ESG+ Newsletter – 20 November 2025

Appeals court pauses upcoming California Climate Compliance Law 

On Tuesday afternoon, a federal appeals court temporarily paused enforcement of California’s Climate-Related Financial Risk Act (SB 261), pending the resolution of an appeal claiming it violates companies’ First Amendment rights. In effect, this preliminary injunction renders the January 1, 2026 deadline to publish climate risk reports irrelevant for the moment, though the California Air Resources Board (CARB) has yet to officially comment on the court order or adjust the reporting deadline. A hearing on the appeal is currently scheduled for January 9, 2026, and if the regulation stands, companies may need to publish compliant disclosures in short order. The other bill in California’s climate package, which requires the disclosure of corporate greenhouse gas emissions, the Climate Corporate Data Accountability Act (SB 253), is not affected by the court’s order. In related updates, earlier this week CARB announced a softening of several key elements of the regulations for the first reporting cycle in 2026. These updates primarily focus on SB 253 developments: pushing back the disclosure deadline from June 30 to August 10, 2026, eliminating assurance requirements for 2026 disclosures, and allowing companies to only publish GHG emissions if they were already collecting this information as of December 2024. Expect forthcoming regulatory updates from CARB in 2026 as we approach the SB 261 compliance deadline.  

European Parliament moves to scale back corporate sustainability regime  

The European Parliament has voted for sweeping rollbacks to the EU’s flagship sustainability regime, marking a historic political shift with major implications for corporate climate and human rights rules, Reuters and Responsible Investor report. In a seismic vote, centre-right Members of European Parliament aligned for the first time with far-right groups to strip climate transition plan requirements from the Corporate Sustainability Due Diligence Directive (CSDDD) and drastically narrow its scope to only the largest firms – those with over 5,000 employees and €1.5bn turnover. Reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) were also significantly reduced, removing around 90% of previously covered companies. The move follows months of pressure from industry and foreign governments, including the US and Qatar, which warned the rules could disrupt gas supplies. Critics say the vote signals the collapse of the EU’s long-standing “cordon sanitaire” against far-right influence and raises concerns of a broader deregulatory push as trilogue negotiations begin later this year.  

SFDR leaked draft draws broad support  

Investors broadly welcome the leaked review of SFDR, Responsible Investor reports. The draft incorporates much of the feedback echoed in the market, including ESMA naming rule exclusions and a reduction in the required sustainable investment share for Article 9 funds from 100 to 70 percent. This added flexibility may help rebuild confidence after recent outflows. The introduction of a newly labelled Article 7 category for transition funds has also been received positively. One major talking point is the removal of principal adverse impact statements, which has been estimated to save investors a collective €56 million a year. This proposed amendment has drawn widespread support.  

While the changes have been met with broad positivity, some asset managers still question whether these changes could contribute to growing ESG fatigue. Others question the logic in adjusting a methodology that the wider market was finally starting to understand. Based on early reviews, the leaked draft suggests that many of the concerns raised by market participants seem to have been addressed and should ease the flow of capital towards sustainable investments in the EU.  

SEC acts on shareholder proposals

Reuters has reported on the latest policy shift from the U.S. Securities and Exchange Commission (SEC). Up until at least next June, the SEC will stop issuing rulings on common procedural objections to shareholder proposals, such as whether a proposal was filed too late or whether the filer owns enough shares. The move follows comments by SEC Chair Paul Atkins, who argued many proposals violate Delaware. In response, certain corporate law experts have warned that the shareholder proposal process could be materially weakened.  

In practice, it appears companies will have greater power to block shareholder resolutions, especially on ESG (environmental, social, governance) issues like climate change or diversity, without having to seek SEC action on the exclusion of proposals. Critics argue it could “effectively end” activism on a range of issues if state courts back this interpretation; however, instead of channelling concerns through the shareholder proposal process, activists may begin to target individual directors deemed responsible for perceived failings over the course of the 2026 AGM season. 

Negotiations at COP30 remain divided 

As reported by the FT, after more than a week of talks countries remain divided on key issues including climate finance and the transition away from fossil fuels. Despite expectations that major issues such as this would be smoothed out after tense exchanges in Baku, negotiations in Belém have again exposed persistent divisions over who pays, how much and under what terms. While all parties acknowledge the scale of investment required to meet global climate goals, negotiations in Belém have revealed persistent divisions between the Global South and North over funding responsibilities and terms. Economic and geopolitical pressures – strained by slow economic growth, ongoing conflicts and shifting domestic political priorities have led governments to adopt a defensive stance or to quietly retreat from earlier commitments. In an unusual move, Brazil’s president has directly stepped in, holding back-to-back meetings in the hopes of ending a deadlock on key negotiations. It remains to be seen whether a meaningful agreement on key issues will be reached during this year’s conference given the current distance between major nations’ negotiating positions.  

Ratings agency warns of financial risks of decline of ocean health  

As reported by Sustainable Views, a new report issued by the ratings agency Moody’s has warned of the financial risks presented by rapidly declining ocean health. The paper reiterates figures developed by the Intergovernmental Panel on Climate Change which estimates that ocean stressors could cost the global economy $428bn annually by 2050. A combination of rising sea levels, current changes, biodiversity loss, and chemical and plastic pollution is causing a perfect storm for our oceans, which are also the world’s largest carbon sink. By tracking companies’ risks, Moody’s highlights that the oil and gas industry is the most exposed to the impacts of declining ocean health, closely followed by fishing and shipping. Moody’s argues that combatting these risks will require a significant uptake of Blue Bonds, with a total of $2.8bn of such bonds in issuance in Q3 2025. Ocean health is fundamental to the regulation of planetary systems and the economy. This Moody’s report further underscores the significant work that must be undertaken to preserve these vital ecosystems.  

ICYMI

• ESG News reports that Exowatt, a Sam Altman backed renewable energy developer  focused on dispatchable solar technology for data centres, has secured a further $50m, bringing total funding to $140m.
  
• The Global Reporting Initiative (GRI) has launched a new resource, the Integrity Matters Checklist. According to ESG Today, the checklist aims to help companies to align their climate commitments transition and disclosures with the UN’s net zero guidance.