Key news in this edition:
- Brazil’s COP30 climate ambitions amid fossil fuel exploration
- European Parliament delays negotiations on the Omnibus Directive.
- Exxon Mobile files lawsuit against California’s climate disclosure laws.
Editorial
In October and November 2025, several major sustainability and climate governance developments unfolded across global jurisdictions. The European Parliament voted to delay negotiations on the Omnibus Directive, exposing deep divisions over how to balance regulatory simplification with maintaining strong sustainability reporting and due diligence standards. Meanwhile, ahead of hosting COP30 this month, Brazil is reportedly planning to propose carbon trading and forest protection initiatives at the same time as approving the expansion of offshore oil exploration along the Amazon coast. In the United States, energy giant Exxon Mobil sued the state of California over new climate disclosure laws, arguing they violate corporate free speech rights, while supporters defended them as a tool to curb greenwashing. Separately, a Texas court ruled in a case against US aviation company American Airlines that corporations must not let ESG considerations outweigh financial returns when managing employee retirement plans, narrowing the permissible role of non-financial factors under US fiduciary law. At the same time, the International Maritime Organization postponed a long-awaited decision on introducing a global carbon price for shipping, after resistance from the United States stalled progress on the sector’s decarbonisation plans.
European Parliament delays negotiations on the Omnibus Directive*
On 22 October, the European Parliament voted to delay negotiations on the European Commission’s proposed Omnibus Directive, a package intended to simplify several existing sustainability and corporate reporting laws, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The proposal was presented as part of the EU’s “Better Regulation” agenda, aimed at reducing administrative burden and reporting costs, particularly for smaller companies.
The Parliament’s decision, with 318 votes against opening talks and 309 in favour, reflects growing divisions over how far simplification should go. The most contentious points included raising reporting thresholds, narrowing the CSRD’s scope, and removing certain due-diligence and liability provisions. These issues have divided Parliament since the proposal’s early stages, with some arguing these steps would make reporting more proportionate and manageable for smaller firms, while others fear they could weaken transparency and damage the EU’s credibility on sustainable finance.
The delay also means that related work on simplified European Sustainability Reporting Standards (ESRS), currently under consultation by the European Financial Reporting Advisory Group, an independent EU-mandated advisory body, will likely remain in limbo until the Omnibus text is finalised. In the meantime, the Commission’s earlier “stop-the-clock” rule, which paused upcoming CSRD and Taxonomy deadlines for certain companies, remains in effect.
So what?
The delay shows that the EU is still struggling to find the right balance between simplifying reporting requirements and maintaining their impact. Most lawmakers accept the need to reduce complexity, but there is little consensus on how far changes should go. The result is ongoing uncertainty for businesses about scope and timing. Until negotiations resume, companies should keep working to meet current CSRD requirements and follow developments from EFRAG and the Parliament later this year.
*Addendum
On 13 November, the Parliament formally adopted its position on the Omnibus package. The approved text reflects a narrower scope for both CSRD and CSDDD, along with lighter requirements for smaller companies. Some civil society organisations criticised the move, warning that higher thresholds and lighter obligations carry a risk of even further diluting the transparency and accountability goals of the original frameworks.
[Contributor: Dominik Wilk]
Brazil’s COP30 climate ambitions amid fossil fuel exploration
This month Belém, a city in northern Brazil, is hosting the UN Climate Change Conference (‘COP30’) during which Brazil’s Ministry of Finance will propose two milestone initiatives. Firstly, the Open Coalition for Carbon Market Integration, which aims to standardise existing carbon trading systems, establish new production standards that value low-carbon products, and promote a fairer transition through revenue redistribution and income generation. And secondly, the Tropical Forests Forever Facility, which is designed to provide funding for countries with tropical forests that continue to protect and preserve their natural environment.
Despite Brazil’s two new measures, the country has faced scrutiny from delegates and media outlets for its contradictory expansion of its fossil fuel agenda. Specifically, Brazilian President Luiz Inácio Lula da Silva has reiterated the federal government’s intention to explore offshore oil reserves across the Brazil Equatorial Margin, a large, offshore region along the northern coast of Brazil considered a key frontier for Brazil's energy security, and the National Petroleum Agency (‘ANP’), Brazil’s fuel exploration regulator, recently announced 275 new oil and gas blocks scheduled for auction in 2026, some of which overlap with indigenous territories and conservation units.
Additionally, on 20 October, IBAMA – Brazil’s federal environmental government agency – granted an exploratory drilling licence to Petrobras, a state-owned Brazilian petroleum company, allowing them to drill in the Foz do Amazonas basin, one of the world’s richest marine ecosystems and home to several Indigenous communities. International media and conservationist organisations have criticised Brazil’s conflicting actions and intentions, calling the government’s decision to approve the Foz do Amazonas drilling licence as an “act of sabotage” to COP30 and further calling into question Brazil’s credibility as the host nation. Eight Brazilian civil society organisations reportedly filed a lawsuit against Petrobras, the Brazilian federal government, and IBAMA for granting the Foz do Amazonas licence; they allege that the licencing process bypassed several environmental licencing regulations, including failure to consult Indigenous habitants and neglecting the climate impacts of drilling in the basin.
So what?
Brazil’s ambition to advance new petroleum drilling and exploration projects ahead of COP30 highlights the tension between energy-fuelled economic factors and climate conscious ideals. By approving drilling projects ahead of COP30 and therefore before potential commitments to phase out oil, Brazil appears to be securing short-term energy and fiscal gains that could complicate its credibility as a climate leader. This highlights the broader challenge facing economies striving to balance financial or development needs with global sustainability pressures.
[Contributor: Simran Sawhney]
Exxon Mobile lawsuit against California’s climate disclosure laws
In October 2025, Exxon Mobil ('Exxon'), the multinational oil and gas corporation, sued the US state of California over climate disclosure laws. Specifically, the company challenged two state Senate bills introduced in 2023 that were slated to require mandatory public disclosure of greenhouse gas emissions and sustainability-related financial risks starting in 2026. The company asked the court to prevent the laws from going into effect next year.
In its initial compliant, filed at the Eastern District of California, Exxon reportedly argued that the state’s new laws violate its freedom of speech by compelling it to act as a “mouthpiece” for views it fundamentally opposes. The company claimed that the legislation was designed to generate public criticism regarding large corporations’ contribution to climate change. Exxon emphasized that it has publicly reported its greenhouse gas emissions for years but maintains strong objections to the laws’ specific reporting frameworks and requirements.
Proponents of the legislation say that it will help to curb corporate greenwashing and marketing that exaggerates or misrepresents a company’s actions to lower its climate impact. A spokesperson for California’s Governor, Gavin Newsom, said the state remains confident in the climate disclosure laws, noting that they have previously been upheld in court.
So what?
Exxon's suit exemplifies the company's aggressive reaction to climate change-related regulation, possibly setting the stage for future pushback from other large-scale multinational corporates operating in the same sector. The company’s forceful legal tactics exemplify mounting resistance from some of the world’s largest emitters, sending the message that regulatory efforts will not go unchallenged.
[Contributor: Haddie Hamal]
American Airlines fiduciary duty breach over ESG investments
On 30 September, a final judgment was handed down for a lawsuit filed by a pilot against American Airlines (‘AA’) and its Employee Benefits Committee (‘EBC’) for damages caused by the company’s investment manager, BlackRock. The ruling stated that BlackRock had prioritised ESG funds in AA employees’ retirement plans over the investments’ ability to provide the best financial outcome for the employees. The judge found that AA had breached its fiduciary duty of loyalty under the Employee Retirement Security Act of 1974 (‘ERISA’), a US law guiding the standards for retirement plan management and operation. The court determined that the EBC knew the investment manager was favouring ESG-related strategies but failed to assess whether these actions were truly aligned with the financial interests of AA’s employees and retirement plan participants. The judge highlighted that corporate or investment manager priorities influenced plan decisions instead of focusing solely on maximising participants’ financial benefits. As a result, the ruling requires that all future proxy voting and stewardship must put the financial interests of plan participants ahead of non-financial ESG considerations. Notably, the plaintiff was not awarded damages despite ruling that AA had been in breach of fiduciary duties due to the fact that the plaintiff had failed to sufficiently establish financial losses as a result of the investment management.
So what?
The ruling is considered a landmark case in that it directly restricts the influence of non-financial ESG considerations in a company's retirement plan. While the case may prompt more lawsuits directed at companies that appear to prioritise non-financial goals over the sole financial interests of retirement plan participants, the judge’s refusal to award damages could discourage similar claims. It remains important for companies to carefully navigate the boundary between fulfilling their fiduciary duties and pursuing ESG goals to avoid litigation or reputational risks.
[Contributor: Nina London]
IMO delays decision on carbon pricing amid US pressure
On 17 October 2025, the UN’s shipping agency, the International Maritime Organization (IMO), postponed its decision on introducing a global carbon price for international shipping by one year. This carbon price, defined by the UN as a fee on emissions or an incentive to emit less, was under discussion at an extraordinary session of the IMO’s Marine Environment Protection Committee held during the week of 13 October 2025.
The meeting focused on implementing the IMO’s Net-Zero Framework, which aims to cut greenhouse gas emissions from ships through two main tools: a global fuel standard and a global carbon pricing system. The decision to postpone the carbon price came after failing to reach consensus on the emission reduction measure amid pressure from the US, which threatened potential port levies, visa restrictions, and trade penalties, while other parties – including the EU and Brazil – had pushed for implementation of the mechanism.
So what?
Maritime transport facilitates more than 80 percent of globally traded goods, and the industry heavily relies on fossil fuels. Although COP30 is aimed at meeting the goals of the Paris Agreement to keep global temperatures from rising beyond 2 degrees, the global greenhouse gas emissions from global shipping remain unaddressed. Without the support of IMO, it would likely not be possible to halt global temperature rise. International Chamber of Shipping Secretary General Thomas Kazakos also expressed disappointment over the postponement, noting that the industry requires clarity to make the investments needed for decarbonising the maritime sector.
[Contributor: Elif Korca]
