ESG+ Newsletter – 17 July 2025

Investor support for E&S proposals drops again in 2025   

New data from Morningstar shows that investor backing for environmental and social (E&S) shareholder proposals has waned for a fourth consecutive year, with average support dropping to 16% in 2025. This is down 20% from last year and half the level seen in 2021 and 2022. The decline is seen as a reflection of the political climate in the US as well as companies’ progress on ESG goals, at least in terms of disclosure, limiting vulnerability to shareholder activism. Talking to Reuters, Leslie Samuelrich, president of climate-focused fund Green Century, said large investors appear unwilling to support proposals that might attract questions from customers or political criticism.  

Morningstar also found that average support for E&S proposals filed by anti-ESG proponents remained below 3% in 2025, consistent with the previous two years. Similar to the number of conventional E&S resolutions, which declined from 316 proposals in 2024 to 167 in 2025, anti-ESG E&S proposals also fell, though at a slower rate, from 84 to 57. These filings accounted for 25% of all E&S-related proposals in 2025, up from 21% in 2024. Despite garnering minimal support at shareholder meetings, these filers continue to see value in submitting such proposals, likely due to the media attention and visibility their efforts generate, serving to put companies “on notice” for the strategies they pursue.  

UK scraps plans for green taxonomy  

The UK Government has announced its decision not to introduce a green taxonomy in the UK, reports IPE News. The decision came as part of the UK Financial Services growth plan on 15 July 2025, and followed an inconclusive response from investment groups about the efficacy of a UK Green Taxonomy. While some groups noted the positive value, others shared concerns about lack of policy clarity. Commenting on the decision, Emma Reynolds, Economic Secretary to the Treasury in the UK Government, said “after careful consideration, the government has concluded that a UK Taxonomy would not be the most effective tool to deliver the green transition and should not be part of our sustainable finance framework”. The UK Government announced their intention to instead focus on policies that industry feedback suggested would have a greater impact, with a consultation open on sustainability reporting last month, which the government states demonstrate its ambition to work closely with industry to establish the UK as a global hub for green/transition finance activity. With the EU’s taxonomy being “simplified” as part of the bloc’s Omnibus package, and other jurisdictions ploughing ahead with their plans for their own versions of a taxonomy, there may be a sense of back to the drawing board for greater uniformity in classification of green activities globally.  

EU confirms delay in sustainability reporting requirements for large companies

ESG News reports that the EU has amended the European Sustainability Reporting Standards (ESRS), as part of the Commission’s broader Omnibus regulatory reform aimed at simplifying the Corporate Sustainability Reporting Directive (CSRD). Under these amendments, “Wave One” companies – those already required to report under the CSRD for FY 2024 – can delay new disclosures such as biodiversity metrics and Scope 3 emissions until FY 2027. Companies with fewer than 750 employees are exempt from reporting on Scope 3 GHG emissions, biodiversity, workforce, workers in the value chain, affected communities, and end users. Companies with over 750 employees now receive most of the phase-in relief granted to smaller firms, but will still be required to disclose Scope 3 emissions. 

The Omnibus initiative seeks to reduce the CSRD scope to firms with over 1,000 employees, with some lawmakers pushing for even higher thresholds. The European Financial Reporting Advisory Group (EFRAG), responsible for the crafting of the European Reporting Standards, is aiming to reduce reporting datapoints by two-thirds, with a review expected to conclude by FY 2027. These changes reflect a broader EU shift to balance corporate reporting burdens with long-term climate and social objectives under what has been termed a drive for “greater competitiveness.” 

CARB releases compliance guidance on California Climate Disclosure Laws   

While other jurisdictions seek to defer or even scrap sustainability reporting requirements, ESG Dive reports on the California Air Resources Board’s (CARB) release of guidance on its two major climate-related laws: SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act). 

The FAQ confirms the 2026 reporting deadline still stands, with CARB remaining committed to developing the final regulation by the end of the year. Current deadlines require companies to publish their first climate-related financial risk report by 1 January 2026, with a less specific deadline of reporting Scope 1 and 2 emissions with limited assurance “in 2026”. CARB restated that it will not enforce non-compliance penalties during the first reporting cycle, as long as companies make a “good-faith effort” and submit their initial reports based on “best available information.” CARB will also seek public input as the regulation is being finalised throughout the year.  

SB 261 is expected to impact over 10,000 companies operating in the Golden State, and aligns with global standards like TCFD, positioning California at the forefront of climate-related financial transparency. By requiring companies to publicly disclose climate risk reports and emissions data, the state may set a national precedent, potentially influencing broader adoption of mandatory climate disclosures across other US states. 

Forced labour flagged as concern in luxury fashion sector

A recent study by ESG data firm RepRisk found that over half of social and governance risks are linked to labour exploitation. The global analysis reviewed over 2.5 million publicly available documents, focusing on three fashion tiers: fast, premium, and luxury.

In the luxury tier, 17% of incidents involved forced labour, human rights abuses, or corporate complicity. In fast fashion, labour issues such as poor treatment and excessive hours were most common, making up 46% of cases. Environmental and health concerns accounted for 13%. Across all fashion tiers, most social risk incidents involved poor working conditions, forced labour, and human rights violations, together making up 35% of all cases.

Geographically, the US recorded the highest number of ESG risk locations at 2,429, followed by China at 2,203. US-based companies also led in supply chain incidents, totalling 5,168, while Germany ranked second with 2,079. European firms were found to be twice as likely to be involved in labour-related issues in Asia than in Europe.

ICYMI 

• GRI has proposed a new sustainability reporting standard for the textile and apparel sectors, covering key issues like labour rights, hazardous chemicals, and supply chain impacts according to ESG Today. The draft was developed by a global working group and identifies 18 key topics for companies to report on. Public feedback is open until end of September, with the final standard expected in 2026.
• DHL announced that it has signed a deal with Neste to supply over 9 million litres of SAF for its Singapore flights from 2025 to 2026. This will cover up to 40% of fuel needs for its cargo fleet at Changi Airport and will support DHL’s net-zero goals.
• According to Environmental Finance, labelled bond issuance had a weak start to the year, putting the market on track for its lowest annual total since 2022. Issuance dropped by over $100 billion to $449.7 billion in the first half of 2025, compared to $574.1 billion during the same period in 2024. All regions saw declines, with Europe still leading, while US issuance fell sharply to $40 billion.