February 2025 Newsletter

Here is our latest selection of ESG stories from February 2025.

EU Announces Sustainability Omnibus: Major Changes to CSRD Reporting

The EU Sustainability Omnibus announced significant revisions to CSRD reporting. Going forward, only large entities (1,000+ employees, €50M+ turnover, or €25M+ balance sheet) will fall within the scope, reducing the number of reporting companies by 80%. Companies initially scheduled to report in 2026-27 have an extended deadline to 2028. Smaller companies will only be asked to share simplified ESG data (VSME). Additionally, the ESRS standards will be refined with fewer data points, clearer guidance, and improved regulatory consistency. Sector-specific standards will be removed to simplify compliance. Read our update here.

EU Platform on Sustainable Finance Proposes Key Reforms

The EU Platform on Sustainable Finance has proposed changes to optimise sustainability reporting under the EU Taxonomy. Aiming to reduce compliance burdens, the recommendations focus on improving clarity, usability, and consistency with existing frameworks. Key suggestions include simplifying compliance assessments for the "Do No Significant Harm" (DNSH) criteria, introducing a temporary "comply or explain" approach, and allowing estimates for the Green Asset Ratio and Green Investment Ratio. Furthermore, the platform advises to set thresholds for key financial indicators and provide clearer guidelines on using estimates. To help SMEs access sustainable finance, it recommends a streamlined reporting framework for both listed and unlisted SMEs.

Recent Legal Challenges and Progress in the U.S. ESG Regulatory Landscape

In California, a federal judge has upheld the state’s climate disclosure laws (SB 253 and SB 261), rejecting a legal challenge from the U.S. Chamber of Commerce and several business groups. The laws require large companies operating in California to disclose their greenhouse gas emissions and climate-related financial risks. The Chamber argued that mandatory reporting violates the First Amendment by forcing companies to share information that could harm their reputation. However, the court ruled that the laws’ focus is on transparency rather than imposing penalties or forcing emission reductions, highlighting the shift towards stronger accountability in corporate sustainability reporting.

In Colorado, legislators have introduced House Bill 25-1119, which requires businesses with over $1 billion in annual revenue to disclose their greenhouse gas emissions. From 2028, these companies must report Scope 1 and Scope 2 emissions, with Scope 3 emissions phased in gradually from 2029 through to 2031. The bill is more stringent than California’s climate disclosure requirements, particularly in its broader approach to Scope 3 emissions, which encompass emissions from the supply chain, product use, and various other indirect sources.

Meanwhile, a coalition of state attorneys general, led by Texas, is intensifying its challenge to major financial institutions' ESG and Diversity, Equity, and Inclusion (DEI) practices. Attorneys general from ten states have warned firms like BlackRock, Goldman Sachs, and JPMorgan Chase that their ESG policies could violate legal standards and harm consumers. The coalition has given these companies 45 days to clarify their ESG commitments, with potential legal action looming if the firms fail to comply.

The People’s Pension Transfers £28 Billion to Maintain ESG Principles

The People’s Pension, the UK’s largest pension fund, has made the decision to withdraw £28 billion in assets from State Street, reallocating £20 billion to Amundi and £8 billion to Invesco. This action follows concerns about State Street’s reduced commitment to ESG principles.  With £33 billion in assets and nearly 7 million members, the move aligns with People’s Pension long-term strategy on achieving both solid financial returns and responsible investment practices. By refocusing its investments, the fund is prioritising sustainability and aligning its portfolio with ESG criteria, reflecting the growing trend among institutional investors to emphasise responsible investing.

Apple Shareholders Reject Proposal to End Diversity, Equity, and Inclusion Programs

Apple shareholders have voted overwhelmingly against a proposal to eliminate the company's diversity, equity, and inclusion (DEI) programs. The proposal, put forward by the National Centre for Public Policy Research, a conservative think tank, urged Apple to end its DEI initiatives, aligning with the Trump Administration’s stance against such programmes. However, 97% of shareholders supported Apple’s commitment to diversity. CEO Tim Cook affirmed the company’s ongoing dedication to advance an inclusive culture while acknowledging that the evolving legal landscape may require some adjustments to their DEI strategies.

If you’d like to know more or discuss any of these topics please get in touch.