Key news in this edition:
- ICJ delivers landmark advisory opinion on the obligations of states to prevent environmental harm
- UK Government abandons green taxonomy plans
- China introduces absolute emissions caps from 2027
Editorial
In the past two months, we have seen policymakers slow the pace on some ESG rules, yet, without stepping away from the broader agenda. The International Court of Justice’s advisory opinion confirmed that states have a legal duty to prevent environmental harm, including from private sector emissions. While the ruling isn’t binding, it is likely to influence how domestic ESG obligations take shape in the years ahead. At the same time, some policies are being reconsidered. At the global level, UN talks on a plastic treaty ended without agreement in August. The UK has formally abandoned its green taxonomy plans, concluding the framework was too complex and offered limited added value. In the EU, battery supply chain due diligence rules have been pushed back by two years to give companies more time to prepare. On the other hand, China has announced that it will introduce absolute emissions caps in selected sectors by 2027, as part of a broader plan to establish a national carbon market by the end of the decade.
ICJ delivers landmark advisory opinion on the obligations of states to prevent environmental harm
Following two years of proceedings that drew record-breaking engagement from both states and international organisations in the history of the institution, the International Court of Justice (‘ICJ’) delivered a landmark advisory opinion on 23 July 2025. Reached unanimously, the opinion addressed a question posed by the United Nations (‘UN’): What are the obligations of – and, where significant harm has been inflicted, legal consequences for – states under international law to ensure the protection of the climate system and other parts of the environment from anthropogenic emissions of greenhouse gases? The ICJ determined that states do have an obligation to protect the climate system and other parts of the environment, as per multiple sources of law, including but not limited to international human rights law, climate change treaties, customary international law, other environmental treaties, and the law of the sea. Not merely must they abide by their climate commitments, they must also regulate the activities and limit the quantity of emissions caused by private actors within a state’s jurisdiction.
So what?
While the ICJ’s advisory opinion is not legally binding, it does incite significant political and policy ramifications for private actors, particularly with respect to domestic ESG compliance. As part of their duty to prevent harm to the environment, states will likely enforce stronger protocols towards the private sector and require more comprehensive ESG assessments in cases of interactions between private actors and environmental landscapes. Furthermore, as states begin to adopt the ICJ’s opinion, stronger legal frameworks against harmful climate practices and enhanced human rights protections in the context of climate change are likely to emerge.
[Contributor: Simran Sawhney]
UK Government abandons green taxonomy plans
In July 2025, the UK Government confirmed it would not proceed with its plans to introduce a Green Taxonomy, a classification framework for sustainable investments. The plans were first announced in 2020, however, following a consultation review in November 2024, the UK government reported that it found no sufficient evidence that a taxonomy would lessen greenwashing or channel investments toward sustainability-focused investments, two of the taxonomy's main goals. The British government said it would instead focus on other, pre-existing methodologies, including sustainability reporting standards and corporate transition plans. The consultation received 150 responses from financial services firms and corporates, with over half expressing a mixed or negative view. Respondents cited concerns around complexity, limited practical benefits, and difficulty aligning the framework with global standards.
So what?
The UK's decision indicates it is prioritising both attracting investment and reducing regulatory hurdles over implementing environmental standards, as many businesses appear to view taxonomies as complex, rigid, and difficult to implement. However, the government’s emphasis on alternative sustainability measures demonstrates that green policies remain a consideration. For businesses, the decision removes the prospect of a new classification burden, but expectations around credible transition planning and ESG reporting continue to grow.
[Contributor: Haddie Hamal]
China introduces absolute emissions caps from 2027
On 25 August 2025, the State Council, the chief administrative body of the People’s Republic of China (‘PRC’), and the Central Committee of the Communist Party, the highest legislative body of the ruling Communist Party of China, announced the introduction of absolute emissions caps in the PRC, to be implemented in certain industries by 2027. This formed part of a broader policy guideline on the construction of a national carbon trading market. By 2030, the announcement stated that the PRC will have established a national carbon trading market based on a cap-and-trade system, with free and paid allocations, and a national voluntary greenhouse gas emission reduction trading market. The guideline does not specify which sectors would be added to the market by 2027, analysts expect that these will include the chemical, petrochemical, papermaking and aviation industries. The planned national carbon trading market will replace the current compulsory emissions trading scheme that targets the power, steel, cement and aluminium sectors, and the existing voluntary carbon market known as the China Certified Emission Reduction scheme.
So what?
This announcement indicates that the PRC is following a global trend towards stricter emissions management, particularly through carbon pricing and trading. As regulations such as the Carbon Border Adjustment Mechanism, the EU’s new tariff regime for trading in carbon-intensive goods, come into effect, exporters the world over are encouraged to build effective and accurate emissions tracking systems, and to invest in emissions reduction, to ensure goods remain competitive in the international market.
[Contributor: Emma Shewell]
UN plastic treaty talks end without agreement
In mid-August, the latest round of negotiations in Geneva to forge the world’s first legally binding treaty on plastic pollution collapsed. Delegates from 184 countries failed to reach consensus on key issues, including limits on plastic production, controls on toxic additives, and whether treaty provisions should be legally binding.
The talks are part of the Intergovernmental Negotiating Committee (INC) process, which was launched in 2022 with the aim of agreeing a legally binding treaty by the end of 2025. Despite two competing draft texts being tabled, negotiators were unable to reconcile divisions between countries advocating for strict controls and those opposed to production caps, the latter including the US and several major oil-producing states.
Some campaigners viewed the outcome as a setback for international environmental governance. Others argued that failure to reach a weak compromise may ultimately strengthen the final product. There is currently no date set for the next round of negotiations.
So what?
The talks reflect ongoing tensions in global plastic policy, particularly over how responsibility for production and pollution should be distributed. For companies in affected sectors, such as packaging, consumer goods, petrochemicals, and retail, should see the lack of progress as a temporary pause in a steadily intensifying regulatory landscape. Regional and national plastic regulation continues to tighten, as shown by the EU with the Single‑Use Plastics Directive, and by the UK with plastic packaging tax.
[Contributor: Dominik Wilk]
EU delays battery due diligence rules until 2027
On 8 July 2025, the Council of the European Union adopted a regulation delaying the implementation of supply chain due diligence obligations under the EU Battery Regulation. Originally due to take effect in August 2025, the rules will now apply from 18 August 2027.
The decision forms part of the so-called “Omnibus IV” regulation, which modifies several product-related environmental rules to give businesses more time to prepare. The delay affects companies involved in the production, import, or placing on the market of batteries and battery-powered products within the EU, particularly those sourcing key raw materials such as lithium, cobalt, and nickel.
The due diligence obligations are intended to address environmental and human rights risks across battery supply chains. They were a core part of the EU’s push to promote responsible sourcing and reduce the carbon footprint of electric mobility and energy storage systems. However, concerns had been raised by industry groups and member states about the feasibility of implementing the rules within the original timeline.
So what?
The postponement offers short term relief from compliance pressures for businesses, but expectations around supply chain transparency remain in place. Many companies continue to invest in mapping and monitoring their upstream partners, especially as similar rules are progressing under the Corporate Sustainability Due Diligence Directive (CSDDD), which will affect a wider range of sectors in the coming years.
[Contributor: Dominik Wilk]
