ESG+ Newsletter – 18 December 2025

Major emitters required to report from 2027 in New York 

According to ESG Today, the New York State Department of Environmental Conservation (NYSDEC) has confirmed regulations requiring mandatory greenhouse gas emissions reporting from large emitters. The NYSDEC’s GHG reporting program specifically targets facilities emitting over 10,000 metric tons of CO2e annually to report their emissions data, which will primarily impact power plants, industrial facilities, manufacturers, and waste management sectors. Emissions reporting for required industries is due on June 1, 2027, for the 2026 emissions year data. New York joins other state-level emissions reporting programs, including those in California, Washington, and Oregon, with some other states requiring sector-specific reporting. However, NY’s approach to target direct emitters contrasts CA’s SB 253, the Climate Corporate Data Accountability Act, which focuses on corporate revenue thresholds to report global greenhouse gas emissions across an entire value chain. Overall, this regulatory development is a significant step in New York’s climate action and emissions accountability strategy. Expanding state-level GHG reporting requirements are likely to accelerate as states move to fill regulatory gaps created by September 2025 EPA rollback on a federal level, which proposed ending reporting obligations for the Greenhouse Gas Reporting Program (GHGRP). There is merit in companies reviewing all regulatory requirements in the first part of 2026, as a means of ensuring the disconnect between state and federal reporting requirements does not cause reporting uncertainty as deadlines approach.

UK’s Biodiversity Net Gain scheme may be rolled back

The UK’s Biodiversity Net Gain (BNG) scheme was introduced in early 2024, under the 2021 Environment Act, requiring most developments in England and Wales to deliver a 10% net gain to biodiversity. Despite being hailed as a ‘landmark’ piece of legislation, according to Environmental Finance, the UK government has indicated that it may roll back the measures as part of a consultation to reduce environmental assessments in a bid to scale up housing delivery. Jonathan Halford, chairman of Environment Bank, commented that any such moves “will mark not just a setback, but a reversal of hard-won progress, jeopardising nature restoration and undermining investor confidence in the UK, and would do very little in terms of delivering on housebuilding targets”. The UK Department for Environment, Food and Rural Affairs told Environmental Finance that the government is “fully committed” to BNG. The results of the consultation are expected in the next week, with reports suggesting that small sites – the majority of the market – could have BNG requirements dropped and the planned expansion of the scheme into nationally significant infrastructure projects could also be stopped.

EU expands carbon border levy to further bloc’s decarbonisation goals

The EU is preparing to significantly expand its Carbon Border Adjustment Mechanism (CBAM) to cover emissions embedded deeper in industrial supply chains, ESG News reports. Planned additions include car parts, refrigerators, washing machines, construction products, and a range of industrial equipment. The aim is to close carbon leakage gaps by preventing manufacturers from relocating production to regions with weaker climate rules. By aligning the carbon cost of imports with the EU’s internal carbon price, the bloc aims to protect its domestic industry from cheaper, high-emission imports, while encouraging foreign producers to decarbonise. 

Alongside the scope expansion, draft proposals indicate that 25% of CBAM revenues would be recycled between 2028 and 2029 to support EU manufacturers investing in decarbonisation. The levy is forecast to generate €2.1 billion by 2030, making it a material climate-linked fiscal tool. Access to support would be conditional on companies actively reducing their carbon footprint, reflecting pressure from industry to pair border measures with reinvestment. The scope expansion is expected to raise trade tensions with major exporting economies and further test the World Trade Organization’s (WTO) boundaries, as recycling 25% of CBAM revenues could be interpreted as an indirect subsidy to retain manufacturing within Europe, which could potentially impact free and fair global trade.

US asset managers thread the needle on sustainability

US asset managers are facing mounting pressure from European pension funds over sustainability and climate risk alignment, according to Bloomberg. In response, to protect existing client mandates, US firms are increasingly using private arrangements like side letters and segregated accounts, offering tailored ESG solutions without public disclosure. These developments reflect a divergence between US and European markets: while US managers face political headwinds against ESG, European investors demand robust climate strategies, as a means of meeting regulatory obligations while also aligning with beneficiary expectations. Despite success in balancing demands in the US and Europe, workarounds may not suffice over the long-term, as institutional investors tighten responsible investment requirements. As the world appears to take a step back from ESG, it appears sustainability is having a back to the future moment; ESG, sustainability and responsible investment remains a decisive factor in securing institutional mandates and shaping long-term investment strategies.

Proxy advisors remain under the microscope 

US President Trump has issued a wide-ranging executive order directing several regulators to investigate and potentially curb the influence of proxy advisors (primarily ISS and Glass Lewis), according to Responsible Investor. The order tasks the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC) and Department of Labor (DoL) with reviewing rules and practices that the president claims allow proxy advisors to promote politically motivated agendas, including ESG and DEI, rather than prioritising investor returns.

The SEC chair has been instructed to review and consider rescinding rules and guidance relating to proxy advisors and shareholder proposals that are deemed “inconsistent with the purpose of the order.” The SEC chair is also directed to enforce anti-fraud provisions of federal securities laws in relation to material misstatements or omissions in proxy voting research and consider whether proxy advisors should be required to register as investment advisers; whether greater transparency should be mandated around methodologies and conflicts of interest; and whether proxy advisors facilitate coordinated voting among investment advisers. The FTC chair has been instructed to review ongoing state-level antitrust investigations into proxy advisors and determine whether there is a link between the conduct under scrutiny and potential violations of federal antitrust law. The FTC chair is also asked to investigate whether proxy advisors engage in unfair methods of competition or unfair or deceptive practices that may harm US consumers. Meanwhile, the DoL has been asked to strengthen fiduciary standards for pension and retirement plans covered under ERISA, including an assessment of whether proxy advisors act solely in the financial interests of plan participants and whether any of their practices undermine the pecuniary value of plan assets.

In response, certain commentators have pointed to the question of cost implications for asset owners if increased scrutiny of proxy advisors were to translate into higher functioning costs for these firms and/or asset managers internalising some of the research previously obtained from external advisers. Responsible Investor also reports that, amid renewed political scrutiny, ISS has revived its efforts to counter what it sees as misinformation about the sector. Without downplaying the potential impact of the executive order, it appears that in proxy voting, like in fashion, a number of trends tend to move in cycles.

ICYMI

• On Monday, lawmakers in the European Parliament agreed on the final Omnibus proposal, removing an estimated 90% of companies from the sustainability reporting requirements or the CSRD and CSDDD, ESG Today reports.

• ESG Dive reports that, according to a recent press release, the Science Based Targets initiative (SBTI) is seeking companies in the power sector to pilot its draft standards for the industry in setting near- and long-term climate targets.