopted the Defence Readiness Omnibus in June 2025. The package included a Commission Notice on the application of the sustainable finance framework and the Corporate Sustainability Due Diligence Directive (CSDDD) to the defence sector. The aim of the Notice is to prevent any undue discrimination of the sector in investment decisions and ensure a better understanding and recognition of the sector's potential to contribute to social sustainability, in line with the objectives of the European defence industrial strategy and the Joint White Paper for European Defence Readiness 2030. The Commission Notice was published in the Official Journal of the EU on 30 December 2025. 

As part of the Defence Readiness Omnibus, the Commission also approved a Delegated Regulation containing modification of Delegated Regulation (EU) 2020/1818 on sustainable finance benchmarks. It clarified that only companies involved in prohibited weapons must be considered in the context of the Paris-Aligned and Climate Transition Benchmark exclusions. The Delegated Regulation was published in the Official Journal of the EU on 30 December 2025 and will apply from 30 June 2026. 

For more information on the Defence Readiness Omnibus, see our blog post. 

Global: ISSB publishes targeted amendments to climate disclosure standard IFRS S2

On 11 December 2025, the International Sustainability Standards Board (ISSB) published targeted amendments to its climate disclosure standard, in response to challenges to the application of IFRS S2 raised by stakeholders (see ISSB press release). This follows a consultation process launched in April 2025 (see our previous ESG newsletter). 

The amendments relate to the application of GHG emissions disclosure requirements in IFRS S2, including: 

• clarifying that an entity is permitted to limit measurement and disclosure of Scope 3 Category 15 GHG emissions to financed emissions as defined in IFRS S2; 

• permitting the use of alternative classification systems - beyond the Global Industry Classification Standard - to disaggregate information about financed emissions; 

• clarifying the availability of the jurisdictional relief from using the GHG Protocol Standard, if only part of an entity is required to use a different method for measuring GHG emissions; and

• introducing a jurisdictional relief from using global warming potential values from the latest IPCC Assessment Report for converting GHG emissions.

The amendment relating to the measurement and disclosure of Scope 3 category 15 GHG emissions clarifies that an entity is permitted to limit its measurement and disclosure of Category 15 GHG emissions to financed emissions – being those emissions attributed to “loans and investments” made by the entity to investees or counterparties. For an entity that participates in asset management activities, financed emissions include GHG emissions attributed to assets under management. This indicates that facilitated emissions that are associated with investment banking activities, and insurance-associated emissions that are associated with insurance and reinsurance underwriting activities are not required to be reported. The amendment also clarifies that companies may exclude GHG emissions attributable to derivatives from their reported Scope 3 financed emissions. 

The amendments are effective for reporting periods beginning on or after 1 January 2027, with early application permitted. 

The ISSB has also issued consequential amendments to align financed emissions metrics in three SASB Standards with the corresponding amended requirements in IFRS S2. 

For more information on the ISSB standards, see our Quick Guide: Key Sustainability Disclosure Regimes: ISSB standards.

EU: Delegated act on simplifying Taxonomy Reporting published in the Official Journal

The Commission’s Delegated Act on simplifying the application of the EU Taxonomy Regulation was published in the Official Journal of the EU on 8 January 2026. The Delegated Act, which amends the Taxonomy Disclosures, Climate and Environmental Delegated Acts under the EU Taxonomy Regulation was adopted by the Commission on 4 July 2025. The changes to reporting include the introduction of a materiality threshold and changes to the reporting templates. The changes to the technical screening criteria include changes to the “do no significant harm” (DNSH) criteria with regard to the environmental objective of preventing and reducing pollution. For more information, see our blog post. 

UK: FCA consults on changes to Listing Rules to cater for UK SRS 

On 30 January 2026, the Financial Conduct Authority (FCA) launched a consultation on changes to the Listing Rules to reflect the forthcoming UK Sustainability Reporting Standards (UK SRS) which will replace existing TCFD based rules. The UK SRS are based on the ISSB's sustainability disclosure standards (IFRS S1 and S2) with some minor modifications. The FCA is proposing to mandate climate disclosures (in line with UK SRS 2) from 2027, with the exception of Scope 3 emissions, which would be required on a “comply or explain” basis from 2028. Non-climate-related sustainability disclosures (in line with UK SRS 1) would be on a “comply or explain” basis from 2029. Also, in-scope companies would be required to disclose whether they have published a transition plan and if not, the reason why. The consultation closes on 20 March and the FCA aims to publish a Policy Statement in autumn 2026, with the rules coming into force from 1 January 2027.  For more information, see our blog post. 

UK corporate reporting 2025/26: recent developments and guidance for listed companies

We have published our annual reporting guide for UK listed companies, which summarises recent developments and guidance from regulators and investors to help UK listed companies prepare their 2025/26 annual reports. It includes sections on climate reporting and corporate governance, as well as a section on developments that will affect reporting in the near future, including UK sustainability reporting standards and transition plans. 

EU: How to talk about ESG integration and ESG exclusions according to ESMA anti-greenwashing guidance note

ESMA has published its second anti-greenwashing guidance note for asset managers – “Thematic note on clear, fair & not misleading sustainability-related claims”. The note is designed to promote clarity in sustainability-related communications. It focuses on ESG strategies, and in particular the way references to ESG integration and ESG exclusions are often described and communicated to investors. For more information, see our blog post. 

EU: European Supervisory Authorities finalise guidelines on how to integrate ESG risks into financial stress tests for banks and insurers

On 8 January 2026, the European Supervisory Authorities (ESAs) published their final report on joint guidelines on ESG stress testing. The guidelines provide national insurance and banking supervisors with guidance on designing ESG-inclusive stress tests and outline the necessary organisational and governance arrangements. They do not introduce new requirements for competent authorities to carry out ESG-focused supervisory stress tests. The ESAs consultated on a draft version of the guidelines in June 2025 (see our previous blog post).  The guidelines will apply from 1 January 2027. 

EU: More steps forward in a key year for the EU ESG Rating Regulation: processes for fees and fines

The European Commission has published two draft Delegated Regulations which supplement the EU ESG Rating Regulation (ERR). These focus on fees charged to, and fines and penalty payments imposed on, ESG rating providers by ESMA. The deadline for feedback on both draft Delegated Regulations is 13 February 2026. The European Commission expects to adopt both Delegated Regulations during Q1 2026. For more information, see our blog post. 

UK PRA updates expectations on climate-related risks

On 3 December 2025, the Prudential Regulation Authority (PRA) published a policy statement (PS25/25) confirming changes to its supervisory statement SS3/19 on enhancing banks’ and insurers’ approaches to managing climate-related risks, having consulted on these changes in April 2025. The final policy builds on the PRA’s previous expectations, set out in SS3/19, providing greater clarity and detail, and to bring the expectations up to date with international standards and developments in the understanding of climate-related risks since 2019. The PRA says that the overall sentiment of the responses it received to its April 2025 consultation was supportive. In response to the feedback it received, the PRA has made some changes to its final policy in several areas, including the proportionate application of the expectations and the role and application of scenario analysis and reverse stress testing. The final policy replaces SS3/19 in its entirety and a new supervisory statement, SS5/25, took effect on 3 December 2025. For more information, see our blog post. 

ESG Legal Outlook 2026

ESG continues to evolve amid changing economic conditions and geopolitical uncertainty, as regulatory expectations become more detailed and enforcement activity intensifies. Our 2026 Outlook highlights five key themes driving the ESG legal landscape across major markets in 2026. We explore what these themes mean in practice for companies and financial institutions, including how evolving ESG risks and opportunities are shaping strategy, disclosure, governance and risk management. See our ESG Legal Outlook 2026 for key global themes set to shape the legal landscape for ESG in the coming year. 

EU: Commission launches plastics circularity pilot ahead of 2026 Circular Economy Act

On 23 December 2025, the European Commission published a Communication entitled  “Accelerating Europe’s transition to a circular economy: a pilot for boosting the circularity of plastics”. The Communication sets out measures to tackle the immediate crisis in the plastics recycling sector and to test approaches that will later be scaled up under a forthcoming Circular Economy Act in 2026. It responds to very low circularity rates, declining recycling capacity, unfair competition from cheap imports (often mislabelled as recycled), and the forthcoming ban on plastic waste exports to non‑OECD countries under the EU waste shipment rules.

Key regulatory initiatives include a draft Implementing Regulation laying down rules for the application of the Waste Framework Directive 2008/98/EC, which sets out criteria to determine when plastic waste ceases to be waste. It aims to achieve a well‑functioning single market for secondary raw materials through a single, harmonised set of end‑of‑waste criteria and their uniform application in the EU. The draft regulation was published for public feedback, which closed on 26 January 2026.

The Commission has also published a call for evidence to evaluate the impact of the 2019 Single-Use Plastics Directive and determine whether a review is needed. The Directive aims to prevent and reduce the impact of certain plastic products on the marine environment and on human health. In addition, the Commission plans to amend the Regulation on recycled plastic materials and articles intended to come into contact with food to tighten documentation for recycled food‑contact plastics, create separate customs codes for recyclates, and re‑launch the Circular Plastics Alliance with a joint 2026 workplan, alongside a high‑level dialogue on the circularity of plastics involving Member States.

EU: Commission proposes to extend CBAM scope and adopts implementing legislation

On 17 December 2025, the Commission published a proposal for a Regulation to further amend the Carbon Border Adjustment Mechanism (CBAM). Under the proposal, the CBAM scope would be expanded from 1 January 2028 to include 180 additional downstream products with a high steel or aluminium content, in order to address residual carbon leakage risks. The overwhelming majority (94%) of the additional downstream products are intermediate industrial goods with a substantial steel and aluminium share (on average 79%), typically used in heavy machinery and specialised equipment, for example base metal fittings, cylinders, industrial radiators or casting machines. A small fraction (6%) of the products concerned consists of household goods. The Regulation would also introduce additional anti-circumvention provisions and refine the technical rules on how emissions are attributed to electricity. The Commission’s proposal now needs to be negotiated and adopted by the European Parliament and the Council under the ordinary legislative procedure. In addition, in November – December 2025, the European Commission also adopted several implementing acts, clarifying how the CBAM applies from 1 January 2026. For more information, see our blog post. 

UK nuclear regulatory reform: Taskforce recommendations and implications for investors

The Nuclear Regulatory Taskforce, commissioned by the UK’s Prime Minister and led by John Fingleton, an economist and former chief executive of the Office of Fair Trading, has published its final report, proposing reforms to the UK nuclear regulatory framework. The Taskforce’s proposals include establishing a unified Commission for Nuclear Regulation and addressing regulatory fragmentation, siting restrictions, environmental consenting and legal challenge risk. See our blog post for an analysis focusing on several of the changes proposed which have direct implications for investment decisions and project economics.

UK: What’s next for the CfD? Looking ahead to AR8

The results of the seventh renewable contract for difference auction round (AR7) in January 2026 delivered the biggest single procurement of offshore wind energy in British and European history, according to government figures. 8.4GW of offshore wind capacity was secured at a strike price of just below an average of £91/MWh for fixed-bottom projects and £216/MWh for floating projects, in each case indexed over the 20-year life of the contract. The success of AR7 represents a hugely positive milestone for the UK’s offshore wind industry, which is rejuvenating. With three times the secured capacity eligible to enter AR7, the sector has also demonstrated its competitive strength and attractiveness for investors. Looking ahead to AR8, the government is consulting on proposals to shore up investor confidence as the CfD adapts to increasingly large and complex clean energy projects. The proposals focus on changes to improve the efficiency of the scheme, further enable innovative technologies and provide increased clarity on obligations and enforcement mechanisms in the CfD Standard T&Cs. For more information, see our blog post. 

EU: Changes to Deforestation Regulation published in the Official Journal

Following political agreement reached by the European Parliament and the Council on 4 December 2025,  the Regulation on postponement and targeted revision of the EU Deforestation Regulation (EUDR) was published in the Official Journal of the EU. The Regulation provides for a one-year postponement of the application of the EUDR for all operators, until 30 December 2026 for medium and large operators and 30 June 2027 for micro and small operators. It also contains certain simplification measures, including limiting the requirement to submit due diligence statements only to operators first placing products on the market and possibility for micro and small primary operators to replace the geolocation information with the postal address of the plots of land or establishment concerned.  For more information, see our blog post. 

UK: IASC report proposes new measures to strengthen human rights and forced labour framework

The UK Independent Anti-Slavery Commissioner (IASC) published a new report in December 2025 on strengthening the UK’s forced labour and human rights legislative framework, including “model legislative drafting”, which could bring significant change to the UK business and human rights landscape. One of the IASC's proposal is the creation of a failure to prevent offence linked to serious human rights harms. This would include a reasonable due diligence defence and would apply to a broad range of companies, with the scoping test based on the current Modern Slavery Act 2015 with its £36m turnover threshold. As well as a new due diligence regime, the proposal includes a ban on the export, import or making available of forced labour products (i.e., those made or transported with forced labour, including intermingled goods). For more information, see our blog post. 

Thailand’s cabinet approves in principle the Climate Change Bill

On 2 December 2025, Thailand’s cabinet approved in principle (Thai language) the proposed Climate Change Bill (the CC Bill). The CC Bill still requires further approvals from parliament to become law and could be revised. As an overview, the CC Bill has been developed by the Ministry of Natural Resources and Environment (the Ministry) and aims to establish a comprehensive framework to support Thailand’s climate change goals.

Key elements of the CC Bill which are relevant to companies in the private sector are (i) the disclosure and reporting obligations, notably in respect of quantity of greenhouse gas (GHG) emissions, with penalties for failure to report GHG emissions data and for submitting false reports, where secondary legislations will be passed to identify companies that will be subject to such reporting requirements, (ii) the establishment of the Climate Change Fund, under which companies undertaking emission-reduction projects may seek financial assistance in the form of loans; and (iii) the framework of Thailand’s carbon pricing instruments, namely emissions trading scheme (ETS), carbon tax and carbon credits together with the introduction of the Carbon Border Adjustment Mechanism (CBAM),  modelled on the European Union’s CBAM, which will need to be further clarified and supplemented by secondary legislation aimed to be passed between 2026 – 2028. 

Interestingly, the CC Bill suggests that qualified voluntary carbon market (VCM) credits will be capable of being used to meet a portion of an in-scope company’s compliance obligation under the ETS - the pilot phase of which is currently expected to be launched in 2029.

After the CC Bill becomes law there is still the need for significant secondary legislation to be developed before it starts to affect businesses. The Ministry intends to further engage with stakeholders in respect of the secondary legislation to be enacted. 

Singapore: SGX RegCo and ISCA jointly develop roadmap to help listed companies meet SGX's climate reporting timelines

Singapore Exchange Regulation (SGX RegCo) and the Institute of Singapore Chartered Accountants (ISCA) have jointly developed a roadmap to navgiate SGX's climate reporting timelines (the Roadmap). 

In August 2025, SGX RegCo and the Accounting and Corporate Regulatory Authority extended the timelines for implementing climate reporting requirements, to support listed companies and large non-listed companies in developing reporting capabilities. Under the revised timeline, issuers outside the Straits Times Index (STI) are still required to issue climate-related disclosures (CRD). However, they now only need to report Scope 1 and 2 greenhouse gas (GHG) emissions from FY2025. Non-STI constituent issuers with a market capitalisation of S$1 billion and above will be required to report CRD beyond Scope 1 and Scope 2 GHG emissions based on the ISSB Standards from FY2028, save for Scope 3 GHG emissions (which will be voluntary until further notice). The remaining non-STI constituents (i.e. those with a market capitalisation of less than S$1 billion) will be required to follow suit from FY2030. 

The Roadmap aims to support non-STI constituent issuers in meeting the relevant timelines by FY2028, i.e. within the next three years. Non-STI constituents that have until FY2030 may adapt the Roadmap for their own use, although they are encouraged to adopt it earlier. As most issuers have already substantially adopted the TCFD recommendations, the Roadmap suggests how a non-STI constituent which has already adopted the TCFD recommendations may implement the climate related requirements of the ISSB Standards.

To this end, the Roadmap outlines the key incremental disclosures required for issuers to build on their TCFD-aligned CRD to comply with the requirements in the ISSB Standards, as a guiding reference to support their transition to the ISSB requirements. Issuers are encouraged to first perform a gap analysis of the current state of their disclosures and the required ISSB disclosures and adapt the Roadmap based on their specific circumstances to guide progress. They should also consider preparing a full mock up of ISSB aligned CRD to assist its gap analysis. 

The Roadmap is also intended as a reference for the board of directors or board committees to assess the progress made by listed issuers in their CRD within each subsequent sustainability report to meet the climate-reporting requirements by the applicable timeline. For more information, see our Quick Guide: Key Sustainability Disclosure Regimes: Singapore: Mandatory climate reporting regime. 

Singapore and Bhutan invite applications for carbon credit projects under bilateral implementation agreement

Singapore and Bhutan have opened a joint call for carbon credit project applications under their Article 6 Implementation Agreement. This is Singapore's third call for project applications after similar calls with Ghana and Peru, demonstrating Singapore's commitment to exploring carbon credits through international cooperation. Authorised projects in Bhutan will be permitted to generate carbon credits, which will be eligible for use by Singapore carbon tax-liable companies to offset up to 5% of their taxable emissions.

From 1 December 2025, applicants can submit projects that will be jointly assessed through a three-stage authorisation process. Projects must meet strict environmental integrity criteria and use approved carbon crediting programmes and methodologies. Under the agreement between Singapore and Bhutan, Singapore will cancel 2% of authorised credits at first issuance (which will contribute towards a net reduction in global emissions), and channel 5% of the value of the carbon credits to adaptation efforts in Bhutan. 

Hong Kong SAR: AFRC publishes consultation on the proposed regulatory framework for sustainability assurance

On 29 December 2025, the Accounting and Financial Reporting Council (AFRC) published a consultation paper on the proposed regulatory framework for sustainability assurance in Hong Kong (the Framework) (see AFRC’s press release). This development is in line with the Roadmap on Sustainability Disclosures in Hong Kong published by the HKSAR government in December 2024.  The AFRC has set three core objectives for the Framework: (i) promote high quality assurance by adopting internationally recognised standards; (ii) enhance the credibility and reliability of sustainability disclosures by promoting independent assurance; and (iii) ensure a level playing field for all assurance providers. 

Subject to further consultations by Hong Kong Exchanges and Clearing Limited (HKEX) and relevant financial regulators, all entities subject to mandatory reporting using HKFRS Sustainability Disclosure Standards (Mandatory HKSDS Reporting) must obtain independent assurance in phases: 

• Phase 1: Limited assurance over Scope 1 and Scope 2 greenhouse gas (GHG) emission disclosures must be obtained from the third financial year of the Mandatory HKSDS Reporting; and 

• Phase 2: Limited assurance over all remaining mandatory HKSDS disclosures must be obtained from the fifth financial year of the Mandatory HKSDS Reporting. 

To illustrate, if an entity is required to comply with Mandatory HKSDS Reporting from FY 2028, Phase 1 will apply from FY2030 while Phase 2 from FY2032.

No timetable for reasonable assurance is proposed at this stage, considering compliance costs, market readiness, and evolving global standards.  Mandatory assurance must be provided by registered sustainability assurance providers (SAPs) comprising either registered local public interest entity auditors that meet additional criteria; or accredited local non-CPA firms that meet similar criteria.  Mandatory assurance must be carried out in compliance with Hong Kong Standard on Sustainability Assurance 5000 which is fully aligned with the International Standard on Sustainability Assurance (ISSA) 5000. A single regulatory model is proposed to register and regulate all SAPs and oversee the related standard-setting by the by the HKICPA. The consultation closes on 30 March 2026. 

Hong Kong Monetary Authority publishes Hong Kong Taxonomy for Sustainable Finance Phase 2A

On 22 January 2026, the Hong Kong Monetary Authority (HKMA) published the Hong Kong Taxonomy for Sustainable Finance Phase 2A (the Phase 2A Taxonomy) following a public consultation in September 2025. The Phase 2A Taxonomy builds on the publication of Phase 1 of the Hong Kong Taxonomy by adding new sectors, economic activities, and, importantly, transition elements. The “transition category” covers “carbon-intensive activities that are on a time-bound decarbonisation journey to align their operations with a 1.5°C trajectory, ultimately reaching net zero in 2050”. It also introduces climate change adaptation as an environmental objective, being one of the first few taxonomy frameworks globally to address this issue and further strengthening the Hong Kong’s taxonomy’s focus on local climate resilience needs. The HKMA also released a consultation report which summarises the consultation feedback and the HKMA’s responses. The HKMA has stated that development of subsequent phases is underway - areas under consideration for future development of the Phase 2A Taxonomy include, in the energy sector, natural gas-fired power generation and nuclear energy power generation as transitional and low-carbon energy sources, as well as hydrogen for electricity generation. The use of the Phase 2A Taxonomy remains voluntary, although it states that “… In the long run, the incorporation of the Taxonomy into banking supervisory policies will be explored to further strengthen its role in advancing green and sustainable finance”. For more information, see our previous blog post. 

Hong Kong Monetary Authority issues circular and FAQs on Sale and Distribution of Green and Sustainable Investment Products

On 29 December 2025, the Hong Kong Monetary Authority (HKMA) published a circular and an updated set of FAQs. This follows the circular issued by the HKMA in respect of the Sale and Distribution of Green and Sustainable Investment Products (the Sale and Distribution of Green and Sustainable Investment Products Circular) on 29 November 2023. The HKMA has conducted a round of thematic review (the Review) on registered institutions (RIs) on their implementation of expected standards outlined in the Sale and Distribution of Green and Sustainable Investment Products Circular. From the Review, the HKMA observes that RIs have generally implemented the expected standards, including putting in place the policies, procedures and controls to manage greenwashing risks.  The HKMA also notes from the Review an increase in number of RIs participating in bookbuilding activities, and that these RIs have implemented the expected standards in the Sale and Distribution of Green and Sustainable Investment Products Circular for these activities. Certain areas for improvement have been identified in the Review.  Some RIs have yet to establish proper policies and procedures governing the classification framework for green and sustainable investment products.  As part of follow-up actions, these RIs have committed to enhance their policies and procedures to strengthen the governance and oversight of these products. The Frequently Asked Questions (FAQs) clarify the inapplicability of the expected standards (except on bookbuilding) set out in the Sale and Distribution of Green and Sustainable Investment Products Circular to transactions where the RIs do not market or classify the investment product as green and sustainable.  Separately, RIs may continue to follow existing regulatory guidance on streamlining product disclosure to meet the expected standards on “Disclosure” in the Sale and Distribution of Green and Sustainable Investment Products Circular. 

Hong Kong Cross-Agency Steering Group announces strategic priorities for 2026-2028

The Green and Sustainable Finance Cross-Agency Steering Group has set out its strategic priorities for 2026-2028 to enhance the development of sustainable finance in Hong Kong after their meeting on 29 January 2026. The 2026-28 priorities are anchored on the following two pillars (building on the sustainable finance initiatives announced or launched in the past few years): (i) enhancing sustainability disclosure, sustainable finance markets, external engagement and talent development to bolster Hong Kong as a sustainable finance hub; and (ii) focusing on transition finance and adaptation finance. For more information, see our blog post. 

Japan publishes roadmap for phased mandatory sustainability disclosure and third-party assurance

On 8 January 2026, Japan’s Financial Services Agency (FSA) published a report (Japanese language) finalising a phased roadmap for mandatory sustainability disclosure and third-party assurancefor companies listed on the Tokyo Stock Exchange (TSE)'s Prime Market. The Report follows the interim report published in July 2025. According to the Report,

• companies with market capitalisation of JPY3 trillion or more will be subject to mandatory disclosure requirements from the fiscal year ending March 2027, and mandatory third-party assurance on such disclosure from the fiscal year ending March 2028;

• companies with market capitalisation of JPY1 trillion or more will be subject to mandatory disclosure requirements from the fiscal year ending March 2028, and mandatory third-party assurance on such disclosure from the fiscal year ending March 2029; and

• companies with market capitalisation of JPY500 billion or more will be tentatively subject to mandatory disclosure requirements from the fiscal year ending March 2029, and mandatory third-party assurance on such disclosure from the fiscal year ending March 2030 (the FSA will continue to consider and finalise the roadmap for this category of companies in light of disclosure practices of listed companies and investor needs).

The rules will require companies to prepare their disclosures in accordance with the standards developed by the Sustainability Standards Board of Japan (SSBJ). For more information, see our Quick Guide: Key Sustainability Disclosure Regimes: Japan: Sustainability disclosure standards. 

China strengthens green finance mechanisms to support green factory construction

On 12 December 2025, China’s Ministry of Industry and Information Technology and the People’s Bank of China jointly issued the Notice on Utilising Green Finance Policies to Support the Construction of Green Factories (Chinese language) (the Notice), aiming to establish and improve the working mechanism for green finance to support green factories. Support will focus on key areas including research and development and industrialisation projects, technological transformation and upgrading projects, and zero-carbon factory construction projects. The Notice specifies that work plans for green finance support to green factories will be formulated and refined, with efforts directed towards strengthening green credit support, broadening direct financing channels, and supporting qualified enterprises in issuing green bonds and transition bonds.

China sets direction for accelerated growth of concentrated solar power

On 15 December 2025, China’s National Development and Reform Commission and National Energy Administration jointly released the Opinions on Promoting the Large-Scale Development of Concentrated Solar Power (CSP) (Chinese language) (the Opinions), which highlight the supporting and balancing role of CSP in the new power system. The Opinions outline the overall objectives, development plans, application market expansion, technological and industrial innovation, and policy support mechanisms for CSP in the next five years, providing a roadmap for CSP’s accelerated development. According to the Opinions, by 2030, total installed CSP capacity is targeted at 15 million kilowatts, power‑generation costs per kilowatt‑hour are expected to be broadly on par with coal‑fired power, while achieving full self‑reliance in CSP technologies.

China charts course for sustainable disclosure with new climate standards

On 19 December 2025, China’s Ministry of Finance and eight other government bodies jointly issued the Sustainability Disclosure Standards for Business Enterprises No.1 - Climate (Trial) (Chinese language) (the Climate Standards), requiring companies to disclose climate‑related risks, opportunities, and impacts. Compared to its consultation draft (see our June 2025 ESG Newsletter), the Climate Standards further refine disclosure requirements, enhance capacity-building, and strengthen compatibility with domestic systems. The Climate Standards demonstrate regulatory flexibility, particularly for entities with less‑developed reporting capabilities. While aligned with the ISSB’s climate-related disclosures (IFRS S2), the Climate Standards incorporate requirements and terminology tailored to China’s regulatory, legal, and economic context. The Climate Standards adopt a voluntary reporting approach, with a phased transition towards mandatory disclosure, marking another step towards establishing China’s nationally unified disclosure system by 2030. For more information, see our Quick Guide: Key Sustainability Disclosure Regimes: PRC sustainability disclosure standards.

China outlines new roadmap for the application and promotion of recycled materials

On 23 December 2025, China’s National Development and Reform Commission and six other government bodies jointly issued the Action Plan for Application and Promotion of Recycled Materials (Chinese language) (the Action Plan). The Action Plan targets key sectors such as steel, non‑ferrous metals, plastics, and paper, as well as industries well‑positioned for large‑scale use of recycled materials, including automobiles, electronics, batteries, textiles, and packaging. It aims to strengthen the supply of recycled materials, improve application standards, and promote adoption across supply chains. According to the Action Plan, by 2030, the waste recycling system will be further improved, with standards, certification systems, and traceability mechanisms for recycled materials progressively put in place.

China unveils action plan to improve treatment of solid waste

On 27 December 2025, the State Council of China issued the Action Plan for Comprehensive Treatment of Solid Waste (Chinese language) (the Action Plan). The Action Plan prioritises the treatment of solid waste that directly impacts public health and workplace safety, calling for the expedited establishment of a comprehensive, long-term governance framework alongside resolute measures to curb solid-waste growth. By 2030, the annual utilisation of bulk solid waste is expected to reach 4.5 billion tonnes, and the annual recycling volume of major renewable resources is expected to reach 510 million tonnes. The Action Plan sets out detailed measures to enhance the source control and reduction of solid waste, standardise its collection, transportation and storage, and strengthen its capacity for safe disposal.

China steps up efforts to promote green consumption

On 4 January 2026, China’s Ministry of Commerce and eight other government departments jointly released the Notice on Implementing the Green Consumption Promotion Action (Chinese language) (the Notice), which aims to accelerate green consumption during the 15th Five-Year Plan period (2026-30). The Notice outlines 20 specific measures across 7 main aspects, covering sectors such as agriculture, home appliances and furnishings, and catering and accommodation, whilst also calling for supporting financial policies. Key measures include expanding green product supply, upgrading green services, promoting greener consumption models, strengthening plastic reduction and recycling, and encouraging green credit and other innovative financial products.

China expands list of assets eligible for investment by infrastructure REITs

On 1 December 2025, China’s National Development and Reform Commission issued the Industry Scope List for Infrastructure Real Estate Investment Trusts (REITs) Projects (2025 Edition) (Chinese language) (the List), setting out 15 eligible sectors for infrastructure REITs projects. Compared with its 2024 edition, the List expands the scope of eligible asset classes into consumption and urban renewal, which signals a stronger push to monetize mature, stable assets within China’s largest cities. “New‑infrastructure” categories, including artificial intelligence infrastructure, data centres and 5G networks, are also covered. The List continues to support clean energy assets, such as wind, solar and nuclear power, and for the first time specifies eligibility conditions for coal‑fired power assets in technical details. 

China unveils new lending support for private, high-tech and green sectors

On 15 January 2026, the State Council of China held a press conference on the “effects of monetary and financial policies on high-quality development of the real economy”. At the press conference, the People’s Bank of China (the PBOC) unveiled a series of targeted lending support measures for 2026 to direct more capital towards the nation’s private, high-tech and green sectors. In terms of green finance, the PBOC will expand its carbon emission reduction support tool to cover projects with direct emissions‑cutting effects, including energy‑saving renovations, green industrial upgrades and the green and low‑carbon transition of energy systems, operated quarterly with annual re‑lending of up to CNY 800 billion. Interest rates on all key structural monetary policy instruments, including those used for green lending, will be reduced by 0.25 percentage points to support uptake.

Hong Kong SAR Government updates Biodiversity Strategy and Action Plan

On 31 December 2025, Hong Kong issued an updated Biodiversity Strategy and Action Plan (BSAP) setting out its biodiversity policy direction and implementation priorities for the next 10 years (see HKSAR’s press release). The revised plan is structured around four strategic areas: (i) nature conservation, (ii) deepening mainstreaming of biodiversity into economic and urban decision-making (including corporate disclosures on biodiversity-related risks), (iii) capacity building (through research, technology and talent development) and (iv) collaborative partnering (including cross‑boundary co‑operation and Greater Bay Area initiatives). 

Philippines' Securities and Exchange Commission adopts mandatory sustainability reporting standards

On 22 December 2025, Philippine’s Securities and Exchange Commission (SEC) issued Memorandum Circular No. 16, Series of 2025 adopting sustainability reporting for publicly listed companies and large non‑listed entities using the Philippine Financial Reporting Standards PFRS S1 (sustainability‑related disclosures) and PFRS S2 (climate‑related disclosures), aligned with IFRS S1 and S2. Adoption of PFRS S1 and PFRS S2 is phased from financial years beginning 1 January 2026 (with reporting in 2027), using a three‑tier system based on listed status, market capitalisation and, for large non‑listed entities, revenue thresholds. There is also specified transitional reliefs available. Limited external assurance over Scope 1 and 2 greenhouse gas emissions will become mandatory two years after first adoption for each tier. 

Federal agency actions

On 21 January 2026, the National Oceanic and Atmospheric Administration (NOAA) announced a final rule amending the regulations for exploration licensing and commercial recovery permitting under the Deep Seabed Hard Mineral Resources Act. The rule allows applicants to choose to use the existing two-step process requiring applicants to obtain an exploration license before applying for a commercial recovery permit, or to use a new application process combining the licensing and permitting processes into one shorter review. This rule follows an executive order from President Trump that directed NOAA to expedite the review process in order to expand deep-sea mining in the U.S.

On the same day, the Fourth Circuit Court of Appeals vacated an order involving various grants to environmental and agricultural organizations funded by Congress through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. The first part of the vacated order was a permanent injunction setting aside the termination of the grants and directing the federal government to give the organizations access to the funds, which the Fourth Circuit struck down as a contractual matter to be decided by the U.S. Court of Federal Claims. The second part of the vacated order was a preliminary injunction preventing the federal government from freezing the grants again, which the Fourth Circuit vacated because the organizations’ challenge - made under the separation of powers doctrine - was statutory in nature rather than constitutional, and the organizations failed to identify any statute prohibiting the federal government from freezing the grants.

On 16 January 2026, the U.S. Secretary of Energy, Secretary of the Interior, and a bipartisan coalition of governors urged PJM Interconnection, L.L.C. (PJM) to address the surging electricity prices and grid stress in the PJM network, due mainly to power demands from data centers. The proposal includes an emergency procurement auction (a departure from PJM’s normal operations) to support $15 billion in new power plant construction to serve these data centers, with the tech companies behind these data centers to pay for their co-located large load generation infrastructure. PJM was not involved with this proposal and has yet to respond. 

On 15 January 2026, the U.S. Environmental Protection Agency (EPA) issued a final rule ending the practice of assigning a monetary value to the health benefits of reducing exposure to ozone and fine particulate matter emissions. The rule notes that EPA intends to continue measuring and reporting emissions but will not monetize the effects of emissions until it is satisfied that the modeling used in monetization is accurate. 

On 22 December 2025, the U.S. Department of the Interior (DOI) paused the leases for all large-scale offshore wind projects currently under construction due to national security risks. Citing both classified reports of newfound risks and previous findings by the federal government of turbine blades causing radar “clutter”, DOI paused all ongoing work to assess mitigation procedures for these projects. Accordingly, the Bureau of Ocean Energy Management issued director’s orders, pausing the leases for the following five projects for 90 days: Vineyard Wind 1, Revolution Wind, Coastal Virginia Offshore Wind, Sunrise Wind, and Empire Wind 1. Following this action, sponsors of all five projects sued the Trump administration, with the most recent updates as follows:

• On 6 January 2026, Sunrise Wind filed a complaint in the U.S. District Court for the District of Columbia (D.C.) challenging the pause of its lease and suspension of work on its offshore wind project off the New York coast. Ørsted, the project’s sponsor, cited the previous approval of all local, state, and federal permits, including a multi-year consultation with the U.S. Department of Defense through the permitting process. Generation from this project was due to begin in October 2026 but remains frozen at 45% completion due to this pause. Ørsted is seeking a preliminary injunction in order to continue construction.
• On 12 January 2026, the U.S. District Court for the District of Columbia granted a preliminary injunction for the Revolution Wind project regarding the DOI order. This injunction would allow work to resume for this project, situated off the coast of Rhode Island and Connecticut, which according to Ørsted is approaching 90% completion. The reasoning stated for the injunction centered on the government’s failure to explain why these classified newfound risks warranted a halt to the construction, especially given that the Bureau of Ocean Energy Management (BOEM) took a month to issue a stop-work order after receiving these classified reports.
• On 15 January 2026, the U.S. District Court for the District of Columbia granted a preliminary injunction to Empire Wind, allowing all construction activities to resume. Equinor, the sponsor behind the project, will continue construction off the New York coast as soon as possible, after the judge ruled that further delays during the ongoing legal fight would cause imminent and irreparable harm to the project, with a delay beyond 16 January leading to possible total loss upwards of $5 billion.
• On 27 January 2026, the U.S. District Court for the District of Massachusetts issued a stay of the stop-work order to Vineyard Wind 1, allowing the project to resume construction activities while litigation proceeds. The project is approaching 95% completion and already has 44 existing turbines that are operational.
• On 16 January 2026, the U.S. District Court for the Eastern District of Virginia granted a preliminary injunction to Coastal Virginia Offshore Wind (CVOW), the largest offshore wind project in the country. The federal court stated that DOI’s stop-work order was too broad for this specific project, as risks cited by the government pertained to operational wind farms, not wind farm construction. According to Dominion Energy, the project’s sponsor, CVOW was slated to begin dispatching power by the end of the first quarter of 2026, with all turbine and substation construction already complete. Dominion stated that it will continue its legal challenge while getting work on the project up and running again. 

On 18 December 2025, the Federal Energy Regulatory Commission (FERC) issued an order directing PJM to establish rules and regulations to “facilitate service of AI-driven data centers and other large loads co-located with generating facilities”. PJM is also ordered to revise its current tariff to (1) detail terms and conditions for interconnection customers to follow when using generating facilities to serve co-located loads, (2) establish four transmission service options to better accommodate co-located loads, (3) revise the Behind-the-Meter Generation (BTMG) rules, (4) propose a new megawatt threshold for the amount of load that may be net by using BTMG, and (5) establish a transition period for customers already using BTMG rules.

On 17 December 2025, the D.C. Circuit Court of Appeals reinstated a preliminary injunction forcing the EPA to distribute federal funds granted to climate groups under the Greenhouse Gas Reduction Fund. The order did not include the court’s reason for reinstating the preliminary injunction. In March 2025, EPA terminated the federal grants, citing concerns about misconduct, conflicts of interest, and the overall integrity of the program. In April 2025, the U.S. District Court for the District of Columbia issued a preliminary injunction ordering the disbursement of the federal funds, but the D.C. Circuit Court of Appeals vacated that injunction in September 2025. 

On 16 December 2025, DOE issued an emergency order requiring the only coal plant in Washington State, which was scheduled to cease operations at the end of 2025, to remain open until 16 March 2026. In the order, DOE stated that the heightened risk of extreme weather in the Northwest region could cause conditions requiring additional energy capacity and that increased demand, combined with the retirement of other facilities, has created a gap in the power supply. On 13 January 2026, Washington State Attorney General Nicholas W. Brown filed a motion to intervene, a request for a rehearing, and a motion to stay the order.

On 10 December 2025, BOEM announced that it had conducted Lease Sale Big Beautiful Gulf 1 – the first mandatory offshore oil and gas lease sale required under the One Big Beautiful Bill Act. BOEM solicited bids for leasing rights to 81.2 million acres in the Gulf with a royalty rate of 12.5%. In total, 30 companies placed a total of 219 bids valued at a combined $371.9 million.

On 5 December 2025, the National Highway Traffic Safety Administration (NHTSA) proposed a new rule relaxing the Department of Transportation’s corporate average fuel economy standards for passenger cars and light truck fleets manufactured from 2022-2031. Under the current standards, the NHTSA estimated that the vehicles affected would reach an average fuel economy of 50.4 miles per gallon by 2031, while the proposed changes would result in an estimated average fuel economy of 34.5 miles per gallon in the same time frame. The proposal would also end the inter-manufacturer credit trading system and change the light-duty vehicle fleet classification system.

On 26 November 2025, EPA took final action to respond to comments on an Interim Final Rule extending the deadlines to comply with Clean Air Act regulations for the oil and gas industry set by the Biden administration in 2024. This rule, which was issued in July 2025, extends certain deadlines for compliance with New Source Performance Standards and Emissions Guidelines related to certain crude oil and natural gas facilities. The rule is effective as of 3 December 2025.

On 20 November 2025, FERC announced an information-seeking and comment period regarding a possible blanket-style authorization pathway for liquified natural gas (LNG) and hydroelectric projects. FERC is seeking insight under two separate Notices of Inquiry (NOI) into how its current regulations could be streamlined to authorize activities at LNG plants and hydropower facilities without case-specific authorization orders. Comments to both NOIs are due by mid-March 2026.

On 19 November 2025, the U.S. Fish and Wildlife Service proposed four new rules under the Endangered Species Act, all of which would weaken the protections given to certain endangered plants and animals:

• The first proposal would revise the language controlling the listing and delisting of species, as well as critical habitat determinations, to match language from 2019.

• The second proposal would return to the 2019 definitions of “effects of the action” and “environmental baseline” and eliminate offset provisions added in 2024 to revise interagency cooperation.

• The third proposal would remove the “blanket 4(d) rule” automatic extension of protections for newly-listed species and instead mandate species-specific tailoring. 

• The fourth proposal would return to a 2020 rule setting the parameters for considering economic, national security, and other factors when deciding whether areas should be included as critical habitats.

On 18 November 2025, DOE closed on a loan to a multinational energy company to restart the nuclear reactor facility formerly known as Three Mile Island. The loan, totaling $1 billion, is to help finance the reopening of the 835 MW plant, which has been shuttered, but not fully decommissioned, since 2019. This follows a 2024 deal to reopen the plant to help offset increased electricity costs associated with the rising energy demand for data centers. DOE’s Loan Programs Office currently has $250 billion in capital, with a large portion of that earmarked for large-scale nuclear development, including the restarting of shuttered plants. Once restarted, the plant is expected to provide reliable power into the PJM grid by the end of 2027.

Presidential actions

On 27 January 2026, the U.S. officially exited the Paris Agreement under the United Nations (UN) Framework Convention on Climate Change. President Trump announced the withdrawal on the first day of his second presidential term on 20 January 2025 by issuing an executive order directing the U.S. Ambassador to the UN to submit formal written notification of the withdrawal of the U.S. from the Paris Agreement. The order was followed by confirmation from the UN that the withdrawal will take effect on 27 January 2026, one year from the date that notification was received in accordance with the Paris Agreement.

On 7 January 2026, President Trump issued a presidential memorandum to withdraw the U.S. from the UN Framework Convention on Climate Change. The directive follows a 4 February 2025 executive order directing the U.S. Department of State to review U.S. membership in intergovernmental organizations, covenants, and treaties. The President’s newest directive also withdraws the U.S. from other UN organizations and other international organizations, such as the Commission for Environmental Cooperation, Global Counterterrorism Forum, Intergovernmental Panel on Climate Change, and others. 

On 11 December 2025, President Trump issued an executive order directing the U.S Securities and Exchange Commission, Federal Trade Commission, and U.S. Department of Labor to tighten oversight of certain proxy advisory firms, and to investigate whether their conduct violates securities, antitrust, or consumer protection laws, especially in relation to retirement and pension assets. The order targets these advisors’ use of “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) factors, directing federal government agencies to pare back or rescind rules and practices that allow or encourage the use of non‑pecuniary DEI and ESG considerations in voting and advice. This order followed a lawsuit filed by Florida State Attorney General James Uthmeier in Florida state court in November 2025, claiming that the firms violated consumer protection and antitrust laws by jointly pushing an “ESG agenda” through their activities. 

On 8 December 2025, the U.S. District Court for the District of Massachusetts vacated President Trump’s presidential memorandum that directed federal agencies to suspend the issuance of any new permits, approvals, leases, and other authorizations for both onshore and offshore wind energy projects. The memorandum additionally ordered broad review of existing wind leasing and permitting and blocked offshore leasing on the Outer Continental Shelf, citing concerns about legal adequacy, environmental impacts, economic costs, and energy reliability. In its order, the court stated that the memorandum was “arbitrary and capricious,” and that “the agency defendants candidly concede that the sole factor they considered in deciding to stop issuing permits was the president's direction to do so.”

Congressional actions

On 16 December 2025, three Democratic U.S. Senators opened an investigation and sent demand letters to several tech companies regarding the increase of monthly consumer electricity costs due to data center usage. The senators cited a report detailing how electricity costs have risen over 200% in five years in areas located near significant data center activity. The senators accused these tech companies of lack of clarity regarding costs to consumers when these data centers were first proposed, not just due to the surge in power usage, but also due to the expensive upgrades to the grid that their construction and operation require. The senators requested responses by no later than 12 January 2026.

On 15 January 2026, the U.S. House of Representatives passed a bill that would restrict how retirement plan managers can consider ESG issues when picking investments. The bill amends the Employee Retirement Income Security Act to require retirement plan fiduciaries to focus strictly on pecuniary factors when investing or voting proxies, bar the use of non‑pecuniary goals (except in narrow, documented tie‑break situations), prohibit discrimination in selecting plan service providers, and impose new disclosure and notice rules for brokerage windows and proxy voting. The bill is now moving to the U.S. Senate for consideration. 

Climate change litigation

On 22 December 2025, the Connecticut Attorney General announced a settlement between the State of Connecticut and a German automotive brand and its U.S.-based distributor to resolve allegations that the defendants manufactured and distributed over 211,000 vehicles containing undisclosed software allegedly designed to circumvent federal and state emission standards. As part of a multistate settlement involving 48 other states, D.C., and U.S. territories, the defendants agreed to pay $120 million, with Connecticut receiving approximately $4.99 million. Eligible owners and lessees whose vehicles received an Approved Emission Modification are entitled to a $2,000 payment per vehicle. The settlement is still subject to final court approval by the Connecticut Superior Court.

On 1 December 2025, following an eight-year rulemaking process, Federal Rule of Civil Procedure 16.1 took effect, introducing the first formal procedural framework tailored to multi-district litigation (MDL) proceedings. In part, the new rule requires that, soon after an MDL is transferred to a new court, the transferee judge must convene an initial management process (usually a conference preceded by a joint parties’ report) and issue an initial management order that organizes leadership, pleadings, discovery, motion practice, coordination with related cases, and other key pretrial issues in a structured but flexible way. With environmental cases frequently proceeding as MDLs, this new rule represents a critical development for practitioners in the environmental litigation field. 

Climate disclosure legislation and regulations

On 5 January 2026, the U.S. Department of Justice (DOJ) sued two cities in California in an attempt to block ordinances limiting natural gas infrastructure and appliances in new construction. DOJ alleges that the ordinances violate the Energy Policy and Conservation Act of 1975, which pre-empts states and cities from regulating the energy use of products subject to federal standards. The lawsuit, which follows a 2023 ruling in the Ninth Circuit Court of Appeals that another California city could not enforce a natural gas ban enacted in 2019, also asserts that the ban would impose excessively burdensome costs on California residents.

On 19 December 2025, the U.S. Department of the Treasury (the Treasury) and the Internal Revenue Service (IRS) released guidance providing a safe harbor for taxpayers claiming the tax credit for carbon capture and sequestration under section 45Q of the Internal Revenue Code. Notice 2026-01 establishes that, if EPA does not launch its electronic Greenhouse Gas Reporting Tool for reporting year 2025 by 10 June 2026, taxpayers may instead prepare and submit an annual report to a qualified independent engineer or geologist who must certify that the capture and disposal described in the report complies with relevant greenhouse gas (GHG) reporting program requirements. The guidance primarily affects businesses planning to claim credits for qualified carbon oxide captured in secure geological storage during the 2025 calendar year, and taxpayers may rely on this guidance until the Treasury and the IRS issue forthcoming regulations under section 45Q, including standards for measurement and verification.

On 15 December 2025, the New York State Department of Environmental Conservation (DEC) announced the finalization of new regulations to implement mandatory GHG emissions disclosure from carbon-intensive sectors, with reporting slated to begin in 2027. The regulations require facilities emitting 10,000 metric tons of CO2e annually – including electricity generators, fuel suppliers, waste management operations, and agricultural suppliers – to submit annual GHG emissions data starting June 2027, with large emission sources also required to use DEC-accredited third-party verification services to verify their emissions data report.

DEI developments and litigation

On 19 January 2026, Texas State Attorney General Ken Paxton issued a legal opinion declaring DEI programs that were established under more than 100 “woke” state laws unconstitutional. The opinion concludes that Texas's Historically Underutilized Business programs, Disadvantaged Business Enterprise programs, and various other programs that consider race and sex in public contracting, government appointments, and employment are unconstitutional, because they violate the Equal Protection Clause of the U.S. Constitution and the Texas Equal Rights Amendment. Additionally, Paxton notes that the private sector is “exposing themselves to significant legal liability under state and federal law” – specifically Title VII of the Civil Rights Act of 1964, the Texas Commission on Human Rights Act, Section 1981 of the U.S. Code, and both state and federal securities laws – if they use DEI considerations in company practices, such as: (i) hiring and promotion processes; (ii) employee resource groups, mentoring, and training; and (iii) pay, bonuses, and promotion goals.

On 18 December 2025, the Trump administration announced upcoming proposed rulemakings that would block all hospitals from participating in Medicare and Medicaid programs if they provide gender-affirming care to minors. In the declaration issued by the U.S. Department of Health and Human Services (HHS), HHS cited its authority to initiate such proposed rulemaking under the Social Security Act. Federal health officials have stated that the rule is designed to carry out a 28 January 2025 executive order from President Trump directing federal agencies to halt such care for those under 18 years old. 

On the same day, Andrea Lucas, chair of the U.S. Equal Employment and Opportunity Commission (EEOC), posted a video on social media encouraging “white males” who believe they have experienced discrimination at work to contact EEOC and seek monetary compensation. This follows a series of federal policy changes, with the Trump administration moving away from DEI efforts and instead focusing on “merit-based opportunity”. President Trump signed several executive orders in 2025 that moved the federal government away from policies that he has called “radical and wasteful” or effectuating “illegal discrimination” against majority groups in the U.S.

On 9 December 2025, two separate federal appellate courts allowed federal government policies restricting transgender and HIV-positive citizens from serving in the military to go into effect while lawsuits against the policies are litigated. The D.C. Circuit Court of Appeals stated that the policy restricting transgender citizens from serving in the military is “likely constitutional, because it reflects a considered judgment of military leaders and furthers legitimate military interests.” Similarly, the Fourth Circuit Court of Appeals issued a two-sentence decision merely affirming the government’s policy restricting HIV-positive citizens from serving in the military.

On 8 December 2025, the Supreme Court of the United States (SCOTUS) refused to hear the case of a bakery owner who appealed a decision from a California appellate court, stating that her business’s policy of not selling goods for same-sex ceremonies constituted unlawful discrimination. In its ruling, the California appellate court said that, despite the appellant’s policy being rooted in her "sincerely held religious belief about marriage, held in good faith without ill will or malice," it nonetheless discriminated based solely on prospective customers' sexual orientation.

Greenwashing litigation

On 3 November 2025, New York State Attorney General Letitia James announced a $1.1 million settlement with an American meat processing company for allegedly misleading the public about its commitment to reducing its carbon footprint. Under the agreement, the company must reframe its “net zero by 2040” statements as an ambition or goal rather than a pledge or commitment, provide specific disclosures when claiming progress, and conduct annual reviews of all U.S. consumer-facing environmental statements for three years, with a notice-and-cure process for any future concerns raised by the attorney general. Funds from the settlement will be put toward independent initiatives supporting climate goals across New York.

Financial Regulation Outlook 2026 – Wholesale Banking (see “Sustainable Finance” section on pp.10-11): read our publication

Financial Regulation Outlook 2026 – Asset Management (see “Sustainable Finance” section on pp.15-16): read our publication

Disputes and Investigations in Europe (2026) (see ESG section on p.7): read our publication

Employment & Incentives: What to expect in 2026: read our publication

Tech Legal Outlook 2026: read our publication