Horizon – News and Trends in Sustainability Law

Disclosures and voluntary reporting

Comment period on CARB’s proposed regulations for SBs 261 and 253 is open; public hearing to take place next month. The California Air Resources Board (CARB) will hold a public hybrid hearing on February 26 about its proposed regulations to implement SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act, despite the Ninth Circuit’s ongoing injunction against the latter. The proposed regulations, announced in early December, include a formula for calculating reporting fees, authorize CARB to penalize entities that fail to pay required fees, and set August 10, 2026 as the initial deadline for in-scope entities to report their Scope 1 and 2 emissions under SB 253. The regulations also state that, starting this year, CARB will issue fee notices to in-scope entities by September 10 annually. The fees will cover the costs of administering the regulations. A 45-day public comment period on the proposed SB 253 and SB 261 regulations closes on February 9. CARB will then hold a hybrid public hearing on February 26 and has advised that it will open an additional 15-day comment period if the hearing prompts significant modifications. Also see our report on the related litigation in Chamber of Commerce v. CARB.

New York finalizes Mandatory Greenhouse Gas Reporting Program. In December, the New York State Department of Environmental Conservation (DEC) finalized 6 NYCRR Part 253, establishing the state’s Mandatory Greenhouse Gas (GHG) Reporting Program. The measure is similar to California’s SB 253. Broadly speaking, New York takes a more targeted approach, concentrating on industrial emitters, while California's regime applies more expansively to entities meeting certain revenue and in-state activity criteria. As the agency states, the program is for data collection only. There are no requirements for facilities to reduce their GHG pollution or to obtain emission allowances. Starting in June 2027, facilities that are in scope must annually provide certain GHG emission data and information to DEC, reflecting the previous year’s emissions. To minimize potential reporting costs, the program draws on data that is already required to be reported under other existing mandatory reporting programs. DEC states, “In light of the U.S. Environmental Protection Agency’s reconsideration of key federal air quality and GHG regulations, including the U.S. Greenhouse Gas Reporting Program, DEC’s regulation will also serve as a backstop to ensure the ongoing availability of critical GHG information.” Find the Mandatory Greenhouse Gas Emissions Reporting Regulation here.

EU Parliament approves Omnibus I; other EU regulatory developments. With the European Parliament’s approval of Omnibus I on December 16, the European Union (EU) continues to advance Omnibus I, the set of proposed simplification measures aimed at streamlining key reporting and compliance requirements of the bloc’s Green Deal: the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), EU Green Taxonomy, and Carbon Border Adjustment Mechanism (CBAM). Here are the latest developments:

• European Parliament approves Omnibus I. Omnibus 1 reforms were approved by the European Parliament in mid-December, dramatically shrinking the scope of the EU’s sustainability reporting and due diligence rules. For the CSRD, the reforms remove about 80 percent of companies from scope, applying to EU companies with more than 1,000 employees and more than EUR450 million in net annual turnover, and non-EU companies with more than EUR450 million in net annual turnover who have a subsidiary or branch with a net annual turnover of more than EUR200 million. Listed medium-sized and small companies, along with certain financial holding companies, are no longer in scope. The reforms now limit the CSDDD’s scope to EU companies with more than 5,000 employees and more than EUR1.5 billion in net turnover worldwide, plus non-EU companies with more than EUR1.5 billion in net turnover on the European market. Omnibus I also eliminates the CSDDD’s former obligation for companies to adopt climate transition plans that are compatible with the Paris Agreement. Omnibus I now heads to the European Council to approve the final text, and the law is expected to be official in March or April 2026.
  
  
• EUDR delayed until 2026; amendments are now in force. Regulation 2025/2650, amending the European Union Deforestation Regulation (EUDR), came into effect on December 23, 2025 after publication in the Official Journal of the European Union. The EUDR prohibits the import of commodities such as timber, soy, beef, palm oil, rubber, cocoa, and coffee, along with their derivatives, into the bloc unless they are certified as deforestation-free. Gaining the most attention is the regulation’s postponement of the EUDR’s compliance deadline, which is now December 31, 2026 – this is the second time that deadline has been extended. Regulation 2025/2650 also dramatically streamlines certain key due diligence and reporting obligations, greatly simplifying traceability requirements within the EU. As the European Parliament explains, “only businesses that are first to place a relevant product on the EU market will be responsible for submitting due diligence statements.” The regulation includes a new category, “downstream operator,” which means an entity that commercializes a relevant product that is already covered by another entity’s due diligence statement or simplified declaration – for instance, furniture manufacturers that use lumber sourced within the EU or supermarkets selling coffees that were imported by other businesses. Furthermore, due diligence requirements have been greatly eased for small and micro primary operators (who also have an additional six months to comply). And, as we reported last month, the updates remove certain printed products (such as books, newspapers, and printed pictures) from scope. Of note: the amendments also include a requirement that the European Commission conduct a review of the administrative burdens and impacts of the simplified rules by the end of April 2026, creating the possibility of even more revisions to come.
  
  
• CBAM is in effect; EU publishes default values for importers’ calculations. The European Union has published revised default and benchmark carbon intensity values for the CBAM. Importers lacking reliable information on emissions arising from production of covered products must use the default values to calculate their liabilities. The implementing regulation classifies these default values by country origin and by type. The default calculations must also include a so-called markup – a fee added to help ensure fair carbon pricing. Markups start at 10 percent this year, increasing to 20 percent in 2027, then 30 percent starting in 2028. The regulation also directs the European Commission to “make all necessary efforts” to revise CBAM’s default values and markups. On January 1, the CBAM began applying to imports into the EU of certain key categories of products: iron and steel, aluminum, cement, electricity, hydrogen, and fertilizers.
  
  
• What’s next? These developments are not the end of the EU’s revisions of its sustainability laws and regulations. Next up, expect the bloc to turn its attention to simplifying the European Sustainability Reporting Standards (ESRS) and to an Energy Omnibus that would speed up green transition projects and simplify permitting for renewables. An early draft of the latter reform package is projected for Q2 2026.

Trump Administration issues Executive Order affecting proxy advisory firms: Top points. President Donald Trump has issued Executive Order 14366, “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors,” which could significantly impact the policies and practices of Institutional Shareholder Services and Glass, Lewis & Co., two major proxy advisory firms in the United States. Released in December, the Executive Order directs the US Securities and Exchange Commission chairman “to review and, as appropriate, rescind or revise all rules and regulations related to proxy-advisors that implicate ‘diversity, equity and inclusion’ (DEI) and ‘environmental, social and governance’ (ESG) priorities, as well as rules related to shareholder proxy proposals that are inconsistent with the policies in the Order.” Visit our Market Edge blog to learn more.

China announces “trial” corporate sustainable disclosure standard. China’s Ministry of Finance (MOF), joined by other ministries and the People’s Bank of China, has released the Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial), a national reporting framework based on a key standard of the International Financial Reporting Standards (IFRS) Foundation. The standard, announced in December, sets out key policy and infrastructure tools to support China’s green development goals. In addition to the General Provisions and Supplementary Provisions, the disclosure standard is divided into four sections: Governance, Strategy, Risk and Opportunity Management, and Metrics. As MOF states, the trial standard was crafted to “structurally converge” with IFRS S2 – a key standard of the International Financial Reporting Standards (IFRS) Foundation’s International Sustainability Standards Board – but with an array of granular modifications specific to the Chinese economy. Most notably, the trial standard announced by MOF requires double materiality reporting, addressing both how climate risks affect companies’ financial performance and how their business activities impact the climate. In a possible sign that China intends to swiftly advance the standard, state authorities are reportedly already working to develop sector-specific guidance, in particular prioritizing high-emitting manufacturing sectors – power generation aluminum, automobiles, cement, coal, fertilizer, hydrogen, petroleum, and steel. Once that guidance is in place, the framework will expand to encompass all sectors of the Chinese economy and is expected to become mandatory. The standards will reportedly also affect reporting by Chinese companies wherever they operate – for instance, in Africa and South America, where China is deeply involved in emissions-intensive activities such as mining, agriculture, energy, and infrastructure development.

Philippines adopts mandatory sustainability reporting standards for large companies. The Securities and Exchange Commission of the Philippines has formally adopted the Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures. The PFRS transpose into Philippine law two IFRS standards – IFRS S1, which sets out general requirements for sustainability-related financial disclosures; and IFRS S2, which focuses on disclosure of climate-related risks and opportunities. The standards will serve as the foundation for coming mandatory sustainability reporting requirements affecting both large publicly listed companies and large non-listed firms, which will be required to report to the Commission in 2027 on 2026 data.

Kenya: Some entities are already voluntarily reporting ahead of the 2027 mandate. A modest number of Kenya’s public interest entities (PIEs) – such as insurance companies, banks regulated by the Central Bank of Kenya, and businesses listed on the Nairobi Securities Exchange – are reportedly already voluntarily reporting to the Institute of Certified Public Accountants of Kenya (ICPAK) under IFRS S1 and IFRS S2. Reporting under the two standards becomes mandatory for Kenyan PIEs on January 1, 2027, and for non-PIEs on January 1, 2028. A timeline for reporting by public sector entities has not yet been announced. ICPAK’S Roadmap for Adoption of IFRS Sustainability Disclosure Standards in Kenya was released in November 2024.

Please also see our sustainability calendar for information about key reporting deadlines around the world.

Greenwashing

Putative greenwashing class action involving a sugar producer remains alive. Merrell v. Florida Crystals is a putative class action in the US District Court for the Northern District of California alleging that the sugar producer deceptively markets itself as environmentally friendly while engaging in business practices that damage the environment. At the heart of the suit is the way sugarcane is prepared for harvest. Florida Crystals, which farms about 194,500 acres in the Everglades Agricultural Area, markets itself as the country’s largest Regenerative Organic Certified® farm. Its website includes such phrases as “Farming to Help Save the Planet” and “We lead the fight for a cleaner, greener future.” Plaintiff Marcy Merrell, a California consumer, stated in her original complaint that Florida Crystals engages in pre-harvest burning, which strips away and burns unwanted leaves and tops so that only the sugar-bearing stalk remains to be harvested. These agricultural activities emit “substantial volumes of greenhouse gases that contribute to climate change” and pollute the atmosphere on a daily basis, the original complaint stated. On December 8, the court granted Florida Crystals' motion to dismiss in part, finding that Merrell’s complaint did not “adequately articulate” a theory of liability. The court, however, gave Merrell additional time to file an amended complaint. It also declined to address Florida Crystals’ other grounds for dismissal and denied the company’s motion to dismiss on those grounds without prejudice to the company’s ability to raise them after the plaintiff filed an amended complaint. Merrell submitted her Second Amended Class Action Complaint on January 9. The court has scheduled a case management conference in the matter for March 30. See the Second Amended Class Action Complaint here.

Responsible green marketing: Regulatory shift may reshape environmental packaging claims. Greenwashing – the practice of overstating or misrepresenting environmental benefits – has been one of the most scrutinized areas of corporate marketing for several years. Regulators, attorney generals, plaintiffs’ attorneys, investors, and consumers have increasingly challenged the substantiation of environmental marketing claims, citing concerns that certain claims may mislead consumers. Two US developments signal a fundamental shift from principles-based guidance to enforceable mandates. See our alert.

Sustainability: Regulatory

US to withdraw from UNFCCC and other key International organizations, conventions, and treaties. In a Presidential Memorandum issued on January 7, President Donald Trump has announced that the United States is withdrawing from the United Nations Framework Convention on Climate Change (UNFCCC). This announcement follows a review of the findings of the Secretary of State, in consultation with the United States Representative to the United Nations, of all international intergovernmental organizations to determine which organizations, conventions, and treaties are contrary to the interests of the United States. The stated objective of the UNFCCC, set out in its Article 2, is the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the world’s climate system. In itself, the UNFCCC does not mandate specific emissions reduction targets; rather, it sets out a framework for global climate agreements, such as the 1997 Kyoto Protocol and the 2015 Paris Agreement, which have defined global climate action and established international mechanisms for emissions reduction and climate change adaptation. The Presidential Memorandum further states that the US is withdrawing from 65 other international organizations, conventions, and treaties – among them, the UN’s Intergovernmental Panel on Climate Change, the leading international body for assessment of climate change; the International Renewable Energy Association; the Partnership for Atlantic Cooperation; the Science and Technology Center in Ukraine; and the European Centre of Excellence for Countering Hybrid Threats – upon finding that they are contrary to the interests of the United States.

House passes bill to limit consideration of “nonpecuniary factors” when managing ERISA retirement plan assets. On January 15, the US House of Representatives passed the Protecting Prudent Investment of Retirement Savings Act, a bill introduced by Representative Rick Allen (R-GA) that would limit fiduciaries’ consideration of “nonpecuniary factors” – such as environmental, social, and governance elements – when selecting investments or managing plan assets under the Employee Retirement Income Security Act (ERISA). Under the measure, fiduciaries would be required to base their decisions solely on factors directly related to the financial performance of the investment. The legislation seeks to enact into law the final rule issued by the Department of Labor in 2020 that allows plan fiduciaries to consider climate change and other environmental, social, and governance factors in two scenarios: when those factors directly affect financial returns or when choosing between investments that are otherwise indistinguishable based on pecuniary factors alone. The bill also contains provisions addressing a plan fiduciary’s obligations with respect to shareholder rights, nondiscrimination, and notice requirements when investments are offered through a brokerage window. The bill now heads to the US Senate for consideration.

CalRecycle issues proposes revisions to SB 54. California’s Department of Resources Recycling and Recovery (CalRecycle) has revealed the proposed revisions to SB 54. The revisions are largely technical or procedural, clarifying public-comment and electronic-communication processes. But one substantive area has been significantly revised to clarify the scope of categorical exclusions for food and agricultural commodities subject to conflicting federal rules and the procedures for CalRecycle to recognize the exclusion. The proposed revisions specify that such packaging and packaging components are excluded only where the conflicting federal rule is mandatory and the producer demonstrates that “it is not reasonably possible to use any alternative packaging or packaging component that would avoid the conflict.” They further define “not reasonably possible” as meaning that all the following criteria are true:

• There is no such alternative that satisfies all applicable mandatory standards for safety and structural integrity of packaging, creates no new unavoidable legal conflict with any law, and otherwise is lawful to use in California
• it is not possible to avoid all legal conflicts by eliminating or replacing the components that cause the conflict cited in the notice, and
• it is not possible to avoid all legal conflicts by redesigning or replacing the packaging as a whole.

None of this is substantively different from the prior version, but in total would impose much stricter screening to demonstrate that a commodity meets the exclusionary criteria. These changes were sought because the prior text was considered too vague to limit this categorical exclusion in the manner required by the legislature.

California SB 1215, requiring consumers to pay a point-of-sale fee for battery-embedded products, is now in force. SB 1215, amending California’s Electronic Waste Recycling Act of 2003 to include covered battery-embedded products (CBEPs) in the Covered Electronic Waste (CEW) Recycling Program, came into effect on January 1, 2026. Per CalRecycle, SB 1215 was created to reduce battery fires and injuries to sanitation workers and to ensure that batteries are collected for recycling rather than ending up in the waste stream. The law defines a “covered battery-embedded product” as a product containing a battery that is not designed to be easily removed by the user with no more than commonly used household tools. For such regulated products, California consumers pay a “covered battery embedded waste recycling fee” at the point of sale, whether the products are new or refurbished, and whether the product is purchased at a physical location or online. Per recently finalized regulations, the fee is 1.5 percent of the retail sales price, capped at USD15. Manufacturers of CBEPs must submit annual notices to retailers each July identifying covered and exempt products and must file annual reports with CalRecycle beginning July 1, 2027. SB 1215 would also create a requirement for industry to report on the batteries collected, reused, repurposed, and recycled, as well as the mineral recovery rates. Electronic devices that are already covered by other e-waste rules, such as video display devices, electronic nicotine delivery systems (known as e-cigarettes), large energy storage systems, and certain medical devices, are excluded from the CEW Recycling Program’s scope.

Colorado senate considers measure to establish LEV battery recycling policies. The Colorado legislature is considering SB 003, End-of-Life Management of Electric Vehicle Batteries, which would expand the scope of the state’s Battery Stewardship Act and support the state’s transition to low-emissions vehicles (LEVs) by establishing recycling policies for propulsion batteries, which are used to supply power to an electric or hybrid vehicle. SB 003 seeks to hold auto manufacturers responsible for the proper reuse, repurposing, and recycling of unwanted vehicle batteries – such as damaged or leaking batteries – that have a high risk of mismanagement. The measure’s Qualified Battery Recycler requirement would prioritize high mineral recovery and low pollution – for instance, by prohibiting the recycling of propulsion batteries via smelting, a process that doesn’t recover lithium or aluminum and that generates significant emissions. SB 003 was introduced early this month and is in its earliest stages.

EPR in transactions: From footnote to material liability. Extended producer responsibility (EPR) is increasingly recognized as a core factor in transactional due diligence in the US, with real cash costs, operational implications, and liability exposure that can materially affect valuation, purchase price mechanics, and post close integration. At its core, EPR shifts the financial and, in many cases, organizational responsibility for end-of-life management of products and packaging from municipalities and taxpayers to producers. New US state regimes – led by Oregon, Colorado, and California – will fund system collection, processing, and infrastructure improvement through producer fees based on covered material volume and environmental performance, often with “eco modulation” credits and penalties tied to labeling, toxicity, recyclability, recycled content, and “source reduction.” Find out more about the ways EPR may affect deals.

EPA will no longer calculate the economic cost of curbing air pollutants. The Environmental Protection Agency (EPA) will stop calculating the economic cost of harms to human health from emissions of ozone and PM2.5 – airborne fine particulate matter that is 2.5 micrometers or smaller. The change is embedded in a final rule issued on January 9, New Source Performance Standards Review for Stationary Combustion Turbines and Stationary Gas Turbines. In a regulatory impact analysis of the rule, EPA stated that it will no longer consider the dollar value of health benefits arising from these pollutants because there is too much uncertainty in these economic estimates. The practice of calculating such costs dates back to 1981, when President Ronald Reagan issued an Executive Order requiring agencies to determine the costs and benefits of major regulations such as the Clean Air Act. EPA Press Secretary Brigit Hirsch reportedly told NPR that the agency is still considering the health benefits of federal air-quality regulations but will not assign a dollar amount to those benefits until further notice.

Proposed EPA rule would limit ability of states and Tribes to review major infrastructure projects. On January 13, EPA announced a proposed rule that would limit the power of states and Tribes to review and block major infrastructure projects via the Clean Water Act. That Act’s Section 401 currently gives states and certain Tribes the authority to protect water quality within their borders by approving, imposing conditions on, or rejecting permits for federally regulated projects like dams, pipelines, and power plants. The proposed rule would reduce their authority to conduct such water quality reviews. EPA Assistant Administrator for Water Jess Kramer stated that the proposed rule would help the Administration expedite large energy and infrastructure projects and “unleash energy dominance” while “ensuring that states and tribes only utilize section 401 for its statutory purpose to protect water quality and not as a weapon to shut down projects.” At this writing, a comment period on the proposed rule has not been opened.

Illinois law targets hotels’ mini plastic containers. Illinois SB 2960, the Small Single-Use Plastic Bottle Act, is now fully in effect. The legislation seeks to reduce the hospitality industry's plastic footprint by banning hotels from providing personal care products in plastic containers smaller than six ounces unless specifically requested by a hotel guest. Even on request, hotels are allowed to give small single-use plastic bottles to guests only at locations outside sleeping rooms or shared bathrooms, such as reception desks. SB 2960 took effect for facilities with 50 or more rooms on July 1, 2025, and is now in effect for all Illinois hotels. To ensure statewide uniformity, the measure also contains a preemption clause forbidding local jurisdictions from enacting their own ordinances about such packaging. California, New York, and Washington all have similar laws on the books. The Washington measure, HB 1085, goes into effect in phases beginning January 2027.

Mexico enacts General Law on Circular Economy – now binding. On January 19, Mexico published the General Law on Circular Economy, which went into effect January 20. Among other requirements, the law requires in-scope producers and importers to report on circular management processes and compliance through a new Circular Economy Registry; develop products with circular design, subject to some exceptions where redesign is not feasible; and organize circular economy infrastructure, including an extended producer responsibility scheme. The law also contains certain prohibitions against greenwashing and requires responsible consumption by the general population. Regulations further developing the law will be issued on or before July 20.

New Zealand: Environmental land-use reform at a glance. New Zealand’s government has released the Natural Environment Bill and the Planning Bill, which are intended to repeal and replace the Resource Management Act 1991 (RMA) by mid-2026. The bills are designed to work together to provide distinct but consistent approaches to environmental management and land-use planning in New Zealand. See our alert.

Sustainability: Litigation

Ninth Circuit hears oral arguments in Chamber of Commerce v. CARB. The US Court of Appeals for the Ninth Circuit heard oral arguments on January 9 in Chamber of Commerce of the United States of America et al. v. California Air Resources Board, litigation seeking to overturn California’s SB 261 (the Climate-Related Financial Risk Act) and SB 253 (the Climate Corporate Data Accountability Act) on First Amendment grounds. The US Chamber of Commerce argued that both laws violate the First Amendment by compelling speech beyond commercial information and that California has failed to show that the laws are narrowly tailored to meet a compelling state interest. California’s Department of Justice countered that climate disclosures constitute commercial speech because they pertain to the transactions of investment decisions and that both laws aim not to regulate emissions or impose a political viewpoint but to glean climate-related commercial information. The court is expected to issue its decision in the next six months. In November, the court stayed enforcement of SB 261 but declined to enjoin SB 253, meaning that covered entities were not required to submit their SB 261 reports, which had been due on January 1, 2026 while the injunction remained in place. In December, however, the agency opened a public docket to allow covered entities to voluntarily submit such reports, and more than 40 companies have now voluntarily submitted reports under the law. The court did not extend the stay to SB 253, which remains in effect, with initial disclosure dates currently set for August 10, 2026. Meanwhile, CARB is continuing its rulemaking activities but will not enforce Health and Safety Code section 38533 against covered entities that did not submit SB 261 climate-related financial risk reports by the January 1, 2026 deadline.

Court urged to vacate establishment of Climate Working Group and its report. Two prominent environmental groups are asking the US District Court for the District of Massachusetts to hold unlawful last year’s creation of the Department of Energy’s (DOE) Climate Working Group (CWG). That group produced a report (the CWG report) that supported rescission of the Endangerment Finding, the landmark 2009 determination that greenhouse gas emissions from motor vehicles and engines contribute to air pollution that endangers public health and welfare. The Environmental Defense Fund (EDF) and Union of Concerned Scientists charge that in creating the group, the DOE failed to provide public notice and to create a fairly balanced committee, thus violating the Federal Advisory Committee Act (FACA), which places emphasis on transparency and accountability. In August 2025, the two groups sued the DOE, the EPA, and the CWG over the group’s creation. DOE did not contest the plaintiffs’ charge that the CWG was established illegally. In September, shortly before the court ruled that CWG had to answer to FACA, Energy Secretary Chris Wright disbanded the group. Defendants argued that the CWG's dissolution rendered the plaintiffs' claims moot, but the court granted partial summary judgment, finding that the CWG was subject to FACA. Defendants confirmed at a December 8, 2025 hearing that they no longer contest the merits of the FACA claims against the DOE. However, as the plaintiffs stated in their January 5 brief, the CWG report on the Endangerment Finding remains in effect and, “as indicated in FACA records produced by the government and a recent public statement by a CWG member, the federal government has been in contact with the unlawfully constituted CWG about contributing to the next National Climate Assessment.” Pointing to the Administrative Procedure Act, the plaintiffs urge the court to vacate the establishment of the working group, permanently enjoin the DOE from tasking the CWG with performing additional work beyond the CWG Report, permanently enjoin the DOE from publishing or maintaining the CWG report, and preclude the CWG from holding future meetings or performing future work in furtherance of mandates from any federal agency. See the brief here.

Climate accountability litigation in state legislatures’ crosshairs. Legislation recently introduced in two US states would bar most climate accountability litigation against oil and gas entities. In Oklahoma, SB 1439, introduced January 7, would “prohibit causes of action against those who lawfully produce, manufacture, and sell fossil fuels and their trade associations, when this highly regulated product functions as designed and intended.” Exceptions would be made solely for alleged violations of specific environmental or labor laws. Utah’s HB 222, meanwhile, states, “A person is not civilly or criminally liable, and may not be subject to any judicial remedy under any principle of law or equity, for damage or injury from any actual or potential effect on climate caused wholly or partly by greenhouse gas emissions.” Exceptions would be made when a court determines that the defendant violated a statute or permit. Both these measures are in early legislative stages. Of note: a key priority in the American Petroleum Institute’s 2026 Agenda for Affordable, Reliable & Secure American Energy, released on January 13, is “Stop extreme climate liability policy.” That bullet states, “Protect U.S. energy producers and consumers from abusive state climate lawsuits and the expansion of climate ‘superfund’ policies that bypass Congress and threaten affordability.”

Two senators file amicus curia brief in New York climate superfund litigation. Senators Sheldon Whitehouse (D-RI) and Kirsten Gillibrand (D-NY) have filed an amicus curia brief in State of West Virginia v. Letitia James et al, calling on the court to grant summary judgment in favor of New York – that is, to leave the state’s Climate Change Superfund Act (the Climate Act) in place. The lawsuit is one of two ongoing cases seeking to strike down that law. As we’ve previously reported, the lawsuit was brought in February 2025 by attorneys general from 22 Republican-led states. It describes the New York law as an “extraterritorial shakedown,” asserting that it is unconstitutional and preempted by the federal Clean Air Act. In their brief, Whitehouse and Gillibrand argue that the Climate Act does not preempt the Clean Air Act, nor does it preempt federal foreign policy expressed by Congress through legislation or congressionally ratified treaties. “Plaintiffs’ arguments would invert traditional federalism principles and risk invalidating a host of State laws,” they state.

Meanwhile in New Jersey, state senate leadership chose not to advance a proposed Climate Superfund Act, A 4696, to the senate floor. Modeled on the New York and Vermont acts, the New Jersey measure would require certain fossil fuel extractors to contribute billions of dollars to a climate resiliency fund. More than half of New Jersey’s senators were co-sponsors of the bill. Similar climate superfund bills have also stalled in California, New Hampshire, and Virginia as legislators await the outcome of the lawsuits against the New York and Vermont acts.

Appeals court blocks enforcement of Hawaii’s transient accommodations tax. On December 31, the US Court of Appeals for the Ninth Circuit blocked Hawaii’s enforcement of Act 96, a state law that expands the state’s transient accommodations tax to cruise ships while raising taxes on other transient accommodations. As we reported in May 2025, with this law, Hawaii became the first state in the nation to dedicate tax revenue from lodging to environmental protection and climate change mitigation. In August, a consortium of cruise ship and tour operators brought suit seeking to overturn the act, charging that it violates the Constitution’s Tonnage Clause, which bars states from imposing any charge for the privilege of entering, trading in, or lying in a port, as well as the Rivers and Harbors Appropriation Act of 1884. In early December, the US Department of Justice was allowed to join the case as an intervenor. It swiftly added its call for a preliminary injunction against the tax’s implementation. Although the US District Court for the District of Hawaii denied these motions, on December 31, the appeals court acted, temporarily blocking enforcement of Act 96 while litigation advances. Act 96 would have gone into effect on January 1.

Lawsuit against Oregon EPR law: what’s next. On February 6, the US District Court for the District of Oregon is scheduled to hear oral arguments on the parties’ dueling motions in National Association of Wholesaler-Distributors v. Oregon Department of Environmental Quality et al, a lawsuit initially filed in July 2025 which seeks to halt implementation of Oregon’s Plastic Pollution and Recycling Modernization Act (RMA) and invalidate its implementing regulations. See our original coverage of the lawsuit here. The RMA is one of the first EPR laws implemented in the US for packaging. In late November, plaintiff National Association of Wholesaler–Distributors (NAW) sought a temporary restraining order or preliminary injunction, hoping for a ruling ahead of the first round of fee assessments. Meanwhile, the defendants filed a motion to dismiss on December 22, 2025, and the plaintiffs filed their brief opposing that motion on January 16, 2026, with defendants’ final brief in support of their motion due by January 30. This is the first litigation seeking to overturn a state EPR law, although NAW has stated that it may bring further legal action against EPR programs in other US states.

California appeals court rules in favor of municipalities in a climate harms case. The California Court of Appeal has reversed a Superior Court of San Francisco order that had granted a petroleum company’s motion to quash service of summons for lack of personal jurisdiction. Ruling in In re Fuel Industry Climate Cases (County of San Mateo v. Citgo Petroleum Corp.), the appeals court stated, “Specific personal jurisdiction over Citgo exists as plaintiffs’ claims arose out of or related to Citgo’s contacts with California—namely, its purchase, distribution, and sale of gasoline in California—and Citgo fails to show that the exercise of personal jurisdiction over it would be unreasonable.” The plaintiffs in this case are several California cities and counties who allege that the commercial activities in California of several fossil fuel companies contributed to climate-related harms within the state. The case will proceed. See the court’s ruling.

Supply chain integrity and human rights

CBP forced labor enforcement continues. On January 29, US Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) affecting coffee harvested by Finca Monte Grande, a Mexican coffee farm. Effective immediately, coffee harvested by Finca Monte Grande will be detained by CBP at all US ports of entry. CBP states that it “issued this WRO, the first in 2026 and the third in Fiscal Year 2026, due to violations of 19 U.S.C. § 1307, the law prohibiting goods made with forced labor from entering the United States.” CBP is now enforcing a total of 55 WROs and nine Findings under 19 U.S.C. § 1307.

Supply Chains Act reporting: Canada launches 2026 reporting cycle and updates guidance. Public Safety Canada has updated its guidance for businesses subject to the Supply Chains Act and launched the online portal for the 2026 reporting cycle, with reports due by May 31, 2026. The updated guidance does not change the substantive reporting requirements but does provide clarification on certain aspects of reporting. See our alert.

UK: Report calls for reforms to modern slavery and human rights legislation, including new reporting obligations. A new report from Eleanor Lyons, the Independent Anti-Slavery Commissioner (IASC) of the United Kingdom (UK), affirms that it is time for the UK to update its forced labor laws to “to align with international partners, protect businesses and promote economic growth.” In a foreword, Lyons states that the current legislative environment around forced labor in the UK – including, in part, the landmark Modern Slavery Act 2015 – is a “complex patchwork of disjointed laws… that set competing standards for tackling forced labour in different sectors.” The report presents proposed Model Legislative Drafting that would put in place a ban on imports manufactured with forced labor and would create a new legal offense, failure to prevent serious human rights harms, and new, mandatory due diligence reporting requirements. It goes on to urge the UK government to advance the draft bill in the next King’s Speech, which will likely take place in May this year. The report was issued in mid-December, and the UK government is expected to respond to it by mid-February. See the report, Strengthening the UK’s Forced Labour and Human Rights Legislative Framework, here.

CLE webinar: Supply chain integrity – managing interconnected risks across the consumer goods life cycle. As supply chains scale, exposure to legal, regulatory, and commercial risk can increase at every stage of a product’s life cycle. From sourcing and sustainability to transportation, trade, and product end-of-life obligations, decisions in one area can create downstream consequences that affect market access, brand value, and enterprise stability. Please join our CLE webinar on Thursday, February 19, as a panel of DLA Piper attorneys share practical, cross-functional strategies to identify issues early in the lifecycle, connect risk areas, generate value, and build resilience. Register here.

Human rights due diligence measures advance in Asia. Efforts to put in place human rights due diligence frameworks are advancing in some Asian countries. In Thailand, which already has in place voluntary guidance on human rights, the Ministry of Justice has indicated that it is drafting legislation mandating all companies operating in country to identify, prevent, and address human rights and environmental risks. The legislation will reportedly include civil penalties for noncompliance, as well as such incentives for compliant companies as tax benefits and access to government contracts. In Indonesia, which also has in place voluntary human rights standards, the Ministry of Human Rights announced last year that it is developing a new regulation, contemplated for 2028, that would make compliance with human rights standards mandatory. In South Korea, the Act on the Protection of Human Rights and the Environment for Sustainable Business Management, which would impose mandatory human rights and environmental due diligence obligations on companies, was introduced in June 2025; in November 2025, a less stringent version of the measure was introduced. And Malaysia rolled out its inaugural National Action Plan on Business and Human Rights 2025-2030 (NAPBHR) in August 2025. The nonbinding NAPBRH lays out a national standard for responsible business conduct by strengthening legal protections, boosting corporate accountability, and providing remedies for breaches of human rights.

Australia’s critical minerals reserve: AUD1 billion boost for supply chain security. The Australian federal government has announced new details about its proposed Critical Minerals Strategic Reserve, which would secure the supply of key minerals vital for Australia’s economy and national security and support the Future Made in Australia ambitions. The move signals a significant advancement in national policy to accelerate the responsible development of the critical minerals value chain and positions Australia to play a pivotal role in the global critical minerals landscape. See our alert.

Energy and natural resources

California oil pipeline updates. In mid-December, the US Transportation Department’s Pipeline and Hazardous Materials Safety Administration (PHMSA) announced that it was taking over regulation of the Las Flores pipeline system from the California Office of the State Fire Marshal. The pipeline operator, Sable Offshore Corp., successfully argued that the pipeline – which moves crude oil from platforms in federal waters off Santa Barbara, California to Kern County, California – should be regulated as an interstate pipeline. On December 24, PHMSA approved an emergency permit allowing Las Flores to restart for 60 days. The same day, a coalition of environmental groups petitioned the Ninth Circuit Court of Appeals to stay the permit, arguing that PHMSA’s decision violates federal safety and environmental review laws, but the court denied their motion, also the same day. The company must still obtain an easement from the California Department of Parks and Recreation for the pipeline segment that passes through the agency’s jurisdiction.

In related news, on January 2, the California Public Utilities Commission issued a draft resolution proposing an interim rate increase for the San Pablo Bay pipeline, California’s largest inland oil pipeline, which moves crude oil from the Bakersfield area to refineries in Northern California. The Western States Petroleum Association began warning California lawmakers in 2024 that the pipeline operator was in severe financial distress and that shuttering the pipeline would push refiners to purchase more imports of ocean-borne crude. Should the interim rate be approved, it would be retroactive to August 1, 2025.

Little victories, further challenges for a carbon sequestration pipeline project. On January 12, the US Supreme Court declined a request from two Iowa counties for a review of a lower court’s December ruling that local ordinances setting out standards for hazardous materials pipelines are preempted by federal pipeline regulations. The refusal is the latest development in the saga of Summit Carbon Solutions’ USD9 billion multistate pipeline project, which proposes to move CO2 from more than 50 ethanol plants in five Upper Midwest states to an underground storage site in North Dakota. The Iowa Utilities Commission (IUC) granted a conditional permit for the project, known as the Midwest Carbon Express, in 2024. Iowa landowners, the Sierra Club Iowa Chapter, and 29 Iowa counties subsequently sued the IUC, in Shelby County v. Iowa, seeking to overturn the permit. In another twist, after the Iowa permit was granted, South Dakota enacted HB 1052, banning the use of eminent domain for CO2 pipelines, which pushed Summit to petition the IUC for amended permits changing the pipeline’s route. In December, the Iowa District Court for Polk County granted Summit’s request to remand the challenge to the pipeline permit back to the Iowa Utilities Commission. Shelby County v. Iowa is on hold until the IUC issues its decision about the amended permit. On January 13, a subcommittee of the Iowa House of Representatives advanced House Study Bill 507, which would prohibit pipeline operators from exercising eminent domain to build a carbon sequestration pipeline within Iowa. See some of our earlier coverage of this pipeline project here and here.

NHTSA proposes major reduction in fuel economy standards for vehicle model years 2022 to 2031. The US Department of Transportation has again proposed to revamp the Corporate Average Fuel Economy (CAFE) program, seeking to markedly reduce the stringency of existing fuel economy requirements for passenger vehicle fleets manufactured for sale in the United States. The changes, if adopted, would substantially reduce fleet average fuel economy requirements for passenger vehicles (including light trucks) for ten model years and make a number of far-reaching structural changes to the CAFE program. See our alert.

CARB retires NOx rule for B20 biodiesel, widening options in California’s diesel market. Effective January 1, the California Air Resources Board allowed the nitrogen oxide (NOx) mitigation requirement in its Alternative Diesel Fuel regulation to sunset. Previously, to address NOx emissions from older diesel-fueled trucks, producers blending biodiesel at B6 to B20 had to include at least 55 percent renewable diesel. The regulation built in an off ramp once new technology heavy duty diesel engines reached 90 percent of the state fleet’s total vehicle miles traveled, a milestone achieved in late 2025. With the requirement now lifted, fleets gain more flexibility to use higher biodiesel blends. Because biodiesel is typically more affordable than fossil diesel, the change could reduce fuel costs and spur broader biodiesel adoption in California, the nation’s largest diesel market. See CARB’s Executive Order for additional details.

Sustainability in financial services

For banks, financing green projects continues to be more profitable than financing oil and gas. For the fourth year in a row, in 2025, Wall Street’s largest banks made more money from financing green projects than from working with oil and gas companies, according to data gathered by Bloomberg Intelligence. Such lenders, Bloomberg analysts found, earned about USD3.7 billion overall from climate-related bond underwriting and loans last year. For comparison, the same institutions made about USD2.9 billion in 2025 from oil, gas, and coal financing. Analyst Grace Osborne stated, “Banks are no longer backing sustainability for reputational reasons. It’s increasingly where deal flow, fees and growth are.” She also noted that demand for capital linked to low-carbon technologies is still rising. The analysis also found that 2025’s USD3.7 billion in earnings from green projects represents a decline from 2024, when similar activities at these large institutions brought in about USD4.2 billion. Our own observations suggest that developing sustainable finance products and equity and debt investments remains an important opportunity, with emphasis on commercially viable solutions.

Calendar

Key global reporting deadlines

^{This calendar highlights coming reporting deadlines in key jurisdictions and is not a comprehensive summary of global sustainability regulations. Our Sustainability team’s interactive Global Sustainability Regulatory Dashboard provides our clients with an in-depth, comprehensive analysis of global sustainability regulations pertinent to their business. For more information about the Global Sustainability Regulatory Dashboard, please contact us via DLAPiperCorporateDataAnalytics@us.dlapiper.com.}

Coming events

• SF Climate Week takes place from April 18 to 26, 2026 in San Francisco.
• DC Climate Week takes place from April 20-26, 2026 in Washington, DC.
• Climate Week NYC takes place September 20 to 27, 2026 in New York City.
• The 2026 United Nations Climate Change Conference (COP31) will be held in November 2026 in Antalya, hosted by Turkey, with Australia serving as President of Negotiations.

For professional responsibility reasons, these summaries may not include discussions of developments relating to certain matters.