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United States
U.S. Environmental Protection Agency (EPA) Outlines Next Phase of PFAS Regulation and Enforcement
On May 14, 2025, the EPA announced that it would maintain the current National Primary Drinking Water Regulations (NPDWR) for two perfluoroalkyl and polyfluoroalkyl substances (PFAS): perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS). The agency also intends to extend compliance deadlines for maximum contaminant levels and establish a federal exemption framework for the NPDWR. This announcement follows EPA Administrator Lee Zeldin's release of the agency's ambitious agenda to enhance PFAS regulation and counteract legacy contamination. The NPDWR, finalized on April 10, 2024, set Maximum Contaminant Levels (MCLs) for six PFAS, including PFOA and PFOS. The final rule requires public water utilities to complete initial monitoring for PFAS by 2027 and implement solutions to reduce noncompliant PFAS levels by 2029, at which point utilities with contaminant levels exceeding the applicable MCL must provide public notice of the violation. The EPA expects the NPDWR to protect approximately 100 million people from PFAS exposure through drinking water.
U.S. Securities and Exchange Commission (SEC) Withdraws Anti-Greenwashing Disclosure Requirements
On June 17, 2025, the SEC moved to formally withdraw a series of proposed rules initiated by former SEC Chair Gary Gensler, including a rule, Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices (the Proposed Rule). The Proposed Rule, published in 2022, would amend certain rules and forms under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 to require investment managers marketing ESG-focused funds to make disclosures intended to create a workable regulatory framework for ESG advisory services and mitigate the risk of greenwashing. The SEC does not intend to issue modified proposals or final rules with respect to the withdrawn rules.
U.S. Department of Labor (DOL) Announces Plans to Reverse ESG Investment Rule
On May 28, 2025, the DOL formally announced a plan to reverse its current rule entitled Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (the Rule), which since its enactment in 2023 has allowed employee retirement fund managers to consider ESG factors when making investment decisions. The DOL has authority under the Employee Retirement Income Security Act (ERISA) to determine what factors fund managers may consider when making retirement investment decisions. The Rule expanded the factors to include ESG, provided that doing so does not result in reduced returns or greater risks to plan participants. A coalition of 26 states filed a complaint in the U.S. District Court for the Northern District of Texas (the District Court) challenging the Rule soon after its enactment. The United States Court of Appeals for the Fifth Circuit (Fifth Circuit) was set to consider an appeal of the District Court's decision upholding the Rule, but the DOL's letter filed with the Fifth Circuit signals the DOL's abandonment of their defense of the Rule. To reverse the Rule, the recission must go through the formal rulemaking process, which the DOL stated that it plans to conduct "as expeditiously as possible," with the rulemaking set to appear on its Spring Regulatory Agenda.
California Air Resources Board (CARB) Hosts Public Workshop on Climate Regulations
On May 29, 2025, CARB hosted a public workshop to discuss the development of California’s Corporate greenhouse gas (GHG) Reporting Program established by Senate Bill 253 and the Climate-Related Financial Risk Disclosure Program authorized by Senate Bill 261, collectively called the California Climate Accountability Package. Notably, during the open meeting, CARB provided working definitions for terms such as “doing business in California” (which is the definition in Section 23101 of California’s Revenue and Taxation Code) and “revenues” (which is the definition of “gross receipts” as set forth in Section 25120(f)(2) of the California Revenue and Taxation Code). In addition, two of the key takeaways from the public workshop were that: i) full guidance from CARB is expected by the end of year (rather than July 1, 2025, as previously announced by CARB); and ii) notwithstanding this months-long delay in guidance, the reporting deadlines remain under the Climate Accountability Package remain unchanged.
For more on the reporting deadlines and disclosure requirements under the Climate Accountability Package, please see our most recent client alert on the topic.
Europe
EC Consults on Integrating Sustainability Considerations into Merger Reviews
On May 8, 2025, the EC published two parallel consultations seeking feedback regarding its effort to update the horizontal and non-horizontal merger guidelines. One question posed to the public involves how the EC's merger assessments could give "adequate weight" to sustainability considerations. This move reflects the growing need to align competition policy with the EU's broader climate neutrality and sustainability objectives. The consultations seek to address concerns around "green killer acquisitions"—mergers that undermine sustainability efforts—and to explore which mergers have a positive impact on clean innovation, green technologies and resource-efficient practices. Interested parties have until September 3, 2025, to submit responses.
EU and United Kingdom (UK) to Strike New Cooperation Agreements, Including Carbon Emissions Markets
On May 19, 2025, the EU and the UK held the first joint summit since the UK withdrew from the EU in 2020. At the summit, EU and UK representatives agreed on a new agenda for increased cooperation, including future cooperation projects linking the emissions trading systems (ETS) of the EU and the UK, with the UK becoming "dynamically aligned" with the EU. Goods originating in each jurisdiction should benefit from mutual exemptions from the respective Carbon Border Adjustment Mechanisms. Linking the EU's and UK's ETS will require a formal international agreement to become effective, with an interim agreement likely to be put in place while negotiations proceed.
EC Publishes Omnibus IV Simplification Proposal Implicating Batteries
On May 21, 2025, the EC published its proposal for a fourth Omnibus simplification package (Omnibus IV), which aims to simplify EU rules and reduce administrative burden. The Omnibus IV includes proposed amendments to the rules for batteries entering the EU market (the Batteries Regulation) but does not aim to implement new changes to the Corporate Sustainability Reporting Directive or the Corporate Sustainability Due Diligence Directive.
The Batteries Regulation covers all batteries placed on the EU market (except for defense and aerospace uses) and introduces successive obligations on importers and manufacturers covering the entire battery lifecycle, from raw materials to production processes, labeling, and recycling obligations. The Omnibus IV aims to amend the Batteries Regulation in two respects. First, the amended package would increase the threshold exempting companies from rules mandating the verification of raw material sources for batteries placed on the EU market. The threshold for exempt companies would increase from an annual turnover of less than €40 million (approximately $46.0 million) to an annual turnover of less than €150 million (approximately $172.6 million). Additionally, in-scope companies would only have to publish a report on their battery due diligence policy every three years, instead of annually.
The proposed Omnibus IV would postpone the battery due diligence obligations by two years: from August 18, 2025, to August 18, 2027. EC guidelines on these battery due diligence obligations would be released by July 26, 2026, rather than February 18, 2025. On May 23, 2025, the EC launched a public consultation on the proposed amendments to the Batteries Regulation. Public comments to the consultation close on July 31, 2025.
EC Adopts Country Risk Classification System for EU Deforestation Regulation (EUDR)
On May 22, 2025, the EC adopted a benchmarking system classifying countries into three risk categories under the EUDR: low, standard, or high risk. The EUDR covers commodities such as cattle, cocoa, coffee, oil palm, rubber, soy, timber, and products derived from these commodities and requires companies trading in these goods to conduct extensive supply chain due diligence efforts to ensure that these goods do not result from recent (post-December 31, 2020) deforestation, forest degradation, or breaches of local environmental and social laws. Only four countries are currently designated as "high risk": Belarus, Myanmar, North Korea, and Russia. Around 50 countries are classified as standard risk, and the remainder are classified as low risk. This classification affects whether operators can benefit from simplified due diligence obligations under the EUDR, and the level of annual compliance checks to be conducted by supervisory authorities.
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