The Norwegian National Contact Point (“NCP”) issued its Final Statement on 11 December 2025 regarding a complaint filed by SOMO on behalf of 474 Myanmar-based civil society organisations (“CSO”) against Telenor ASA (“Telenor”) concerning Telenor’s operations and exit from Myanmar following the February 2021 military coup. The NCP concluded that Telenor did not conduct ongoing human rights due diligence commensurate with the severity and likelihood of adverse impacts during disengagement and recommended that Telenor play an active role in remediation.

The Statement underscores that the NCP process, while non-binding, is taken seriously and can catalyse civil litigation. It also provides helpful guidance on what “responsible exit” and the corporate responsibility to remedy should entail. (For further information on the role of National Contact Points, see our earlier article here).

Key Facts

The parties are SOMO, an Amsterdam-based not-for-profit that filed the complaint on behalf of 474 Myanmar CSOs, and Telenor ASA, a majority state-owned Norwegian telecommunications group that formerly operated Telenor Myanmar.

Following the military coup on 1 February 2021, Telenor decided that it was not possible to continue operating in Myanmar and sold the operations to the Lebanese investment company M1 Group for USD 105 million.

The complaint from SOMO alleged that Telenor’s disengagement from Myanmar did not meet the standards of responsible disengagement set out in the OECD Guidelines in three key ways: 

  1. Telenor failed to conduct appropriate risk-based due diligence and failed to seek to prevent or mitigate adverse human rights impacts to its customers potentially arising from the sale;
  2. Telenor failed to meaningfully engage relevant stakeholders in relation to the sale to M1 Group; and
  3. Telenor fell short of OECD standards on disclosure and communication about its due diligence in connection with the decision to exit Myanmar.

In response, Telenor stated that post‑coup operations could not be continued in line with its policies and international expectations, emphasising employee safety and the decision to sell as a last resort, while highlighting the objective of maintaining connectivity and services for approximately 18 million subscribers, hospitals and banks.

Telenor’s engagement with the NCP process

Telenor accepted the NCP’s offer of “good offices” and mediation commenced in June 2022. Mediation led to a Memorandum of Understanding (MoU) between the parties published by the NCP on 28 October 2022, capturing agreements, acknowledgements, and a forward plan.

As part of the MoU follow‑up, the parties commissioned an independent ICT Ecosystem Study, funded by Telenor, to assess risks associated with digital footprints and surveillance in Myanmar. As a follow-up action from the ICT Ecosystem Study, the parties also agreed to explore how an independent Myanmar digital security relief mechanism could be established to provide support to Myanmar citizens facing risks and impacts associated with their digital footprint.

The parties further agreed that Telenor would revisit its previous risk assessment process to determine whether there were any additional risks to be addressed, and to continue engagement with stakeholders and rightsholders by providing them with information about the risks associated with the digital eco-system and the sale of Telenor Myanmar.

A final mediation session was planned for spring 2024 to discuss follow‑up remedial actions, including the design of an independent Myanmar digital security relief mechanism. The session was ultimately cancelled due to the distance between the parties’ positions, after which the NCP proceeded to examine the remaining issues in autumn 2024.

Taken together, these steps indicate that Telenor engaged seriously with the NCP process. Telenor’s willingness to finance independent analysis and to work toward a targeted relief mechanism aligns with the NCP’s expectation that it take an active role in remediation.

NCP’s key findings

The NCP found that Telenor did not undertake ongoing human rights due diligence (“HRDD”) commensurate with the severity and likelihood of adverse impacts, noting that it was inconsistent with the expectations of the OECD Guidelines for Multinational Enterprises (the “Guidelines”) to systematically prioritise one set of rightsholders – employees – over others, including customers. 

The NCP emphasised that when it became clear regulatory approval required majority local ownership linked to the military junta, Telenor should have conducted a new, thorough HRDD process with renewed risk prioritisation and meaningful engagement of rightsholders; this did not occur. 

The Statement also identified a deficit in preparedness: Telenor lacked an exit strategy pre-coup and crisis planning for a return to full military rule, which constrained mitigation options once the coup occurred.  The NCP also criticised the sale contract for not requiring the buyer to adopt specific human rights policies and procedures suited to a conflict‑affected context.

The NCP expects Telenor to take an active role in remedy that is commensurate with its contribution to adverse impacts. Most notably, the NCP expects Telenor to continue its engagement and commitment to explore, design and implement a Myanmar digital security relief mechanism, including providing financial support. The mechanism is described as a fund‑type vehicle designed to reduce risks associated with users’ digital footprints.

Following the Final Statement, Telenor issued a public response acknowledging the NCP’s process and reiterating its commitment to the OECD Guidelines. It also stated that it had fulfilled its key MoU commitments, including by funding the independent ICT ecosystem study, and that it would continue to explore how an independent Myanmar digital security relief mechanism could be established.

Why NCP complaints matter for companies

Although NCP processes are non‑judicial, they can carry significant legal and commercial consequences. NCP statements are public, can shape stakeholder and investor expectations, and may catalyse civil litigation. In this matter, Myanmar civil society groups and victims issued a pre‑action letter to Telenor in Norway in October 2025 notifying their intention to initiate litigation concerning alleged disclosure of personal data to Myanmar’s military authorities. Companies should therefore approach NCP proceedings as part of a broader dispute and risk‑management strategy.

Key takeaways

Overall, companies should engage strategically with the NCP process and recognise that NCP’s expect companies to engage actively in remediation where they have caused or contributed to adverse impacts.

Companies should also recognise that NCP outcomes can influence parallel processes, including potential civil litigation. More generally, companies should obtain proper legal advice in order to help them align policies and practices with the Guidelines, reduce the risk of NCP complaints, and demonstrate compliance if a complaint is made

Yesterday, 10 December 2025, the Council’s presidency and European Parliament’s negotiators reached a provisional agreement to simplify the EU’s sustainability reporting and due diligence requirements.  The provisional agreement must be now endorsed by the Council and the European Parliament, before it is formally adopted by the two institutions.  However, further changes are unlikely and the legislative changes should be fully agreed by 16 December. 

As regards the Corporate Sustainability Reporting Directive (CSRD), the Commission proposed to increase the employee threshold to 1000 employees and to remove listed SMEs from the scope of the directive, meaning that entities with fewer than 1000 employees and listed SMEs would not need to provide sustainability reports. It is now agreed, in addition, that only entities with a turnover of over €450 million will have to do so.  Finally, companies that had to start reporting from financial year 2024 (the so-called “wave one” companies) will be formally “out of scope” for 2025 and 2026.  We note that some “wave one” companies have already reported. 

As regards the Corporate Sustainability Due Diligence Directive (CS3D), the CS3D’s transposition deadline has been postponed by another year, to 26 July 2028. Companies will have to comply with the CS3D’s requirements by July 2029.  It has been agreed that entities will only be in scope if they have more than 5,000 employees and €1.5 billion net turnover. In addition, (in a change to amendments proposed by the Commission which limited scope of the due diligence requirements to a company’s own operations, those of its subsidiaries, and those of its direct business partners), it has been agreed that companies can focus on the areas of their chains of activities where actual and potential adverse impacts are most likely to occur.  Further, when a company has identified adverse impacts, they are given the ability to prioritise assessing adverse impacts which involve direct business partners.  They are no longer required to carry out a comprehensive value chain mapping exercise but instead can conduct a more general scoping exercise. Companies will no longer be required to adopt a climate transition plan.  The liability regime has also been watered down. 

We know our clients have been following California’s climate-disclosure laws closely – including the timing of effectiveness and the various legal challenges. This update relates to a new Ninth Circuit ruling that has effectively hit “pause” on one key pillar of California’s climate-disclosure package.

On November 18, 2025, the Ninth Circuit Court granted a partial injunction blocking enforcement of California’s climate-related financial risk disclosure law – SB 261. Notably, the green house gas emissions reporting law under SB 253 remains in effect, with CARB, in its most recent presentations to the public, proposing August 10, 2026 as the deadline for initial SB 253 disclosures.

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Ninth Circuit Ruling pausing SB 261, but not SB 253

This ruling comes weeks before the January 1, 2026 compliance deadline for SB 261, and on the back of the emergency motion filed with the US Supreme Court on November 10, 2025, following through on the stated intent of the US Chamber of Commerce and the other plaintiffs to seek higher court intervention absent a ruling on their initial motion for injunction pending appeal by November 3, 2025. Now, as a result of the Ninth Circuit’s November 18 preliminary injunction, CARB is enjoined from enforcing SB 261.

This preliminary injunction pending appeal stems from a constitutional challenge filed by the US Chamber of Commerce and allied business organizations, which we first reported on in our February 2024 Legal Update. In seeking relief, the plaintiffs had argued that both SB 253 and SB 261 violate the First Amendment of the US Constitution by compelling speech on controversial policy matters, among other constitutional defects.

In a statement issued on the date of the Ninth Circuit’s ruling, the US Chamber of Commerce welcomed this decision by the Ninth Circuit. CARB, however, has not provided a public statement regarding if or how it intends to respond to this ruling granting the preliminary injunction pending appeal with respect to SB 261.

What the Ninth Circuit injunction means in the short term

The Ninth Circuit’s decision to enjoin SB 261 provides immediate relief to thousands of companies that would otherwise have been required to publish climate-related financial risk reports by January 1, 2026. The ruling marks a significant development in the ongoing tension between California’s climate policy ambitions and constitutional limits on compelled speech. For now, companies may pause SB 261 compliance efforts while the constitutional challenge in the Ninth Circuit proceeds but should maintain a “ready posture” so they can resume quickly if the injunction is lifted.

And while the practical impact of the ruling on the initial “light-touch” enforcement approach CARB has previously suggested is not yet clear, there is no basis to assume CARB will alter its stance solely because of this decision were the law to survive. And of course, unless there is a ruling that subsequently impacts SB 253, companies should continue to prepare for that, recognizing that a Ninth Circuit decision may arrive before the CARB-proposed August 2026 initial reporting deadline.

Other legal challenges – ExxonMobil’s recent lawsuit

As discussed in our October 2025 blog post, on October 24, 2025, ExxonMobil filed a lawsuit in the Eastern District of California seeking to overturn SB 253 and SB 261, using similar constitutional arguments raised in the US Chamber of Commerce suit and also arguing that SB 261 is preempted by the National Securities Markets Improvement Act (NSMIA).

While that case was proceeding, in light of the Ninth Circuit’s ruling granting a preliminary injunction with respect to SB 261 in the US Chamber of Commerce case, on November 19, 2025, ExxonMobil and California jointly stipulated to vacate all briefing deadlines and the hearing on ExxonMobil’s preliminary injunction motion, acknowledging that “the Ninth Circuit’s November 18 order affords the relief ExxonMobil’s pending motions seek while the Chamber of Commerce appeal is pending.”

The stipulation provides that within seven days of any Ninth Circuit decision or order dissolving the injunction in the US Chamber of Commerce case, the parties will meet and confer to determine next steps in the ExxonMobil litigation, effectively putting that case on hold pending the Ninth Circuit’s resolution of the US Chamber of Commerce appeal.

Application of SB 253 so far unaffected

While these legal challenges add to the regulatory and enforcement uncertainty surrounding the California climate disclosure laws, litigation has so far not invalidated or paused SB 253 —and companies within SB 253’s scope should continue preparing for compliance while monitoring both the appellate litigation and CARB’s ongoing rulemaking process for any further developments.

Where can I find Mayer Brown’s comprehensive updates on these laws so I have them in one place or in a hyper-linked connected manner?

Below are links to our other legal updates (not referred to above) addressing SB 253 and SB 261 and the ongoing litigation:

Shortly, we will issue further guidance addressing CARB’s recent updates that provided, among other things, additional clarity regarding key definitions, including (a) CARB’s revised “California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Programs: Frequently Asked Questions About Regulatory Development and Initial Reports” issued on November 17, 2025; (b) CARB’s revised “Climate Related Financial Risk Disclosures: Checklist” issued on November 17, 2025; and (c) CARB’s virtual public workshop hosted on November 18, 2025 (with the slide presentation from that workshop accessible here).

This update covers information regarding the California Air Resources Board (CARB) rulemaking delay for California’s climate disclosure laws, SB 253 and SB 261, as well as additional new litigation challenging the constitutionality of these laws. The bottom line for companies is that despite the rulemaking delays and ongoing litigation, the laws remain valid and in effect, with disclosure deadlines unchanged. We encourage you to review this update in conjunction with our earlier updates that we have issued (some of which are referenced in this update).

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As companies doing business in California prepare to comply with the state’s climate disclosure requirements, CARB has announced it will push its initial rulemaking under SB 253 and SB 261 to Q1 2026, citing the large volume of public comments and ongoing input related to identifying covered entities.

Notably, this rulemaking delay will not affect the statutory compliance deadlines. The first climate-related financial risk reports under SB 261 are still due by January 1, 2026, and Scope 1 and 2 emissions disclosures under SB 253 are scheduled to begin in 2026, with CARB proposing June 30, 2026 as the deadline for initial SB 253 disclosures. This means companies will need to prepare their initial filing reports without the benefit of final implementing regulations—at least with respect to the SB 261 disclosures.

In the face of these regulatory delays, SB 253 and SB 261 are subject to mounting legal challenges. As detailed in our February 2024 Legal Update, the U.S. Chamber of Commerce and several other business and industry trade organizations filed suit challenging both statutes on First Amendment, preemption and extraterritorial/Dormant Commerce Clause grounds. Following a denial of a preliminary injunction that would have enjoined CARB from implementing, applying, or taking any action to enforce SB 253 and SB 261, the plaintiffs filed a notice of appeal which is currently pending in the Ninth Circuit.[1]

Despite SB 253 and SB 261 surviving First Amendment and other challenges brought by the U.S. Chamber of Commerce and others, ExxonMobil Corporation, on October 24, 2025, filed a similar constitutional challenge in the Eastern District of California.

In this latest challenge, ExxonMobil is seeking, among other things, to enjoin CARB from implementing, applying, or taking any action to enforce SB 253 and SB 261.[2] ExxonMobil argues that both laws unconstitutionally compel and regulate viewpoint-based speech in violation of the First Amendment by mandating disclosures in frameworks ExxonMobil contends reflect California’s preferred viewpoint on climate policy.[3] The complaint further asserts that SB 261 is preempted by the National Securities Markets Improvement Act (NSMIA) because it effectively imposes additional investor disclosure requirements beyond those required under the federal securities laws.[4] ExxonMobil also points to CARB’s draft Scope 1 and 2 reporting template—released October 10, 2025—as evidence that implementation may require base-year “recalculations” and other elements that go beyond the Greenhouse Gas Protocol’s core requirements or create misalignment with intensity-based reporting approaches.[5]

While these legal challenges add to the regulatory and enforcement uncertainty surrounding the California climate disclosure regime, previous litigation has not invalidated the laws or stayed their effectiveness—and neither CARB nor the California legislature has to date adjusted the statutory compliance timelines in light of these legal challenges.

As noted above, SB 261 climate-related financial risk reports remain due beginning January 1, 2026, and Scope 1 and 2 reporting under SB 253 begins in 2026, with Scope 3 to follow in 2027.[6] CARB has previously signaled enforcement discretion for the first reporting cycle, but has not shifted statutory deadlines. Companies potentially subject to these laws should continue preparing disclosures, monitoring the docket for any injunctions or merits rulings, and tracking CARB’s ongoing guidance and templates as they evolve. For a detailed discussion of the latest updates relating to SB 253 and SB 261 requirements and what companies can do now to prepare for compliance, see our comprehensive Legal Update.

[1] Plaintiffs filed an emergency motion with the Ninth Circuit on October 27, 2025 requesting the court to schedule a hearing on plaintiffs’ pending injunction motion. This emergency motion was granted in part on October 29, 2025 with the court noting that the pending motion for injunctive relief would be assigned to a merits panel and scheduled for oral arguments on January 9, 2026 (i.e., after the date of the deadline for the initial SB 261 disclosures).

[2] Complaint at p.1, Exxon Mobil Corp. v. Sanchez, No. 2:25-at-01462 (E.D. Cal. filed Oct. 24, 2025).

[3] Id. at p.1.

[4] Id. at p. 2.

[5] Id. at p.14.

[6] Id. at p.2, p.9.

On 17 October 2025, Regulation (EU) 2025/2083 of the European Parliament and of the Council of 8 October 2025 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism (“CBAM”) was published in the Official Journal of the European Union (the “CBAM Simplification Regulation”). This is the first instrument to amend Regulation (EU) 2023/956 establishing a CBAM (the “CBAM Regulation”), reflecting the European Commission’s recent commitment to reduce the regulatory burden on businesses.  Read more here.

Under international standards such as the UN Guiding Principles and the OECD Guidelines, companies are expected to conduct human rights and environmental due diligence to identify, assess, mitigate and remediate any adverse human rights or environmental impacts that they cause, contribute to or are otherwise linked to.  A failure to do so can expose a company to legal, regulatory and reputational risk.  This could come in the form of litigation and other dispute resolution (e.g. National Contact Point complaints), regulatory fines, stakeholder pressure (e.g. from investors or NGOs) and/or a drop in share price.

The mining sector is generally exposed to heightened human rights and environmental risks.  New mining operations may impact local communities and Indigenous Peoples; leaks of tailings dams could contaminate local water supplies leading to environmental contamination and/or restricting the availability of potable water for local communities; excessive use of local natural resources could have lasting impacts on the local environment. 

The robust management of human rights and environmental risk by mining companies is at the core of such companies’ licence to operate.  Two recent cases illustrate some of the perils that mining companies can face from a failure to effectively manage human rights and environmental risks – putting their licence to operate at risk and attracting regulatory sanctions.

Ecuador: environmental licence revoked over community and water concerns

In October 2025, Ecuadorian authorities revoked an environmental licence granted to a Canadian mining company for the development of Loma Larga, a gold project in an environmentally sensitive area.[1]  Local residents and authorities had argued the project threatened the Quimsacocha water reserve and posed material health risks.

The case is illustrative of how human rights and environmental considerations can go to the heart of a mining company’s licence to operate: under the UNGPs and OECD Guidelines companies should respect indigenous people’s rights, including by obtaining free, prior and informed consent (FPIC) as part of the stakeholder engagement process.  While an environmental licence was previously granted, pushback from the local community was sufficient for the government to revoke a licence that had been previously granted – showing that stakeholder pressure could lead to government agencies revisiting past decisions.

Chile: regulatory enforcement at lithium operations

In September 2025, Chile’s environmental regulator fined a US company nearly $340,000 for exceeding its approved water extraction limited between October 2019 and September 2020, and for failing to comply with safeguards under its aquifer alert plan.[2]  This case illustrates some of the challenges in conducting operations in areas that present particularly high environmental risks – and illustrates that regulatory risk can crystallise where an operator falls foul of its environmental obligations.

Where there is a regulatory finding of this nature, it is foreseeable that other interested parties (e.g., NGOs, local communities, supply chain counterparties) may be put on notice as to other forms of pressure they could exert on the operator (e.g. through litigation if they have suffered loss or via an NCP complaint in respect of a potential violation of the OECD Guidelines).

***

As companies develop, review and enhance their existing sustainability and human rights programmes, in line with best practice, companies may wish to apply the below strategies to improve their sustainability and human rights risk management strategies:

  1. Ensuring that they have processes in place at a board level to translate human rights-related commitments into positive action;
  2. Closely monitoring legislative developments relating to mandatory human rights and environmental due diligence (“HREDD”) obligations;
  3. Integrating meaningful stakeholder engagement in all steps of their HREDD process;
  4. Carrying out a human rights impact assessment and taking proportionate counter-measures, as well as communicating internally and externally on what measures have already been taken;
  5. Reviewing and reinforcing complaints mechanisms and speak-up programmes, and ensuring they are well-equipped to deal with human rights-related “crises”;
  6. Reviewing the extent to which their board is equipped to address supply chain risks, including through training executives and seeking independent support and advice; and
  7. Reviewing the role, resources and expertise of the legal and compliance functions, who should play a key part in addressing these new challenges.

Mayer Brown lawyers are available to help clients in this increasingly complex and evolving regulatory landscape.

[1] Ecuador revokes environmental license for Canada’s DPM to develop gold project, Reuters, 4 October 2025, available at: https://www.reuters.com/sustainability/climate-energy/ecuador-revokes-environmental-license-canadas-dpm-develop-gold-project-2025-10-04/

[2] Chile fines Albemarle for lithium extraction violations, Mining.com, 30 September 2025, available at: https://www.mining.com/chile-fines-albemarle-for-lithium-extraction-violations/

Sustainability has undergone a profound transformation over the past two decades.  What began as a moral movement—rooted in reputation management and risk mitigation—has increasingly become a strategic business imperative.  The latest annual report published by the UN Global Compact and Accenture[1] underlines how the business case for sustainability leadership to be at the core of a company’s strategy is stronger than ever.  The report highlights the acceleration and complexity of global sustainability regulations, draws on the insights of nearly 2,000 CEOs across 128 countries, and outlines some of the compliance challenges presented by regulatory fragmentation.

Among other things, the report finds that 86% of CEOs are reporting steps to integrate sustainability into their business and that 88% believe the business case for sustainability is stronger than it was five years ago.  Yet, only half feel comfortable communicating their progress publicly, reflecting a tension derived from external stakeholder scrutiny, the politicisation of ESG issues, and recent pushback against the EU’s sustainability legislative agenda. Notwithstanding these obstacles, 99% of CEOs intend to maintain or expand their commitments going forwards.  Indeed, the report sets out five critical themes for CEOs and businesses to consider implementing to drive forward the next era of sustainability leadership.

From Aspiration to Expectation: The Evolution in Leadership Mindset

The report traces the evolution of sustainability from a peripheral concern to a central pillar of business strategy.  Early efforts focused on reputational risk and compliance, but the adoption of frameworks like the UN Sustainable Development Goals (SDGs) and the Science Based Targets initiative (SBTi) has driven a deeper integration of sustainability into business operations.  In 2010, sustainability was primarily viewed as a moral imperative and treated as a side initiative.  The sustainability focus was mainly on environmental issues and basic human rights.  In 2025, sustainability is now embedding in core business strategy.  The landscape has broadened to include climate change, inequality, biodiversity, and social justice – reflecting a holistic approach towards sustainability.

According to the report, 86% of CEOs report that sustainability is embedding in their core operations, and 66% believe the private sector can drive significant progress by linking sustainability to strategy and executive compensation.  This shift is not just about environmental stewardship.  CEOs increasingly recognise that social issues – such as human rights, diversity, and community impact – are inseparable from environmental goals.  According to one CEO, “A climate crisis is a human rights crisis.”  The interconnectedness of these challenges demands a holistic approach, where business value and societal impact are aligned. 

Five Keys for the Next Era of Sustainable Leadership

The report identifies five critical priorities for business leaders to unlock the next era of sustainability leadership:

  1. Collaboration on Regulation:  Proactive engagement with policymakers and industry peers is essential to shape coherent, global regulatory frameworks.  Strong ESG governance, clear ownership of data integrity, and participation in multi-stakeholder forums can help companies stay ahead of evolving requirements and build trust with investors and regulators.  The report found that 92% of CEOs believe that strong global governance and unified policy is “critical” or “important” for the sustainability agenda.  In particular, one CEO said, “In this new age of collaboration, it is important to have governmental and NGO support promoting and implementing innovative solutions for capital building, technology innovation and workforce upskilling.”
  2. Harnessing Consumer Demand: Consumer expectations are a primary driver of sustainability strategy.  Companies must embed sustainability into product design, pricing, and partnerships, responding to growing demand for ethical, high-performance, and circular products.  Value chain collaboration is key to delivering on these expectations.  One CEO said, “For customers who care, they continue to care—even if they’re more hesitant to talk about it now.  We haven’t seen major shifts in customer behaviour.  Making the right choice isn’t controversial.”
  3. Expanding Access to Technology: Innovation and digital tools—such as AI-powered analytics and blockchain-enabled supply chain tracking—are critical enablers of sustainability governance.  However, access to these technologies must be democratised to ensure inclusive progress, especially in emerging markets.  Investment in local innovators and flexible, scalable solutions will accelerate impact.  One CEO said, “We are working with customers and partners to achieve technological innovation and reduce their environmental impact throughout the entire supply chain.”
  4. Upskilling for the Future: The workforce of tomorrow requires new skills in digital fluency, systems thinking, and adaptability.  Upskilling and reskilling programmes, anchored in human rights and decent work, are essential to drive innovation and ensure a just transition.  Diversity, well-being, and purpose must be at the heart of talent strategies.  One CEO said, “Diversity and well-being should be prioritised—people want this, especially the new generation.”
  5. Leading with Credibility and Purpose: Authentic, transparent communication is vital to building trust and driving change.  CEOs must anchor sustainability in business fundamentals—risk management, regulatory readiness, and ROI—while engaging employees, investors, and communities in an ongoing dialogue.  Leadership is about action, not just ambition.  The report found that 52% of CEOs will expand climate-related environmental commitments and 53% will increase social commitments.  One CEO said, “[We] report [on] sustainability as seriously as when reporting financial performance—because it is a critical performance indicator.”

***

The report sets out themes that companies and their CEOs can place at the heart of their sustainability strategies going forwards.  We previously published blogs on what investors expect of boards in relation to business and human rights and how boards can be better equipped to address emerging human rights risks.  As companies develop, review and enhance their existing sustainability and human rights programmes, they should look to incorporate considerations highlighted by the report.  More broadly, in line with best practice, companies may wish to apply the below strategies to improve their sustainability and human rights risk management strategies:

  1. Ensuring that they have processes in place at a board level to translate human rights-related commitments into positive action;
  2. Closely monitoring legislative developments relating to mandatory human rights and environmental due diligence (“HREDD”) obligations;
  3. Integrating meaningful stakeholder engagement in all steps of their HREDD process;
  4. Carrying out a human rights impact assessment and taking proportionate counter-measures, as well as communicating internally and externally on what measures have already been taken;
  5. Reviewing and reinforcing complaints mechanisms and speak-up programmes, and ensuring they are well-equipped to deal with human rights-related “crises”;
  6. Reviewing the extent to which their board is equipped to address supply chain risks, including through training executives and seeking independent support and advice; and
  7. Reviewing the role, resources and expertise of the legal and compliance functions, who should play a key part in addressing these new challenges.

Mayer Brown lawyers are available to help clients in this increasingly complex and evolving regulatory landscape.

[1] Turning the Key: Unlocking the Next Era of Sustainability Leadership, UN Global Compact-Accenture 2025 CEO Study, September 2025, available at: https://www.accenture.com/content/dam/accenture/final/accenture-com/document-4/2025-UNGC-CEO-Study-Digital.pdf

We aren’t half way though August yet and already the Summer of ’25 has been a hot one for corporate sustainability disclosures in the EU and UK.

On 31 July 2025, EFRAG launched its 60-day consultation on the Exposure Drafts of the revised and simplified European Sustainability Reporting Standards (“ESRS”) for those reporting under the Corporate Sustainability Reporting Directive (“CSRD”).  These can be found here, together with links to documents setting out the changes to the ESRS and commentary on the changes.

This was preceded by a “quick-fix” Delegated Act to postpone additional phased-in reporting requirements, also published with a summary of modifications. 

Meanwhile, in the UK, the Government has announced that it will no longer implement a “Green Taxonomy”, though the Government is now consulting on the exposure drafts of the UK versions of IFRS S1 and IFRS S2 – respectively called UK SRS S1 and UK SRS S2. The consultation is open until 17 September 2025, alongside a consultation on the development of an oversight regime for assurance of sustainability-related financial disclosures.

On 23 July 2025, the International Court of Justice (ICJ) issued a landmark advisory opinion at the request of the United Nations General Assembly, holding that States have a legal obligation to protect the environment, including to address climate change (the “Opinion“). The Opinion also recognised that a “clean, healthy and sustainable environment” is a human right and sets out the consequences for a State’s breach of its legal obligations. Although not legally binding, the Opinion is likely to influence the policy choices of governments and businesses alike, future treaty negotiations and domestic and international litigation.

Background

The origins of the Opinion can be traced to a grassroots initiative launched in March 2019 by the Pacific Islands Students Fighting Climate Change, a collective of Vanuatu-based university students who petitioned every Pacific government to seek an advisory opinion from the ICJ. That effort culminated on 29 March 2023 with the adoption of UN General Assembly Resolution 77/276, which formally requested the advisory opinion. This marked the first time that the UN General Assembly had referred a legal question to the ICJ by consensus, demonstrating overwhelming interest in receiving clarification on the obligations of the State with respect to the climate.

The Opinion is one of three recently published advisory opinions that outline States’ obligations with respect to climate action, the others being:

  • The Inter-American Court of Human Rights (IACHR) issued an advisory opinion on 3 July 2025 clarifying States’ human rights obligations in the face of climate change. Among other things, the IACHR held that an independent right to a healthy climate exists, separate to but derived from the right to a healthy environment.
  • The International Tribunal on the Law of the Sea also issued an advisory opinion last year on States’ obligations under the UN Convention on the Law of the Sea. It found that greenhouse gas emissions absorbed by the oceans constitute marine pollution and that States must take all necessary measures to prevent, reduce, and control such pollution.

These advisory opinions in turn follow developments at the UN General Assembly – in July 2022 the UN General Assembly resolved to recognise the right to a “clean, healthy and sustainable environment”. Further, the intersectionality between human rights and environmental protections is explicitly recognised in the Corporate Sustainability Due Diligence Directive (see here for further Mayer Brown insight on CSDDD).

States’ Key Legal Obligations

The Opinion clarifies the legal duties of States under treaties, customary international law, and human rights law and outlines the legal consequences of acts or omissions that cause significant harm to the climate and environment.

The ICJ found that States must implement measures to cut greenhouse gas emissions and adapt to the impacts of climate change. Adaptation measures must evolve with scientific knowledge. All nations are required to work together, exchanging technology, financial support, and information to achieve these goals.  Developed nations, in particular, are expected to lead mitigation efforts and assist developing and vulnerable countries in adapting to climate impacts.  The Court also clarified that Nationally Determined Contributions (NDCs) – the climate action commitments under the Paris Agreement – are binding obligations of conduct and that not preparing, updating, or maintaining NDCs is considered a breach of international law.  These NDCs must be ambitious enough to contribute to the global target of limiting temperature rise to 1.5°C.

The ICJ further stated that countries not party to climate treaties are still obligated under customary international law to protect the environment and address climate change.  The Court also affirmed that the right to a clean, healthy, and sustainable environment is recognised as a human right.

Legal Consequences of Breach

The ICJ confirmed that a breach by a State of any of the identified obligations constitutes an internationally wrongful act, triggering the following legal consequences:

  • Duty of Performance: The State must perform their international obligations despite breaches thereof.
  • Cessation and Non-Repetition: The State must cease the wrongful conduct and provide assurances against recurrence.
  • Reparation: The State must make reparation for the damage caused, which may include restitution, compensation, and satisfaction.

Potential Implications

Although the Opinion is not legally binding and only deals with States’ obligations, the Opinion raises the legal stakes for inadequate climate action and may have significant implications for businesses:

  • Stricter Regulation: By clarifying and reinforcing States’ obligations to prevent significant harm to the climate and to regulate greenhouse gas emissions, the Opinion is likely to drive more stringent national legislation and regulatory measures affecting business operations.  Businesses should prepare for more rigorous climate-related laws and closer oversight of their environmental performance.
  • Heightened Due Diligence: States are required to exercise due diligence in regulating private actors, meaning businesses can expect increased scrutiny of their emissions, supply chains, and environmental practices. Businesses operating in sectors with high greenhouse gas emissions, such as energy, transportation, agriculture, and manufacturing, may face tighter reporting requirements and intensified due diligence obligations across the value chain.
  • Litigation Risk: The Opinion increases the risk of legal action between States and also against businesses for their impact on the environment. The opinion may give claimants stronger grounds to sue businesses whose actions cause or contribute to climate harm, which could lead to more and stronger lawsuits seeking emission cuts or compensation for damages.
  • Greater Transparency: The various international law frameworks used to protect the climate and address climate change place importance on openness and accountability. Businesses may be required to provide more detailed reporting on their emissions and climate risks.
  • Support and Opportunity: Developed nations are mandated to offer financial and technological assistance to help developing countries mitigate and adapt to climate change. This creates both obligations and potential new markets for financial services, technology firms, and global businesses.
  • Human Rights Integration: There is growing recognition of the link between climate action and human rights. Businesses should be mindful of the risk of climate-related human rights claims and ensure they respect the rights of impacted communities, including indigenous peoples and other vulnerable groups.

Overall, businesses should prepare for more rigorous climate-related laws, closer oversight of their impact on the environment and increased litigation risk. The Opinion may turn what many businesses see as policy choices into clear legal obligations.

On 22 May 2025, the EU banking supervisor The European Banking Authority (EBA) announced the release of several proposed amendments to its Pillar 3 disclosure requirements, previously contemplated under the CRR3 banking package. These amendments clarify ESG risk-related reporting for small and medium-sized banks, as well as expand on the guidelines for larger institutions. Feedback from the public consultation on these proposals is due by August 22, 2025. Below is a table summarising the simplified approach to be taken by the various institution types. The full consultation paper can be accessed here. 

As illustrated above, the EBA is introducing a more streamlined approach to ESG risk disclosures, adjusting the level of detail required based on the size and complexity of each institution. Smaller, non-complex institutions (SNCIs) need only report their most essential ESG risk information, such as their exposure to physical and transition risks and involvement with fossil fuel sectors. Larger institutions and subsidiaries will also benefit from a proportionate approach, with requirements scaled to their specific circumstances. The EBA is not introducing new disclosure obligations for large, listed institutions, but is instead clarifying and improving the existing requirements based on feedback and questions received about the current Pillar 3 ESG framework. The goal is to ensure that the rules are easier to understand and apply, without significantly changing the core information that must be disclosed. To make compliance easier and ensure consistency, the EBA will directly link Pillar 3 disclosure templates to the EU Taxonomy Regulation, meaning that any updates to the Taxonomy Regulation will automatically be reflected in the Pillar 3 templates, which will ensure that the information disclosed under both frameworks remains identical and eliminating the need for separate regulatory updates.

The EBA is also providing transitional measures to give institutions enough time and certainty to adapt to the new ESG disclosure requirements. This will be a phased implementation where large, listed institutions should comply with the current rules until the end of 2026, except for certain templates related to the Green Asset Ratio and Taxonomy Regulation, in which disclosure requirements are suspended until then. Institutions newly covered by the updated regulations (CRR3) will start applying the new rules from the same date. During the transition period, the EBA encourages regulators to allow institutions the flexibility outlined in the transitional provisions. If institutions choose to follow the new approach early, regulators should support this and avoid asking for additional disclosures. This is intended to reduce operational burdens, provide clarity, and ensure a consistent and proportionate rollout of the new requirements across all affected institutions. Please read our previous blog posts on the EBA’s ESG reporting requirements here and here.