There have been significant developments in ESG regulation in the United States over the last 12 months, and we expect consequential ongoing changes in the months ahead as President Donald J. Trump advances his policy priorities. To date, the second Trump Administration, which began January 20, 2025, has issued wide-ranging executive orders (EOs) impacting U.S. policy on ESG and diversity, equity and inclusion (DEI) matters, including:

• terminating all federal government “diversity, equity, inclusion, and accessibility” mandates, policies, programs, preferences, and activities along with all DEI-related offices, positions, action plans, and performance requirements (govinfo.gov/content/pkg/FR-2025-01-29/pdf/2025-01953.pdf);
• revoking prior EOs combating climate change and promoting electric vehicles (EVs), and terminating disbursements under the Inflation Reduction Act of 2022 (IRA) (govinfo.gov/content/pkg/FR-2025-01-29/pdf/2025-01956.pdf);
• ordering all agencies to “combat” private-sector DEI preferences, mandates, policies, programs, and activities and revoking President Johnson’s EO 11246, establishing an equal opportunity policy for federal contractors (govinfo.gov/content/pkg/FR-2025-01-31/pdf/2025-02097.pdf);
• directing the U.S. Armed Forces to review internal DEI efforts and abolishing all DEI offices in the Defense and Homeland Security Departments (govinfo.gov/content/pkg/FR-2025-02-03/pdf/2025-02181.pdf);
• withdrawing the United States from the Paris Agreement and other agreements under the United Nations Framework Convention on Climate Change (whitehouse.gov/presidential-actions/2025/01/putting-america-first-in-international-environmental-agreements); and
• declaring a national energy emergency, which, among other things, authorizes departments and agencies to expedite the development of domestic energy resources (whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency).

In addition, as discussed more fully in response to Questions 3 and 5, below, in March 2024, the Securities and Exchange Commission (SEC) adopted a final rule that would require registrants, including foreign private issuers (FPIs), to disclose climate-related information in their registration statements and periodic reports (the “Final Rule”). Upon issuance, the Final Rule was challenged in court and was subsequently stayed by the SEC. Given the Trump Administration’s opposition to the Final Rule, it is unlikely to go into effect.

On September 20, 2024, the U.S. Commodity Futures Trading Commission (CFTC) approved final guidance related to voluntary carbon credit derivative contracts. As set out in response to Question 3, below, the guidance enumerates factors for designated contract markets (DCMs) to comply with both statutory and related regulatory obligations. The guidance does not, however, impose new obligations on DCMs.

Separately, in the last 12 months, several additional states passed “anti-ESG” laws and regulations. These fall broadly into two types: (i) “Anti-Boycott” laws, which prohibit the state from doing business with asset managers, banks, and other financial services firms deemed to “discriminate” against certain industries; and (ii) “No ESG Investment” laws, which prohibit investing state funds in support of ESG efforts.

In addition, throughout 2024, the Administration of President Joseph R. Biden advanced a number of climate-related investment initiatives through the IRA and the Infrastructure Investment and Jobs Act of 2021. These included efforts to provide up to USD 6 billion for decarbonization projects in energy-intensive industries.

The Biden Administration also released a 2024 National Action Plan on Responsible Business Conduct, seeking to ensure Executive Branch agencies adhere to and promote responsible business conduct. This Action Plan sought to “promote respect for human and labor rights, expand use of green energy, further a just transition, counter corruption, protect human rights defenders, advance gender equity and equality, and promote rights-respecting use of technology.”

In the United States, neither “ESG” collectively nor “E,” “S,” or “G” individually has a single legal definition. Nor is there a settled view in the U.S. business community as to ESG’s precise contents.

Generally, ESG is viewed as shorthand for risks and opportunities related to environmental (inclusive of climate change, greenhouse gas (GHG) emissions, biodiversity, resource use, and preservation); social (inclusive of diversity, equity and inclusion, racial justice, human rights, labor conditions, and labor rights); and governance (inclusive of traditional corporate governance, board diversity and competency, bribery and corruption, and good governance) matters. In recent years “ESG” has become a polarizing term in the United States. As a result, some organizations have shifted away from the “ESG” terminology altogether and adopted terms such as “sustainability” and “responsible business” to describe their activities in these areas.

Second Trump Administration

The second Trump Administration has issued various EOs — which notably are written directives, not legislative actions — addressing ESG, including EOs that:

• revoke environmental protections for federal and state lands in Alaska;
• remove the United States from the Paris Agreement and any other agreements under the United Nations Framework Convention on Climate Change;
• declare a national energy emergency to allow exploitation of domestic energy resources on federal lands and issue emergency fuel waivers for gasoline and expedite delivery of energy infrastructure;
• eliminate the EV mandate and terminate the Green New Deal, immediately pausing all disbursements under the Inflation Reduction Act of 2022;
• combat “illegal private-sector DEI preferences, mandates, policies, programs, and activities” and also terminate all DEI programs in the federal government, which includes terminating all DEI and “environmental justice” offices and positions, among other things. A separate EO provides for federal agencies to “take immediate steps to end Federal implementation of unlawful and radical DEI ideology”; and
• declare that it is the policy of the United States to “recognize two sexes, male and female,” enforce laws to “promote [the] reality” that “women are biologically female, and men are biologically male,” and recognize that women are biologically distinct from men.

The Trump Administration also issued a memorandum ordering relevant federal agencies to cease approvals of new onshore and offshore wind projects, including suspending the Lava Ridge Wind Project. We expect further executive and legislative activity related to ESG, including potentially new laws, in the months to come.

Securities and Exchange Commission

On March 6, 2024, the SEC adopted the Final Rule, which would require SEC registrants, including foreign private issuers, to disclose climate-related information in their registration statements and periodic reports. The Final Rule was intended to facilitate the disclosure of “complete and decision-useful information about the impacts of climate-related risks on registrants” and to improve “the consistency, comparability, and reliability of climate-related information for investors.” Immediately upon issuance the Final Rule was challenged in court and subsequently stayed. Given opposition to the Final Rule, the Final Rule is unlikely to go into effect.

Commodity Futures Trading Commission

On September 20, 2024, the CFTC approved final guidance regarding the listing for trading of voluntary carbon credit derivative contracts. The guidance sets out relevant factors for CFTC-regulated DCMs to comply with statutory obligations under the Commodity Exchange Act (CEA) and associated CFTC regulations. The guidance also covers factors related to the CFTC’s Part 40 Regulations, which concern submitting new derivative contracts and contract amendments to the CFTC. The guidance specifically focuses on DCM listings for trading of voluntary carbon credits (VCCs), namely commodities geared toward supporting GHG emission reduction efforts.

In particular, the guidance focuses principally on the listing of physically settled VCC derivative contracts and provides the following:

• DCMs must only list derivative contracts that are not readily susceptible to manipulation. The CFTC notes that, while standardization and accountability mechanisms for VCCs are still developing, DCMs should determine a VCC’s integrity by reference to, at a minimum, quality standards, delivery points and facilities, and inspection provisions;
• DCMs must monitor derivative contracts’ terms and conditions to ensure, among other things, that the underlying VCC conforms to the latest certification standards applicable to that VCC; and
• DCMs must satisfy the product submission requirements under Part 40 Regulations and CEA section 5c(c). The guidance highlights three requirements: (i) contract submissions to the CFTC must include a section on “explanation and analysis” of the contract and its compliance with regulations; (ii) such explanation and analysis must be accompanied by documentation (or a summary thereof and appropriate citations) relied upon to establish such compliance; and (iii) if requested, the DCM must provide additional evidence of compliance.

The CFTC noted that the guidance does not establish new obligations for DCMs but rather enumerates factors the CFTC may consider relevant in its evaluation of DCM compliance. The guidance thereby allows for flexibility in recognition of the evolving class of products that qualify as VCC derivatives.

Department of Homeland Security

On April 5, 2024, DHS announced a crackdown on illicit trade in the textile industry, including in connection with violations of the Uyghur Forced Labor Prevention Act (UFLPA). Two DHS agencies, the U.S. Customs and Border Protection and Homeland Security Investigations, were tasked with collaborating to implement the new measures.

On July 9, 2024, DHS updated its UFLPA Strategy to strengthen efforts to combat forced labor in Chinese supply chains. The new strategy identifies high-priority sectors — aluminum, polyvinyl chloride (PVC), and seafood — with elevated risk of forced labor or state labor transfers of Uyghurs and other ethnic minorities from the Xinjiang Uyghur Autonomous Region (Xinjiang). This expansion builds on two years of UFLPA enforcement, which previously prioritized apparel, cotton products, silica-based products, and tomatoes.

On May 16, 2024, DHS updated the UFLPA Entity List, adding 26 companies that the Forced Labor Enforcement Task Force, chaired by DHS, believed were involved in exploiting forced labor from Xinjiang. The newly added companies were alleged to have sourced cotton from Xinjiang. Thereafter, on June 11, 2024, and October 31, 2024, DHS added additional Chinese companies, emphasizing its increased scrutiny on the seafood, aluminum, and footwear sectors. DHS is continuing to add entities to the UFLPA entity list, with the total number of banned companies currently at 144, and it is expected that the Trump Administration will extend these enforcement efforts.

Environmental Protection Agency

On March 20, 2024, the EPA released the national pollution standards setting out the final rule applicable to cars, light-duty trucks, and medium-duty vehicles manufactured from 2027 onward, to be phased in from 2027 through 2032. The rule aims to encourage the transition to cleaner vehicles by imposing stricter air emissions standards.

On April 25, 2024, the EPA announced final rules aimed at reducing pollution from fossil fuel-based power plants. The standards are designed to help provide regulatory certainty to the power sector and further support their long-term investments in clean energy. The new rules were introduced under the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act. They provide that: (i) existing coal-fired power plants and new gas-fired plants must control 90% of their GHG emissions through available control technologies; (ii) coal-fired power plants must comply with the updated Mercury and Air Toxics Standards, which tighten emissions standards for toxic metals by 67% and reduce the emissions standard for mercury from existing lignite-fired sources by 70%; (iii) coal-fired power plants must limit the discharge of pollutants in wastewater; and (iv) coal ash must be safely managed in areas that previously were unregulated by the federal government. Question 5, below, discusses litigation challenging these rules.

On September 10, 2024, the EPA proposed updates to its Recommendations of Specifications, Standards, and Ecolabels for Federal Purchasing. The recommendations are designed to guide federal agencies that purchase products to properly identify environmentally sustainable products. The recommendations cover 35 product and service categories, helping to ensure that purchases by the federal government prioritize products that conserve energy, contain recycled content, or reduce the use of harmful substances such as per- and poly-fluoroalkyl substances (PFAS) and single-use plastics, while also reducing the purchase of products that make false, misleading, or otherwise inaccurate sustainability claims. The proposed changes follow the introduction of the Sustainable Products and Services procurement rule, finalized in April 2024, which directs federal agencies to prioritize purchases based on the EPA’s standards. The proposed changes: (i) introduce 14 new standards and ecolabels; (ii) expand the recommendations to sectors including healthcare, laboratories, and clothing and uniforms; and (iii) expand the food serviceware category to include reusable, certified compostable, and recyclable items.

On November 12, 2024, the EPA released a final rule to combat methane emissions from oil and gas operations. In particular, the rule introduces a waste emissions charge for oil and gas sector emitters exceeding 25,000 metric tons of carbon dioxide equivalent per year. The charge is set to start in 2024 at USD 900 per metric ton and will increase annually thereafter. The rule further delivers on the IRA’s goal of reducing pollution by incentivizing the adoption of clean technologies and introducing best practices for reducing GHG emissions.

The EPA’s rules and initiatives are expected to be significantly curtailed by President Trump. It is therefore difficult to predict the ultimate applicability of these new rules and standards.

Federal Reserve Board

On May 9, 2024, the Federal Reserve Board (FRB) published a long-awaited summary of its exploratory pilot Climate Scenario Analysis (CSA). The exercise, conducted with Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, examined the banks’ ability to withstand climate-related financial risks. Launched on January 17, 2023, the CSA was intended to: (i) assess large banking organizations’ climate risk-management practices and challenges; and (ii) enhance the ability of large banking organizations and supervisors to identify, estimate, monitor, and manage climate-related financial risks. The pilot exercise was exploratory in nature and did not have consequences for bank capital or supervision. The CSA exercise resulted in several key insights, including: (i) the difficulties of measuring and incorporating highly uncertain risks into risk-management frameworks; (ii) the importance of understanding insurance market dynamics when modeling physical risk impacts on credit exposures; and (iii) the prevalence of modeling and data-related challenges. The participant banks indicated their plans to incorporate climate scenario analysis into their risk-management processes.

On October 24, 2023, the FRB, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) finalized joint principles intended to provide large financial institutions — those with more than USD 100 billion in total consolidated assets — a high-level framework for the “safe and sound” management and mitigation of climate-related financial risks. The finalized principles seek to: (i) employ a flexible and iterative approach to risk management; (ii) outline actionable expectations for institutions’ boards of directors and management; (iii) provide guidance on climate-related public statements, with a focus toward avoiding greenwashing; (iv) specify that financial institutions should consider the impacts of climate change and its climate mitigation strategies on low- to moderate-income communities; (v) acknowledge data, risk management, and reporting challenges; (vi) encourage the use of exploratory scenario analysis exercises; and (vii) confirm that they do not impose specific requirements on financial institutions.

During the Trump Administration, the federal banking agencies are expected to shift their focus away from climate-related financial risk issues.

State-level developments

2024 also saw several U.S. state-level legislative and regulatory developments, with varied approaches resulting in a patchwork regulatory landscape.

In particular, a number of states passed “anti-ESG” laws and regulations falling into one of two primary types: (i) “Anti-Boycott” laws, which target “financial institutions” that “boycott” or “discriminate against” companies in certain industries and which prohibit the state from doing business with such institutions; and (ii) “No ESG Investment” laws, which prohibit the consideration of ESG factors by state fiduciaries except to the extent doing so maximizes financial returns.

For example, “anti-ESG” laws include H.B. 3, a Florida law passed in May 2023, which prohibits the consideration of non-pecuniary factors in the investment of public funds and restricts financial institutions from limiting the services they provide based on failure to meet ESG metrics. In March 2024, Idaho passed S.B. 1291, which prohibits contracts between public entities and companies that boycott certain industries, including fossil fuel energy, hydropower, nuclear energy, timber, minerals, agriculture and firearms, and requires companies contracting with public entities to certify that they do not boycott such industries.

On May 2, 2024, Florida Governor, Ron DeSantis, signed into law Florida H.B. 989, which seeks to provide legal recourse to consumers who believe they have been denied banking services based on “unsafe and unsound practices.” The law establishes a coordinated complaint and investigatory process within the Florida Office of Financial Regulation for consumers who believe they have been subject to unreasonable bank account cancellations and restrictions. Under H.B. 989, suspending and terminating a bank account is deemed an “unsafe and unsound practice” if the decision was made on the basis of: (i) the person’s political opinions, speech, or affiliations; (ii) the person’s religious beliefs, religious exercise, or religious affiliations; (iii) any rating, scoring, analysis, tabulation, or action that considers a social credit score based on certain factors; or (iv) any factor that is not a quantitative, impartial, and risk-based standard. If a customer or member of a financial institution suspects that the institution violated the “unsafe and unsound practice” standard, the law establishes a complaints process with the Office of Financial Regulation. The complaint triggers an obligation for the financial institution to investigate its practices and report the results to the Office of Financial Regulation. If the investigation confirms the existence of “unsafe and unsound practices,” the offending financial institution may be sanctioned.

By contrast, many states in the same period have introduced “pro-ESG” laws. These include, for example, Utah’s law H.B. 404, which implemented new procurement restrictions on forced labor products and certain services from restricted foreign entities. (Notably, Utah has also passed “anti-ESG” laws, including S.B. 97 in March 2023, which, among other things, prohibits public entities from entering into contracts with companies unless those companies verify that they do not boycott certain industries.)

In 2023, California passed three climate-related disclosure laws, which are discussed in detail in response to Question 7, below. In 2024 and 2025, several other “blue” states, including New York, Illinois, Minnesota, and Washington, have taken steps advancing similar laws.

On March 25, 2024, as part of President Biden’s Investing in America agenda, the Department of Energy announced investments under the IRA and the Infrastructure Investment and Jobs Act of 2021, of up to USD 6 billion in decarbonization projects in energy-intensive industries, such as aluminum and metals, cement and concrete, chemicals and refining, and iron and steel.

On April 4, 2024, the Biden Administration announced clean energy and climate initiatives that collectively would be awarded USD 20 billion as part of the EPA’s Greenhouse Gas Reduction Fund. Of this, over 70% was earmarked for projects in low-income and disadvantaged communities.

On April 5, 2024, the Climate and Resiliency Task Force of the National Association of Insurance Commissioners (NAIC) adopted a National Resilience Strategy for Insurance to address climate resilience in the property insurance market. The strategy aims to help state insurance regulators ensure that insurance continues to be available for communities facing climate risk. The strategy: (i) proposes a flood insurance blueprint, as well as plans to identify and close gaps in insurance protection for climate risks; (ii) prioritizes creating a common roadmap and other new tools to coordinate state insurance regulatory efforts in developing grant programs and incentives for policyholders to take pre-disaster mitigation measures; (iii) aims to make comprehensive data available to state insurance regulators, including related to factors that may affect insurance availability and pricing, such as climate-induced wildfires, floods, storms, and other weather events; and (iv) proposes testing climate resilience scenarios to ensure insurers’ solvency.

On April 30, 2024, the Biden Administration introduced significant changes to the federal permitting process to accelerate the development of infrastructure and green projects across the United States.

In his first days in office, President Trump has taken steps to halt or reverse many of the Biden Administration’s climate efforts, including by issuing a memorandum to the Secretaries of the Treasury, Interior, Agriculture, Energy, the Attorney General, and the Administrator of the EPA to cease approvals of any new onshore and offshore wind projects. Relatedly, EO 14156, Declaring a National Energy Emergency, issued emergency fuel waivers for gasoline and expedited the delivery of energy infrastructure and otherwise sought to suspend funding related to Inflation Reduction Act programs.

Enforcement

On May 20, 2024, the CFTC announced that the agency was conducting investigations into potential fraud within the VCC market. Commissioner Christy Goldsmith Romero, an appointee of President Biden, said that a number of VCC-related practices were under active investigation by the CFTC’s Environmental Task Force, which was established in June 2023 to “combat environmental fraud and misconduct in derivatives and relevant spot markets.”

In September 2024, the SEC disbanded its Climate and ESG Task Force within the Enforcement Division. Enforcement actions related to ESG followed the disbanding.

On October 21, 2024, the SEC charged investment advisor WisdomTree Asset Management with misstatements and compliance failures when marketing three funds as following an ESG-aligned investment strategy. The SEC determined that, between March 2020 and November 2022, WisdomTree wrongly marketed three of their funds as not investing in fossil fuel and tobacco companies. The SEC’s order held that WisdomTree violated the anti-fraud provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and the compliance rule in the Investment Advisers Act. WisdomTree consented to the order and further agreed to a USD 4 million civil penalty, a cease-and-desist order and censure without admitting or denying the SEC’s findings.

On November 8, 2024, the SEC charged Invesco Advisers Inc. with making misleading statements about the percentage of assets managed in accordance with ESG considerations. The SEC found that, between 2020 and 2022, Invesco Advisers claimed that 70% to 94% of its parent company’s assets under management were “ESG integrated,” when in fact, these percentages included assets held in passive exchange-traded funds that did not consider ESG in investment decision making because they did not follow an ESG index. Invesco Advisers agreed to pay a USD 17.5 million civil penalty to resolve the charges.

State court litigation

On August 29, 2024, the American Sustainable Business Council (the “Council”), a nonprofit representing businesses that support environmentally friendly policies, filed a lawsuit against Texas Attorney General Ken Paxton and Comptroller Glenn Hegar seeking to block a state law restricting state investment in businesses deemed to “boycott” the energy sector. The Council argued that, among other things, the law “impermissibly infringes rights of free speech and association under a scheme of politicized viewpoint discrimination, based on no legitimate state interest.” As a result of the 2021 law, Comptroller Hegar maintains a list of investment funds and financial companies that the Comptroller considers to be engaging in boycotts of the fossil-fuel industry, including several large banks. The lawsuit argues that the 2021 law, Senate Bill 13: (i) unconstitutionally infringes on firms’ rights to free speech and association; (ii) includes “undefined and vague” provisions with respect to violations and compliance with the law; and (iii) does not afford entities adequate notice of their prospective exclusion from competition for state investments and contracts, further giving them no meaningful opportunity to contest their placement on the Comptroller’s list. Comptroller Hegar accused the Council of pursuing a “radical environmental agenda” and forcing “Texas taxpayers to invest their own money in a manner inconsistent with their values and detrimental to their own economic well-being.”

Federal court litigation

States and non-governmental organizations (NGOs) also raised civil challenges to federal regulations. For instance, on the day the SEC voted to approve the Final Rule, a coalition of 10 states led by West Virginia filed a petition for review of the Final Rule in the United States Court of Appeals for the Eleventh Circuit. Legal challenges to the Rule were filed in the Second, Fifth, Sixth, Eighth, Eleventh, and D.C. Circuits, which were then consolidated in the U.S. Court of Appeals for the Eighth Circuit. On April 4, 2024, the SEC stayed its final climate disclosure rule pending resolution of the litigation and emphasized it would continue “vigorously defending” the Rule in court, though we anticipate this will change under the Trump Administration’s SEC.

On July 19, 2024, an Oklahoma District Court judge extended an injunction to permanently block enforcement of the state’s Energy Discrimination Elimination Act (EDEA), a law prohibiting Oklahoma municipalities and state agencies from contracting with companies or institutions perceived to discriminate against the oil and gas industry. The judge held that the challenger had shown the requisite substantial likelihood of success in proving his claims that the law violates the exclusive benefit provision of the Oklahoma Constitution, which requires the state’s public retirement system to be handled for the exclusive benefit of the participants and beneficiaries, and that the law was unconstitutionally vague.

Courts also reviewed civil challenges to corporate practices allegedly violating ESG regulations. On March 5, 2024, the U.S. Court of Appeals for the District of Columbia unanimously ruled in favor of Alphabet, Apple, Dell Technologies, Microsoft, and Tesla in a decision that rejected an appeal by former child miners and their representatives. Doe v. Apple Inc., No. 21-7135. Plaintiffs alleged that the companies benefited from a venture that relied on forced labor by purchasing cobalt from a supply chain originating in the Democratic Republic of the Congo. The appeals court held that purchasing cobalt through the global supply chain did not amount to “participation in a venture,” a requirement under a federal law that protects victims of human trafficking and forced labor.

Courts also considered challenges to ESG investing strategies. On January 10, 2025, the U.S. District Court for the Northern District of Texas held that American Airlines violated federal law by permitting an asset manager to make proxy votes on behalf of its employees’ 401(k) retirement plans based on ESG factors. Spence v. American Airlines, No. 4:23-cv-00552-O. Plaintiffs alleged that American Airlines breached its fiduciary duty of loyalty to members of its retirement plan because its ESG goals created a conflict of interest when combined with ESG considerations made by its investment managers when making investment decisions. The district court found that the airline was impermissibly influenced by the asset manager’s interests and as a result was in breach of its fiduciary duty of loyalty.

In 2024, federal courts also reviewed civil claims related to the causes and effects of climate change. On January 8, 2024, the U.S. Supreme Court declined a jurisdictional challenge to a Minnesota lawsuit, American Petroleum Institute, et al., v. Minnesota, No. 23-168, brought against the American Petroleum Institute, ExxonMobil, and three Koch Industries subsidiaries. The lawsuit, originally filed in 2020 by Minnesota Attorney General Keith Ellison, alleges that the defendants deliberately misled consumers by concealing evidence of the connection between fossil fuel use and global warming. The suit asserts claims for fraud, failure to warn, and violations of Minnesota state laws that prohibit false advertising and deceptive trade practices. The defendants applied for the lawsuit to be heard in federal court, rather than the Minnesota state court, on the basis that climate-related issues like global warming are a matter of federal law. The Supreme Court denied the defendants’ writ of certiorari and, on February 1, 2024, the case was remanded back to Minnesota state court.

On September 27, 2024, the Missouri Attorney General dropped an appeal against a federal district court’s ruling striking down state anti-ESG rules. Missouri had introduced rules that required investment advisers and broker-dealers to obtain the written consent of Missouri customers if the advisers or broker-dealers incorporated “a social objective or other nonfinancial objective” into their investment decisions. Non-compliance with the rules constituted “dishonest or unethical business practices” under Missouri state law. The Securities Industry and Financial Markets Association (SIFMA) challenged the rules, alleging that they violated the First and Fourteenth Amendments of the U.S. Constitution. On August 14, 2024, a federal district court granted summary judgment to SIFMA, finding the anti-ESG rules to be unconstitutional. The court, in summary judgment, struck down the rules on the basis that they: (i) were preempted by the National Securities Markets Improvement Act and Employee Retirement Income Security Act; (ii) violated free speech provisions of the First Amendment of the United States Constitution; and (iii) were unconstitutionally vague. While Missouri initially chose to appeal the August ruling to the U.S. Court of Appeals for the Eighth Circuit, this appeal has since been abandoned. Missouri agreed to pay SIFMA USD 500,000 for fees and costs incurred in the district court litigation.

Soft non-binding laws

The United States has promoted the United Nations (UN) Sustainable Development Goals (SDGs), releasing a Sustainable Development Report each year. It also promotes the UN Guiding Principles on Business and Human Rights, which recognize a three-pronged approach to protecting human rights in the context of business activity.

In addition, the United States upholds the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises (the “OECD Guidelines”), a comprehensive set of recommendations for multinational enterprises to adopt in order to minimize and resolve impacts that arise from their operations in foreign jurisdictions and to encourage positive contributions to economic, social, and environmental progress, with a National Contact Point (NCP) being a dispute resolution service to assist companies and stakeholders with responsible business conduct issues.

National Contact Points (NCPs)

The U.S. National Contact Point (USNCP) for Responsible Business Conduct (RBC) is a dispute resolution and mediation resource that can support companies and stakeholders when responsible business conduct issues arise in a company’s operations.

The USNCP, which is housed in the Bureau of Economic and Business Affairs of the U.S. Department of State, has three roles, which are to:

• promote awareness and encourage implementation of the OECD Guidelines to business, labor, NGOs, and other members of civil society, the general public, and the international community;
• facilitate practical application of the OECD Guidelines by bringing business and civil society together to identify potential and emerging RBC-related risks and discuss appropriate actions and responses under the OECD Guidelines; and
• offer a “Specific Instance” mediation process to be used when a party raises allegations against a multinational enterprise’s operations.

Shareholders

As recognized by the SEC in its 2010 Guidance and its 2022 rule proposals, there has been, and continues to be, significant shareholder demand for ESG-related disclosures, although these have decreased significantly since 2023. In recent years, institutional investors have sought to encourage companies to provide better information regarding the impact of climate change and human capital-related issues on their businesses. In addition, shareholders have put forward anti-ESG proposals, although these have been fewer in number and have received limited support. Additionally, in December 2024, Institutional Shareholder Services (ISS) updated voting guidelines for the 2025 proxy season with decreased focus on ESG, and Glass Lewis, in February 2025, announced that it is reviewing its voting guidance on board diversity and DEI-related matters.

For example, in 2019, more than 630 investors, who collectively manage more than USD 37 trillion, signed the Global Investor Statement to Governments on Climate Change, which urged governments to require climate-related financial reporting. The most recent iteration of this initiative is the 2024 Global Investor Statement to Governments on the Climate Crisis. Through this statement, a group of 534 investors and their representatives — representing over USD 29 trillion in assets under management — called on governments worldwide to adopt policies designed to accelerate flows of public and private capital necessary for the net-zero transition.

As outlined in Question 3, above, the SEC’s Final Rule would require registrants to disclose extensive climate-related information in their registration statements and periodic reports. Given the policy priorities of the second Trump Administration, however, the Final Rule is unlikely to go into effect.

In 2023, California passed the Climate Corporate Data Accountability Act (SB 253) and the Climate‐Related Financial Risk Act (SB 261). SB 253 requires companies with more than USD 1 billion in revenue that do business in California to report Scopes 1 and 2 GHG emissions annually beginning in 2026 for the 2025 fiscal year, and Scope 3 GHG emissions beginning in 2027 for the 2026 fiscal year. SB 261 requires companies with more than USD 500 million in revenue that do business in California to report on climate-related financial risks and measures to address those risks starting in 2026. The California Air Resources Board is responsible for overseeing the requirements of both laws.

In addition, on January 1, 2025, California Assembly Bill 1305 went into effect, mandating that businesses operating in California and that make claims related to achieving net-zero emissions, carbon neutrality, or significant GHG reductions publicly disclose detailed information substantiating these assertions. This includes specifying the methodologies used to determine the accuracy of such claims, the role of voluntary carbon offsets, and whether third-party verifications have been conducted. The law aims to enhance transparency in corporate climate commitments, mitigate greenwashing risks, and provide consumers and regulators with verifiable data on emissions reductions and offset practices. Additionally, entities marketing or selling voluntary carbon offsets must disclose project details, including location, durability, and whether credits have been retired or resold.

Private equity

ESG considerations have become central to investments in private equity in the United States. A U.S. SIF Foundation report, published in 2024, found that 12% of all dollars under professional management in the United States, a total of USD 6.5 trillion, was managed according to sustainable investing strategies. While this figure has fallen from USD 8.4 trillion in 2022, it remains significant, demonstrating that sustainable investing continues to be a focus.

Banks

In recent years banks have begun to offer social and green bonds and to consider more comprehensively the financial risks that may be caused by climate change. While banks themselves are not high emitting, their “financed emissions,” which are included in their Scope 3 GHG emissions, may be substantial. In recent years, U.S. banks experienced pressure to disclose their financed emissions and commit to reducing them, in some cases by altering their business activities in connection with clients who operate in certain high-emitting sectors.

Automobile industry

The IRA, which President Biden signed into law on August 16, 2022, has significant provisions and allocates substantial funding for various initiatives supporting the further development of the EV market. These include tax credits for the purchase of new and used EVs, incentives to support the U.S. development of industries central to EV supply chains, and support for the buildout of EV charging stations, among others. In addition, the Biden Administration’s American Jobs Plan includes a USD 174 billion investment in the EV market. Furthermore, the Bipartisan Infrastructure Law included an investment of USD 7.5 billion for EV charging infrastructure and more than USD 7 billion for the critical minerals supply chains necessary for batteries, components, materials, and recycling.

On his first day in office, President Trump issued EO 14154 which seeks to eliminate the Biden Administration’s EV mandate and terminate the Green New Deal, pausing disbursements under the Inflation Reduction Act of 2022. Nevertheless, because a significant proportion of the investment under the IRA has gone to “red” states, it is possible that elements of the IRA will continue under President Trump.

On February 1, 2023, the Department of Labor’s (DOL) rule enabling ERISA fiduciaries to consider ESG factors in their investment decisions (the “DOL Rule”) went into effect. These considerations include governance factors such as board composition, executive compensation and transparency, and accountability in corporate decision making as well as a corporation’s avoidance of criminal liability and compliance with labor, employment, environmental, tax, and other applicable laws and regulations.

The DOL Rule — and the ensuing legal challenge which it was subject to — is emblematic of U.S. trends in ESG governance. The fractured landscape means that certain states, and certain financial institutions, are pushing ahead with increased ESG governance requirements, reporting, and consideration of ESG factors. At the same time, other states have passed anti-ESG legislation and filed lawsuits seeking to halt implementation of increased ESG regulation. In addition, it is likely that the DOL under the Trump Administration will seek to change the DOL Rule in a way that limits consideration of ESG factors by ERISA fiduciaries.

ESG rating agencies

The Big Three credit rating agencies, namely Standard & Poor’s, Moody’s, and Fitch Ratings, were all founded in the United States. All three provide ESG rating services that are widely used. While there have been calls for ESG rating agency regulation since 2021, the government has not done so.

ESG benchmarks

MSCI is a U.S.-founded finance company that created some of the most widely used ESG benchmarks and indexes.

ISS ESG is a subsidiary of Institutional Shareholder Services which publishes ratings on a large number of issuers.

Sustainalytics, owned by Morningstar, provides sustainability and ESG ratings.

ESG agenda

A range of actors drive ESG developments in the United States. For instance, investor and shareholder pressure influenced the SEC’s efforts related to climate and ESG. In connection with the Final Rule, the SEC noted that its 2010 Guidance on climate-related reporting for public companies was issued in response to increasing pressure from the public and shareholders for public companies to disclose how climate change is impacting their business.

In addition, in recent years, numerous companies have weighed in on sensitive social and political issues. For example, companies across the United States expressed their support for the Black Lives Matter movement through pledges to increase diversity, donations to civil rights groups, and changes in policies and practices. Dozens of U.S. companies have signed letters calling for police reforms and have made financial and other commitments supporting efforts to address racial and economic inequality. More recently, investor pressures, combined with the Supreme Court’s 2023 Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023), which held that consideration of race in university admissions decisions violated the U.S. Constitution’s Equal Protection Clause, as well as changes in policy by the Trump Administration, have led companies to reconsider, and in many cases end, their DEI initiatives.

The proliferation of both mandatory and voluntary disclosure and reporting frameworks, many of which overlap but are not perfectly aligned, has resulted in complicated and conflicting disclosure obligations for multinational organizations.

As described above, individual states are passing “pro-ESG” and “anti-ESG” laws and regulations that have further fragmented the regulatory landscape within the United States. This has been a key challenge for asset managers, banks, and private equity firms particularly because some stakeholders, including investors from outside the United States, have urged greater ESG integration while others have sought to limit ESG considerations. Balancing these conflicting expectations has proven challenging.

There is no single information source that consolidates all the major ESG developments taking place in the United States. For federal regulatory developments, monitoring the SEC website at www.sec.gov is helpful; congressional developments can be found at www.congress.gov. Each state government has a parallel site.

Debevoise & Plimpton has an ESG Resource Center, which can be found at www.debevoise.com/topics/environment-social-and-governance, and regularly publishes an ESG Update outlining ESG developments of interest to the business community with a focus on legal and regulatory developments (https://media.debevoise.com/5/7/landing-pages/esg-newsletter-subscribe.asp?sid=blankform).

No.

The long-term future of ESG in the United States remains uncertain. In the near term, the Trump Administration likely will continue advancing policies that constrain recent ESG initiatives. Additionally, given Republican control of both congressional houses, new federal legislation limiting ESG and DEI programs in the private sector may emerge. Republican-led states may seek to further advance “anti-ESG” agendas at the local level. At the same time, significant constituencies in the United States and globally continue to support addressing climate change, biodiversity loss, racial and economic injustice, and various other societal challenges. Democrat-led states may redouble efforts regarding ESG challenges, including through state-level legislation, regulation, and enforcement. Businesses operating in the U.S. are reassessing their strategies carefully as they navigate the challenges of a shifting landscape.