Issue - April 7, 2026

Good morning. It’s Tuesday, April 7, and this week’s ESG Litigation Weekly covers parallel challenges to EPA’s repeal of updated Mercury and Air Toxics Standards for coal- and oil-fired power plants, a European Commission proposal to change the EU ETS market stability reserve, Fonterra’s settlement of a greenwashing case over “100% New Zealand” and “Grass Fed” butter labeling, and more.

States and Advocacy Groups File Parallel Challenges to EPA’s MATS Repeal
Two coalitions filed D.C. Circuit petitions challenging the U.S. Environmental Protection Agency (EPA)’s February 2026 repeal of the 2024 Mercury and Air Toxics Standards (MATS) update for coal- and oil-fired power plants. One petition was filed by 21 states and local governments led by Illinois and Minnesota. The other was filed by environmental, public health, and community groups, including the Environmental Defense Fund (EDF), Sierra Club, Natural Resources Defense Council (NRDC), the American Lung Association, and the American Academy of Pediatrics. Both seek to overturn EPA’s rollback, which restores older standards for mercury and other hazardous pollutants and removes the particulate-matter continuous emissions monitoring requirement.
🔗 Read more → Illinois AG Office (Press Release, Court Review Petition), EDF (Press Release, Court Review Petition)

Vermont Defends Climate Superfund Law in First Court Challenge
A federal judge heard arguments in the first court challenge to a state climate superfund law, as Vermont defended its 2024 statute requiring certain large fossil fuel companies to help fund climate adaptation costs tied to their production and refining activities from 1995 to 2024. The law is being challenged by the United States, American Petroleum Institute, U.S. Chamber of Commerce, and a coalition of Republican-led states. Supporters, including Conservation Law Foundation (CLF) and Northeast Organic Farming Association of Vermont (NOFA-VT), argue the measure is a lawful, one-time assessment to help Vermont communities prepare for worsening floods and other climate impacts.
🔗 Read more → NRDC’s Press Release, Vermont’s Climate Superfund Act

Court Denies Chubb’s Dismissal Bid and Refuses to Require Vote on Climate Proposal
A federal judge in Washington, D.C. denied As You Sow’s request for emergency relief requiring Chubb to include a climate-related shareholder proposal in its 2026 proxy materials. Judge Sparkle L. Sooknanan held that, at this stage, As You Sow had not shown it was likely to succeed in arguing that the proposal focused on a significant policy issue rather than Chubb’s ordinary business operations. The court also denied without prejudice Chubb’s motion to dismiss for insufficient service and gave As You Sow 120 days to complete service, leaving the merits open for further briefing.
🔗 Read more → Court Memorandum Opinion via JUSTIA

Gulf Groups Sue Over Blanket ESA Exemption for Offshore Oil and Gas Activities
Healthy Gulf, Sierra Club, Friends of the Earth, and Turtle Island Restoration Network sued the Trump administration in D.C. federal court over the Endangered Species Committee’s March 31 decision to exempt Gulf offshore oil and gas activities from Endangered Species Act (ESA) requirements. The complaint also challenges Defense Secretary Pete Hegseth’s national security finding, arguing the administration unlawfully bypassed the ESA’s ordinary exemption process to grant a broad industry-wide carveout tied to the Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement’s Outer Continental Shelf oil and gas program. The suit highlights risks to species, including Rice’s whale and several sea turtles.
🔗 Read more → Earthjustice (Press Release, Court Filing)

European Commission Proposes ETS Reform to Preserve More Allowances in Market Stability Reserve
The European Commission proposed amending the EU Emissions Trading System (ETS) Market Stability Reserve to stop invalidating allowances held in the reserve above the current 400 million threshold. Instead, those allowances would remain available as a buffer to support market stability and predictability. The Commission said the change is intended to make the EU carbon market more resilient to future supply pressures while preserving the ETS’s rules-based design and role in decarbonization. The proposal now goes to the European Parliament and Council, with a broader EU ETS review due in July 2026.
🔗 Read more → European Commission (Press Release, Proposal for an Amendment to the Market Stability Reserve Decision)

New Zealand FMA Grants Class Exemption for Green and Social Bond Offers
New Zealand’s Financial Markets Authority (FMA) granted a class exemption intended to make it easier for issuers to bring green, social, sustainability, and sustainability-linked (GSSS) bonds to market. The exemption allows issuers to offer certain bonds on the same-class basis even where they differ from existing quoted bonds in GSSS status, and in some cases, interest rate or redemption date, without preparing a full product disclosure statement. FMA suggested the change is meant to reduce time and cost barriers while still requiring issuers to provide investors with information about the bond’s GSSS features so they can make informed decisions.
🔗 Read more → Exemption Notice, NZ FMA (Press Release, Regulatory Impact Statement)

China Adopts Ecological and Environmental Code Consolidating Pollution, Ecology, and Climate Rules
China’s legislature adopted the Ecological and Environmental Code on March 12, creating a unified framework for ecological and environmental protection that will take effect on August 15, 2026. The code covers general provisions, pollution prevention and control, ecological protection, green and low-carbon development, and legal liability. It also includes a dedicated section on green and low-carbon development, with chapters addressing the circular economy, energy conservation, low-carbon transition, and climate change mitigation, adaptation, and international cooperation.
🔗 Read more → English.gov.cn’s News Release, Ecological and Environmental Code, Presidential Decree No.70

European Commission Issues Guidance and FAQs on New EU Packaging Rules
The European Commission published guidance and FAQs to support implementation of the Packaging and Packaging Waste Regulation (PPWR), which entered into force in February 2025. The materials are intended to promote more uniform application across Member States and help companies interpret key provisions, including who qualifies as a manufacturer or producer, what counts as packaging, restrictions on certain single-use packaging, PFAS limits for food-contact packaging, re-use targets, extended producer responsibility, and deposit return systems. The Commission said the guidance does not amend the regulation and that further delegated and implementing acts are in preparation.
🔗 Read more → European Commission (Press Release, PPWR Guidance, PPWR FAQs)

GRI Opens Consultation on Draft Pollution Reporting Standards
The Global Reporting Initiative (GRI) launched a public consultation on three exposure drafts aimed at strengthening corporate reporting on pollution impacts and management. The proposals include a first GRI Topic Standard on soil pollution, expanded disclosures in GRI 305: Emissions 2016, and a substantial update to GRI 306: Effluents and Waste 2016 covering significant spills and broader critical incident preparedness, prevention, and response. The consultation is open until June 8, 2026, with the final Pollution Standards intended to launch in 2027.
🔗 Read more → GRI (Exposure Drafts: Air Pollution, Soil Pollution, Critical Incidents; Survey Links and Webinars Registration)

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Fonterra Settles Greenwashing Case Over Anchor Butter “100% New Zealand” and “Grass Fed” Label
Fonterra and Greenpeace Aotearoa agreed to settle Greenpeace’s 2024 lawsuit over Anchor butter packaging sold in New Zealand between December 2023 and April 2025. In its April 1 statement, Fonterra accepted that using the phrases “100% New Zealand” and “Grass Fed” together on the label was likely to mislead some consumers and breached section 9 of the Fair Trading Act 1986. Fonterra said it has removed the label and will not use it again, while emphasizing that the case did not challenge “Grass Fed” in isolation and that it makes no admission on that point.
🔗 Read more → Fonterra’s Statement, Greenpeace’s Press Release

Fiducian Unit Agrees Proposed $7.3 Million Penalty to Resolve ASIC ESG Fund Case
Fiducian Group confirmed its subsidiary, Fiducian Investment Management Services Limited (FIMS), has entered into a heads of agreement with the Australian Securities and Investments Commission (ASIC) to resolve civil proceedings over the Diversified Social Aspirations Fund, subject to New South Wales (NSW) Supreme Court approval. Under the proposed settlement, FIMS would pay a A$7.3 million penalty and up to A$650,000 toward ASIC’s legal costs. The parties would also seek declarations that the fund’s product disclosure statements contained misleading ESG-related statements and that FIMS breached its duty of care and diligence as the responsible entity. The case stems from ASIC’s 2025 allegations that the fund’s ESG disclosures did not match its investment selection and monitoring processes.
🔗 Read more → Fiducian ASX Announcement, ASIC’s October 2025 Press Release

DUH Launches Greenwashing Actions Over “Climate-Neutral” Fuel and Fossil Heating Claims
Deutsche Umwelthilfe (DUH) reported it launched legal proceedings against ten companies and one oil-industry trade association over advertising that allegedly overstates the environmental benefits of HVO100 diesel, fossil heating systems, and vehicle technologies. In its press release, DUH pointed to claims such as “90% climate neutral,” “I fuel climate protection,” and statements portraying oil heating as highly efficient or “future-proof.” DUH said it sent cease-and-desist demands on March 30, and framed the actions as part of a broader push against sustainability marketing for fossil-based products and what it calls false solutions in transport and heating.
🔗 Read more → DUH’s Press Release

New LSE Report Finds Climate Considerations Remain Weakly Integrated in EIAs Across Latin America and Asia
A new London School of Economics and Political Science (LSE) Grantham Research Institute report examines environmental impact assessment (EIA) regimes in 20 major economies across Latin America, the Caribbean, and East, South, and Southeast Asia, and finds that climate considerations remain unevenly and often narrowly integrated into project approval processes. One-third of the jurisdictions reviewed do not incorporate any form of climate impact assessment in their EIA frameworks, most focus mainly on direct emissions, and very few expressly require Scope 3 assessment. The report also notes that climate litigation is increasingly being used to push for stronger project-level climate review, including in Latin America.
🔗 Read more → LSE Report “Integrating climate considerations into environmental impact assessments: Lessons from Latin America and Asia”

Catch up on previous editions → ESGLitigation.com

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