Horizon – News and Trends in Sustainability Law

Global sustainability rulemaking is recalibrating, signaling a reset, not a retreat

In 2025, Europe and Singapore saw an overall rollback of some of the requirements imposed by sustainability-related regulations. Some highlights include:

• EU Omnibus I package. On December 8, the European Union reached an agreement on the first part of Omnibus I package of reforms originally announced in February. The agreement will simplify the bloc’s key sustainability regulations, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), while reducing their compliance burden on companies. Most notably, the agreement would significantly increase applicability thresholds, thereby reducing the number of covered companies and paring back regulatory requirements. While the agreed text must be formally adopted following votes in the respective bodies of the European Parliament and European Council, it is highly likely that the regulations will be finalized and amended in line with this political agreement. Additional Omnibus agreements are expected to be reached in 2026, creating current uncertainty about how to comply with other sustainability-related EU regulations.


• Suspension and postponement of laws. While the EU continues to move forward with its landmark sustainability regulations, it has delayed their compliance timelines. In April, the bloc adopted a “stop the clock” directive for the CSRD, delaying reporting for EU companies and groups to financial years starting on or after January 1, 2027 and for non-EU ultimate parent companies to financial years starting on or after January 1, 2028. Omnibus I further delayed the CSDDD’s reporting to financial years starting on or after January 1, 2030. On December 18, the European Council formally adopted a revision of the European Union Deforestation Regulation (EUDR) that postpones application of the regulation for all operators until December 30, 2026, allows micro and small operators an additional six months to comply, and removes certain printed products (for example, books, newspapers, and printed pictures) from scope. In Germany, the coalition agreement announced by the new government indicated that the existing Act on Corporate Due Diligence in Supply Chains (Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten), which is already in force, will eventually be replaced by the CSDDD. It further stated that, until the CSDDD comes into effect, those who do not comply with existing obligations will not be subject to sanctions. In Switzerland, the amendment to the ordinance on corporate climate disclosure was temporarily suspended starting in June, and in September, the Swiss Federal Council announced it intends to harmonize the country’s supply chain legislation with the EU’s reformed CSDDD, once the Omnibus I changes are final, “to continue ensuring harmonization of rules at the international level.” In Asia, Singapore postponed the application of International Sustainability Standards Board (ISSB)-based disclosure requirements for the majority of unlisted companies until 2030.

Against this backdrop, numerous countries globally are continuing to advance sustainability reporting. Australia’s and Mexico’s new sustainability reporting regimes continue as planned and are effective for in-scope companies in 2025 with annual reports due in 2026. Sustainability reporting standards for listed companies became effective in Hong Kong and Pakistan in summer 2025. Around the corner are Chile and Japan’s sustainability reporting standards, which become mandatory in the first quarter of 2026. Other countries have signaled plans to adopt reporting standards aligned with those of the ISSB into their national frameworks. China and the United Kingdom published draft ISSB-aligned standards in April and June, respectively. This brings the number of jurisdictions with either adopted or proposed ISSB standards to 36. In addition, in November, New Zealand published its draft standards, which are based on the ISSB standards’ predecessor, the broader international Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Crosscurrents in the US: Many states’ policy approaches will likely continue to diverge from Washington’s

The second Trump Administration ushered in a significant pivot in United States policy, promoting energy production and economic growth. The Administration, among other actions, issued an Executive Order (14260) supporting the review and suspension of state laws promoting sustainability policies; it also overhauled the US Environmental Protection Agency (EPA), cutting agency staff by more than a quarter and significantly changing its policies, including proposing in September to remove the Greenhouse Gas Reporting Program.

As we discuss in further detail below, states have made significant progress in extended producer responsibility (EPR) and recycling legislation. Meanwhile, Attorneys General in Florida and other states have increased their scrutiny of corporations’ EPR activities, expressing concerns that environmental groups and large businesses may be engaging in recycling practices that are anti-competitive and, therefore, in violation of state or federal antitrust laws.

The Securities and Exchange Commission (SEC) abandoned its defense of its landmark climate disclosure rules, which are the subject of an ongoing challenge in federal court. In September, the US Court of Appeals for the Eighth Circuit ordered the SEC to suspend the litigation until it decides whether to resume its defense or withdraw, repeal, or amend the rules. The SEC’s response is still pending. Even absent federal sustainability disclosure standards, some states have already introduced their own disclosure rules, with California’s SB 253 and SB 261 (related to GHG emissions and climate-related financial risk disclosures, respectively) being the most prominent examples. But SB 261 has also been challenged in court; and, in mid-November, the US Court of Appeals for the Ninth Circuit enjoined its enforcement pending the plaintiffs’ appeal of the trial court’s denial of a preliminary injunction. The California Air Resources Board (CARB) therefore announced in its December 1 enforcement advisory that it would not enforce SB 261 pending resolution of the injunction.

Regarding foreign regulations, there is strong opposition within the US to the extraterritorial application of EU sustainability regulations such as the EUDR, CSRD, and CSDDD. However, these concerns may be tempered by the recent adoption of Omnibus I.

Expect heightened rulemaking on product stewardship, circularity, and product end-of-life management

Despite significant deregulatory headwinds at the federal level, US states have been forging ahead with ambitious – and sometimes controversial – plans to bring about a “circular economy” that, as the US EPA put it, would keep “materials and products in circulation for as long as possible.” In the US, circular economy regulations typically come in the form of EPR frameworks, but other state efforts also seek to increase recycling rates, improve circularity infrastructure, and regulate the use of consumer-facing recyclability claims.

2025 was a pivotal year for US state-driven circular economy efforts, particularly EPR laws covering packaging, disposable food-service ware, and paper products. The main object of EPR laws is to make producers – rather than governments and taxpayers – responsible for the end-of-life costs associated with their products. This includes the financial burdens of collecting and disposing of products and, in some states, funding and enhancing recycling infrastructure, reducing the volume of plastic material in packaging, and transitioning from single-use packaging to packaging that is recyclable, compostable, or reusable.

EPR laws are typically implemented by a producer responsibility organization (PRO) that producers must establish, fund, and join. The PRO assesses and collects fees based on the volume of “covered materials” that a producer introduces into the state. Fees are generally “eco-modulated” so that producers pay less for covered materials designed to minimize waste or improve environmental outcomes. The PRO administers the program via a plan that must be approved by regulators. Thus far, every state that has selected a PRO has chosen the Circular Action Alliance (CAA).

Seven states so far have adopted EPR laws for packaging and are in various stages of implementing these schemes, with proposed EPR laws pending in other states. Several of these laws were adopted before 2025, but this was the year when mandates under those laws first took effect or when regulations and amendments clarified their scope. Oregon and Colorado both adopted packaging EPR laws in 2022, but most requirements for producers in both states took effect in 2025 (although Colorado producers will pay their first round of fees in January 2026). California also adopted its law before 2025, but producers were required to register with CAA and begin volumetric reporting on covered materials this year. Other states’ laws are in various stages of early implementation.

Given the novelty of these laws in the US and the burdens they impose on producers, legal challenges were widely predicted. Those predictions bore fruit in July when the National Association of Wholesaler-Distributors (NAW) sued Oregon regulators in the US District Court for the District of Oregon to block implementation of that state’s EPR law, the Recycling Modernization Act (RMA). NAW’s complaint alleges that Oregon’s RMA unconstitutionally interferes with interstate commerce and violates the US Constitution’s guarantees of equal protection and due process as well as Oregon’s nondelegation doctrine, which prohibits the delegation of certain regulatory powers to private entities. NAW has moved for a preliminary injunction, and oral arguments will be heard on February 6, 2026, providing an early glimpse into the court’s thinking about the law and NAW’s challenge. This litigation is widely considered a bellwether, with likely ramifications for EPR laws beyond Oregon. More importantly, should these judicial efforts survive legal challenge, they would signal a potentially even more significant 2026 as these initiatives continue to roll out and mature.

Beyond packaging EPR, California has been especially ambitious in its efforts to promote a circular economy. This year, trade groups from the apparel industry formed a PRO to implement SB 707, which sets out the nation’s first EPR scheme for textiles and apparel, although full implementation of that law remains years away. Separately, California’s Department of Resources Recycling and Recovery (better known as CalRecycle) has finalized a material characterization study by which producers can determine whether their products meet statutory requirements for recyclability. The final findings of that study, issued in April, started an 18-month countdown, after which producers will be barred from labeling any product as recyclable – including by use of the familiar “chasing arrows” symbol – unless the product meets strict statewide recycling standards.

Meanwhile, many jurisdictions outside the US have adopted and continue to push new regulations promoting circularity, with EU members – particularly France, Germany, Italy, and the Netherlands – considered leaders. In Latin America, perhaps the most significant circularity-related development of 2025 was Chile’s addition of textiles to its EPR law, expanding on its regulation of the management of other products in six priority product categories: packaging and containers, lubricating oils, electric and electronic equipment, tires, batteries and small batteries, and mercury products. We may see further life-cycle management regulations globally.

For supply chains, 2025 was turbulent. In 2026, the rules will likely keep shifting

2025 may have been the year of the supply chain, as the global trade framework, amid geopolitical tensions and shifting tariff policies, underwent some of the most significant disruptions since the COVID-19 pandemic. Next year may bring continued regulatory uncertainty to corporate supply chains as companies prepare to comply with long-delayed supply chain sustainability reporting and disclosure regimes. Tracking, reporting, and mitigating sustainability impacts across a company’s entire value chain will remain front of mind as companies navigate the dynamic and global regulatory environment.

The EUDR, which bars the sale of products linked to deforestation, was slated for implementation on December 30, but at this writing appears likely to be delayed until the end of 2026, not least with additional revisions to the list of covered industries. Meanwhile, the EU Omnibus I agreement, discussed above, limits the scope of the CSDDD – which mandates due diligence reporting of upstream and downstream supply chain activities – by, among other changes, substantially increasing its applicability thresholds (thereby reducing the number of covered companies), delaying the compliance timeline to financial years starting on or after January 1, 2030, and adding new value chain reporting restrictions. Under Omnibus I, companies may not, by contract or otherwise, demand information exceeding the European Commission’s voluntary sustainability reporting standards (which have yet to be adopted) from companies with 1,000 or fewer employees. These changes give companies more time to prepare and pare back some compliance burdens, but supply chain reporting requirements continue to move forward.

Furthermore, the EU’s Forced Labor Regulation (EUFLR), which comes into force in December 2027, will bring further substantial new compliance obligations for all businesses operating in or exporting from the EU market, not least because of its breadth. The EUFLR bans products, including the components of products, that have been manufactured using forced labor at any point in the extraction, harvest, production, and manufacturing process. It covers all companies regardless of size, affects products of any origin and sector, and is applicable regardless of the way products are marketed – that is, online sales are impacted too.

Companies must also prepare to report Scope 3 (in addition to Scopes 1 and 2) greenhouse gas (GHG) emissions. Scope 3 covers indirect GHG emissions in a company’s value chain – ie, those outside of its own operations (Scope 1) and purchased energy (Scope 2). In the US, California has proposed a deadline of August 1, 2026 for covered companies to report Scope 1 and 2 emissions under the Climate Corporate Data Accountability Act (SB 253), with Scope 3 reporting of upstream and downstream emissions slated for 2027. Similarly, in-scope companies in Australia and Mexico must report Scope 1, 2, and 3 emissions in their 2025 annual reports, which are due in 2026 under those countries’ new sustainability reporting rules.

Meanwhile, in the US, enforcement addressing forced labor across global supply chains continues to maintain strong bipartisan support. In November, Customs and Border Protection (CBP) issued its fourth Withhold Release Order of 2025, focusing on forced labor practices by a manufacturer of upscale denim garments.

Learn more about how companies are tackling supply chain challenges from our Supply Chain Risk & Resilience Hackathon.

Greenwashing: In the US, litigation and state enforcement will likely keep trending up

Against a backdrop of federal deregulation, greenwashing litigation and state-level regulatory enforcement in the US accelerated in 2025 as courts, state regulators, and consumers demanded stronger substantiation, transparency, and accountability for environmental and sustainability-related claims.

DLA Piper launched its Greenwashing Litigation Intelligence Hub in early 2024 to provide real-time tracking and analysis of emerging greenwashing disputes and enforcement activity across federal and state class actions, shareholder derivative matters, and private litigant actions involving alleged greenwashing claims. As of early December, the Hub has captured 73 cases this year, a 30-percent increase from 2024’s 56 cases.

The most active jurisdictions this year were California (39), New York (ten), Washington (five), and Ohio (five), underscoring the continued concentration of greenwashing activity in states with robust consumer protection frameworks. Litigation was nearly evenly split between federal and state courts, with 39 federal cases and 34 state cases filed during this period.

The most frequently affected sectors remain food and beverage, household products, and personal care, consistent with trends observed since 2021. Claims also continued to expand into transport, energy and natural resources, and agricultural products and services, reflecting broadening scrutiny. Plaintiffs most commonly relied on unfair competition or deceptive trade practices statutes, followed by false advertising and consumer protection laws, a pattern that has persisted across multiple filing years. Unjust enrichment claims, which declined from 2023 to 2024, regained momentum in 2025 and now rank as the fourth most frequently asserted cause of action after unfair competition or deceptive trade practices, false advertising, and consumer protection statutes. An analysis of these cases determined that, in 2025, the most frequently challenged terms appear to be “recyclable,” “sustainable,” and “plant-based,” reflecting closer scrutiny of claims tied to circularity and product composition.

In the US, the legal framework to address greenwashing claims is anchored in state consumer protection laws and the Federal Trade Commission Act of 1914 (FTC Act), with the FTC’s Green Guides as the primary touchstone. On the federal level, the FTC Green Guides continue to serve as the main standard for assessing environmental marketing claims. Of note: the Green Guides have been under review for the past two years, but, given the change in administration this year, progress may be delayed.

All US states have laws regulating unfair or deceptive conduct, which both public authorities and private plaintiffs routinely invoke to challenge alleged greenwashing. California continues to lead in developing state-specific environmental marketing requirements. Like many jurisdictions, California prohibits untruthful, deceptive, or misleading environmental claims and incorporates compliance with the FTC’s Green Guides as a safe harbor. In addition, AB 1305, effective January 2024, imposes new disclosure and substantiation obligations for voluntary carbon offset claims and restricts unsubstantiated statements – for instance, those making claims of carbon neutrality. Oregon has followed closely with proposed SB 680, a measure that would expressly prohibit misleading environmental marketing under the state’s Unlawful Trade Practices Act and would authorize civil penalties for violations. The Oregon bill, however, did not advance in this legislative session and remained in committee upon adjournment. States are also beginning to regulate specific environmental phrases through packaging laws. For example, California prohibits packaging labeled “recyclable” if it contains intentionally added perfluoroalkyl and polyfluoroalkyl substances (PFAS) or incidentally occurring PFAS above 100 parts per million, and New Jersey has introduced similar legislation that remains under consideration. The surge in greenwashing litigation, coupled with evolving regulatory standards at both the federal and state levels, suggests that companies may mitigate the risk of litigation, enforcement, and reputational harm by staying informed of legal developments, adopting best practices, and ensuring that all claims are supported by robust evidence.

Moving forward

Two phrases may accurately describe the business environment around sustainability law in 2026: changing crosscurrents, stabilizing expectations. Some governments are striving to roll back sustainability rules, while others are seeking to forward them, aiming for a balance among near-term economic goals, long-term climate goals, and consumer expectations. In this changing atmosphere, companies will likely continue to face a dynamic and increasingly rigorous legal and regulatory environment.

Meanwhile, sustainability reporting frameworks that are already in place in numerous countries are creating a globally aligned baseline, bringing in a solid consistency that will likely have profound knock-on effects extending beyond sustainability reporting. In pragmatic terms, companies that do business across borders – even across jurisdictional borders within their home countries – understand the need to address the full spectrum of emerging and maturing requirements. The baseline: substantiation, transparency, and proactive compliance will be more important than ever.