It is an uncertain time for environmental, social, and governance (ESG), particularly in the United States, although not exclusively. Legal, regulatory, and policy developments are reshaping the ESG landscape in dramatic ways, prompting organizations to reassess their commitments and business and compliance strategies. Executive orders from the U.S. presidential administration, state-level “anti-ESG” laws, and attorneys general investigations into corporate diversity, equity, and inclusion (DEI) practices have introduced significant legal risks. Many corporations are recalibrating their ESG activities to ensure compliance with evolving regulatory requirements, seeking to mitigate potential enforcement risk and avoid being out of step with changes in policies.

In Europe, which has been at the forefront of ESG-related regulation, policymakers are considering an “Omnibus” proposal to scale back certain European Union sustainability requirements. This potential regulatory shift is causing businesses to evaluate how changes to existing laws, such as the Corporate Sustainability Reporting Directive and the Sustainable Finance Disclosure Regulation, may impact their ESG activities and efforts to comply. While adapting to changes in law and policy is prudent, substantially curtailing ESG initiatives also carries potential legal, reputational, and financial consequences.

From a legal standpoint, in the United States, corporate DEI programs face increasing scrutiny, with some U.S. states challenging the legality of race-conscious hiring and promotion practices. The rollback of these initiatives raises questions about compliance with federal anti-discrimination laws, such as Title VII of the Civil Rights Act, and the potential for litigation risks. Companies must carefully navigate the legal landscape to ensure that diversity initiatives align with applicable laws, both in the United States and around the world, while still fostering inclusive workplaces that comply with evolving regulatory expectations.

In addition, corporate climate commitments are subject to growing legal and regulatory pressures. Companies that have pledged to achieve net-zero emissions must now contend with both regulatory uncertainty and legal challenges, including greenwashing claims, shareholder litigation, and enhanced disclosure obligations. While the U.S. Securities and Exchange Commission’s climate disclosure rule is unlikely to go into effect, California’s disclosure laws will reach a significant number of large U.S. companies, requiring standardized climate disclosures. Meanwhile, global frameworks such as the International Sustainability Standards Board and regulations in Europe, the UK, and around the world are setting new compliance benchmarks. Legal exposure for misstatements or failures to meet sustainability targets is an increasing concern for boards and executives.

Beyond regulatory and litigation risks, public sentiment remains a crucial factor in the ESG legal landscape. Many consumers, investors, and employees continue to favor companies that demonstrate compliance with sustainability and corporate governance standards. Businesses that fail to meet these expectations may face legal challenges from shareholder activists, customers, and employees, further emphasizing the need for legally sound ESG strategies.

As companies navigate these shifting dynamics, legal compliance and risk mitigation must remain central to their ESG approach. Organizations should assess their ongoing legal obligations, ensure that ESG-related disclosures are accurate and aligned with regulatory expectations, and seek to balance the priorities of their full range of stakeholders. Companies that abandon ESG commitments may experience short-term relief from political and legal pressures but could face long-term reputational and financial repercussions.

This is where the value of the present book arises. As societies confront major, seemingly intractable challenges such as climate change and social injustice, they often turn to legal and regulatory mechanisms to enforce compliance and accountability. As reflected in the chapters that follow, jurisdictions worldwide have recently implemented ambitious legal frameworks addressing ESG-related issues. While ESG withdrawal is a predominant theme in the United States, significant legal developments are advancing sustainability objectives globally, including through binding legislation and regulatory enforcement.

We hope this guide serves as a valuable resource for businesses and their legal advisors in navigating this complex and evolving ESG regulatory landscape.

We would like to extend our thanks to all the law firms that contributed to making this book possible. Special thanks are due to the many Debevoise partners and associates who supported this project and contributed to its success. Our team at Debevoise includes lawyers with deep experience across the full spectrum of ESG legal issues. In addition, without Gavin Collins and associates Isabelle Glimcher, Jacob Hochberger, Sophie Michalski, Allison Perlin, and Alfie Scott the pages you are about to peruse simply would not exist. Thank you, team!

We welcome your feedback on how we might enhance this resource in the future.