Gibson Dunn ESG: Risk, Litigation, and Reporting Update (January 2025)

Client Alert  |  February 27, 2025

We are pleased to provide you with Gibson Dunn’s ESG update covering the following key developments during January 2025. Please click on the links below for further details.

I.  GLOBAL

  1. The International Financial Reporting Standards (IFRS) Foundation publishes guide for reporting only climate-related information using International Sustainability Standards Board (ISSB) Standards

On January 30, 2025, the IFRS Foundation published a new guide to help companies prepare abbreviated disclosures using the transition relief provided under ISSB Standards IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information to report only climate-related information under IFRS S2, Climate-related Disclosures, in the first reporting year. For those filing voluntary under the ISSB standards, this relief would apply to disclosure for the fiscal year beginning on or after January 1, 2024.

  1. The International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) jointly launch a new international framework to support the implementation of their sustainability standards

On January 27, 2025, the IAASB and IESBA jointly launched new and revised standards intended to enhance the trust and transparency of sustainability reporting and assurance. The standards are IAASB’s International Standard on Sustainability Assurance 5000 (ISSA 5000), which provides a framework for the assurance of sustainability information, and IESBA’s International Ethics Standards for Sustainability Assurance (IESSA), which provide ethical principles for sustainability reporting and assurance. ISSA 5000 and IESSA will become effective for periods starting on or after December 15, 2026, in the jurisdictions that choose to adopt them.

  1. Net Zero Asset Managers (NZAM) and Glasgow Financial Alliance for Net Zero (GFANZ) respond to departures

Following the public withdrawals of several large financial institutions from NZAM, on January 13, 2025, NZAM announced it was launching a review of the initiative following “[r]ecent developments in the U.S. and different regulatory and client expectations in investors’ respective jurisdictions.” While the review is in process, NZAM will suspend its activities tracking signatory implementation and reporting and will remove from its website the commitment statement and list of NZAM signatories, as well as their targets and related case studies.

Citing recent departures from its Net Zero Banking Alliance, GFANZ announced a restructuring plan to focus its efforts on mobilizing capital in support of the transition to net zero. In particular, the group seeks to close “the investment gap” in support of technology and public policy and to pursue public-private partnerships.

II.  UNITED KINGDOM

  1. Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) publish Climate Change Adaptation Reports 2025

On January 30, 2025, the PRA published its report on climate change adaptation reporting. The report notes that the current goal of the Bank of England’s policy work on climate change and the transition to net zero is to play a leading role in enhancing the resilience of the UK financial system and in understanding the financial, operational, and economic impacts on the macroeconomy. The PRA expects to publish in 2025 a consultation paper seeking views on an update to Supervisory Statement 3/19 on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change.

On January 28, 2025, the FCA published its report identifying three major issues that affect climate change adaptation in the financial services industry: (i) data and modelling for quantification and management of climate risks; (ii) barriers and enablers to insurance underwriting for climate risks and in consequence lending and investment; and (iii) barriers and enablers to financial services in allocating capital to adaptation.

  1. UK confirms 2035 Nationally Determined Contribution (NDC) emissions reduction target under the Paris Agreement

On January 30, 2025, the UK submitted its NDC target to the United Nations Framework Convention on Climate Change (UNFCCC). First announced by the Prime Minister at COP29 in November 2024, the UK has now committed to reduce all greenhouse gas emissions (GHGs) by at least 81% by 2035 compared to 1990 levels, excluding international aviation and shipping emissions. The commitment aligns with the recommendations of the U.K. government’s climate advisory body, which has verified the target as a credible contribution towards limiting global warming to 1.5 °C.

  1. UK Government votes to end debate and adjourn the Climate and Nature Bill

On January 24, 2025, the House of Commons debate resulted in a majority decision to adjourn the Climate and Nature Bill during its second reading, thereby preventing a vote on the proposed legislation. The bill proposes to impose a duty on the Secretary of State to ensure the UK implements its obligations and commitments under the Paris Agreement and the Global Biodiversity Framework, as well as a strategy to implement certain climate and nature targets. Debate on the bill will continue in July 2025.

  1. The Equality and Human Rights Commission (EHRC) publishes parliamentary briefing on the UK Employment Rights Bill

On January 14, 2025, the EHRC published its parliamentary briefing on the proposed UK Employment Rights Bill. The briefing notes the potential of many measures set out in the bill to improve working conditions and reduce inequalities in the workplace but also raises concerns about the level of detail intended to be left to secondary legislation. The EHRC highlights that this approach could limit the ability of parliamentarians and stakeholders to assess the legislation’s unintended impacts on certain protected groups. The briefing calls for the UK Government to consider and avoid such impacts. The EHRC also warned of the current lack of clarity around the UK Government’s intentions for enforcing the bill.

III.  EUROPE

  1. EU Commission releases proposal of “First Omnibus Package” scaling back Sustainability Reporting and Due Diligence Obligations under CSRD, Taxonomy and CSDDD

Please see Gibson Dunn’s February 28, 2025 alert, Omnibus Simplification Package Proposed by the EU Commission: Scaling Back Sustainability Reporting and Due Diligence Obligations.

  1. EU Platform on Sustainable Finance publishes draft reports suggesting revisions and simplifications of the EU Taxonomy Regulation and Climate Delegated Act

On January 8, 2025, the EU Platform on Sustainable Finance, tasked by the EU Commission with reviewing and recommending revisions to the Climate Delegated Act as well as with simplifying the EU Taxonomy Regulation, published a draft report. The report recommends simplifying the application of Do No Significant Harm criteria and expanding the scope of activities covered by the EU Taxonomy. This includes reducing complexity, improving the clarity and consistency of technical screening criteria, and providing more detailed guidance for reporting to ease the compliance process for companies and financial institutions.

On February 5, 2025, the EU Platform on Sustainable Finance published a second report in which it outlines “specific proposals to revise the Taxonomy Disclosures Delegated Act, leading to a reduction of over a third in the reporting burden for non-financial companies and a significant simplification for financial institutions.” Key recommendations include introducing a materiality threshold for corporate KPIs, making the OpEx KPI mandatory only for R&D costs, and simplifying the Green Asset Ratio by allowing estimates and proxies for non-EU and retail exposures.

  1. Switzerland sets new Climate Goals for 2035

On January 29, 2025, the Swiss government approved a new climate target, aiming for a 65% reduction in GHGs by 2035 compared to 1990 levels, to be implemented as an emission budget covering 2031-2035. This goal will be part of Switzerland’s second NDC under the Paris Agreement. The new target aligns with Switzerland’s Climate and Innovation Act, which mandates net zero emissions by 2050 and includes various measures to reduce energy consumption and transition away from fossil fuels. The government also plans to achieve an average 59% GHG reduction between 2031 and 2035, primarily through domestic measures, while retaining the option to use international emissions reductions.

  1. CSRD Transposition

No countries transposed the CSRD in January; however, the Dutch government submitted a CSRD implementation bill (Wet implementatie richtlijn duurzaamheidsrapportering) to the House of Representatives for consideration. An overview of the transposition of CSRD into national laws can be found here.

IV.  NORTH AMERICA

  1. The California Air Resources Board (CARB) extends comment period deadline for California Senate Bills 253 and 261

As described in our recent blog post, on December 16, 2024, CARB issued a request for public feedback and information regarding certain implementing regulations for Senate Bill (SB) 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate Related Financial Risk Act). CARB has extended the comment deadline to March 21, 2025, due to the Southern California wildfires.

  1. Attorneys general issue request for information to financial institutions on ESG activities

On January 27, 2025, a coalition of 11 state attorney generals, led by Texas Attorney General Ken Paxton, sent a letter to several large financial institutions expressing concern that the companies had breached their fiduciary duty to maximize shareholder returns by making investment decisions based on diversity and climate considerations.

  1. United States Climate Alliance (U.S. Climate Alliance) reaffirms commitment to Paris Agreement climate goals amid U.S. withdrawal

On January 20, 2025, the U.S. Climate Alliance, a bipartisan coalition of 24 state governors, delivered a letter to the Executive Secretary of the UNFCCC stating that the U.S. Climate Alliance, remains committed to the Paris Agreement, is “on track to meet [its] near-term climate target by reducing collective net greenhouse gas (GHG) emissions 26 percent below 2005 levels by 2025,” and noted that the states have “broad authority” to pursue climate initiatives despite President Trump’s announcement that he will withdraw from the Paris Agreement. .

  1. Tennessee drops ESG lawsuit against BlackRock following settlement agreement

As described in our Winter 2023 ESG update, Tennessee filed a consumer protection lawsuit in Tennessee state court against BlackRock alleging the company had misled or made false representations to the state’s consumers regarding the incorporation of ESG into its investment strategy. On January 17, 2025, Tennessee announced a settlement with BlackRock. As part of the settlement agreement, BlackRock agreed to increase disclosure and compliance around its use of ESG factors and to disclose on its website membership in climate-focused organizations. For funds that do not have investment objectives beyond financial performance or screens based on non-financial criteria, BlackRock agreed to cast votes “solely to further the financial interests of investors,” remove ESG ratings from main product pages, provide quarterly as opposed to annual disclosures regarding its proxy voting, and provide the rationale behind any proxy voting that is contrary to management’s recommendations.

  1. Federal Acquisition Regulatory Council (FARC) withdraws proposed climate-related disclosure rule

On January 13, 2025, FARC withdrew a proposed rule titled “Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk.” The rule, originally proposed on November 14, 2022, would have required certain government contractors to publicly disclose GHG emissions and major contractors (those that received over $50 million in federal contract obligations) to disclose climate-related financial risks and set emissions reduction targets in order to qualify for future federal contracts.

In case you missed it…

The Gibson Dunn Securities Regulation and Corporate Governance Practice Group has published updates regarding the Securities and Exchange Commission’s issuance of Staff Legal Bulletin 14M, which is relevant for the 2025 shareholder proposal season; its potential strategy shift in the climate disclosure rule litigation; and its new interpretive guidance on Schedule 13G eligibility for large stockholders engaging with companies on ESG.

The Gibson Dunn Workplace DEI Task Force has published several updates for January and February summarizing the latest key developments, media coverage, case updates, and legislation related to diversity, equity, and inclusion, including dedicated alerts describing:

  • a recent executive order revoking affirmative action requirements for government contractors and directing agencies to identify nine large targets for investigations of private sector DEI practices;
  • the impacts of recent executive orders regarding race and gender on corporate DEI programs; and
  • potential insights an Office of Personnel Management memorandum may give into future enforcement of the DEI directives.

Gibson Dunn also published two alerts regarding energy-related executive orders:

  • key takeaways from the executive order “Unleashing American Energy” and its potential impact on various energy initiatives as well as the M&A and capital markets outlook for energy companies; and
  • ten regulatory and policy issues energy industry experts will be monitoring in the early days of President Trump’s second administration.

More information on executive orders and other announcements from the White House is available in our White House Executive Order Tracker. A collection of our analyses of the legal and industry impacts from the presidential transition is available here.

V. APAC

  1. Securities Commission Malaysia and the Central Bank of Malaysia releases 2025 climate change priorities

On January 22, 2025, Securities Commission Malaysia and Bank Negara Malaysia, co-chairs of Joint Committee on Climate Change (JC3), held its 14th meeting and released a joint statement outlining their priorities and action plans for addressing climate change in 2025. JC3 will focus on building climate resilience in the financial sector in three key areas: addressing data challenges, facilitating small and medium enterprises’ transition, and designing climate finance solutions.

  1. Securities Commission Malaysia releases guidance to aid company directors in driving sustainability reporting

On January 20, 2025, the Securities Commission Malaysia released a guide titled “Navigating the Transition: A Guide for Boards” to provide actionable steps for directors to adopt the National Sustainability Reporting Framework (NSRF). The NSRF addresses the use of the sustainability disclosure standards issued by the ISSB. Large-listed issuers on the Bursa Malaysia’s Main Market with market capitalization of RM2 billion and above will start NSFR implementation this year, while other listed issuers and non-listed large companies will be expected to comply with the reporting requirements by 2027 under a phased approach.

  1. Bank of China joins the Taskforce on Nature-related Financial Disclosures

On January 13, 2025, the Taskforce on Nature-related Financial Disclosures (TNFD) welcomed the Bank of China (BOC) as the first Chinese institution to join the TNFD.

Lauren Assaf-Holmes, Mellissa Campbell Duru, Mitasha Chandok, Becky Chung, Georgia Derbyshire, Ferdinand Fromholzer, Muriel Hague, Michelle Kirschner, Vanessa Ludwig, Babette Milz, Kiernan Panish, Johannes Reul, Annie Saunders, and Helena Silewicz*

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s ESG: Risk, Litigation, and Reporting practice group:

ESG: Risk, Litigation, and Reporting Leaders and Members:
Susy Bullock – London (+44 20 7071 4283, [email protected])
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, [email protected])
Perlette M. Jura – Los Angeles (+1 213.229.7121, [email protected])
Ronald Kirk – Dallas (+1 214.698.3295, [email protected])
Michael K. Murphy – Washington, D.C. (+1 202.955.8238, [email protected])
Robert Spano – London/Paris (+33 1 56 43 13 00, [email protected])

*Helena Silewicz is a trainee solicitor in London and is not admitted to practice law.

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