Issue - May 26, 2026

Good morning. It’s Tuesday, May 26, and this week’s ESG Litigation Weekly covers the Dutch Supreme Court’s hearing in Milieudefensie’s climate case against Shell, California CARB’s nearly $197 million diesel engine emissions settlement with Volvo, the UN General Assembly’s resolution welcoming the ICJ’s climate advisory opinion, and more.

Dutch Supreme Court Hears Shell Climate Case
The Dutch Supreme Court held a hearing in Milieudefensie’s climate case against Shell on May 22, following the 2024 Court of Appeal decision that rejected a specific 45% emissions-reduction order but recognized Shell's duty to reduce emissions. Milieudefensie argues the appellate court wrongly declined to impose a concrete reduction target and continues to seek a 45% cut in Shell’s CO₂ emissions by 2030 compared to 2019. Shell argues the requested order has no legal basis, would be ineffective, and would interfere with climate policy choices better handled by lawmakers. The case concerns whether Dutch civil law can support a company-specific emissions-reduction order, and how far courts may go in defining that obligation for a major fossil fuel company.
🔗 Read more → Milieudefensie (Press Release, Written Submission, Pleading Note), Shell (Press Release, Written Submission, Pleading Note)

California CARB Settles Diesel Engine Emissions Case With Volvo for Nearly $197 Million
The California Air Resources Board (CARB) settled an emissions and certification case with Volvo Group North America for nearly $197 million. CARB alleged that approximately 10,000 model year 2010 to 2016 heavy-duty diesel engines used undisclosed auxiliary emission-control devices and emitted more smog-forming nitrogen oxides than allowed under California standards. The settlement includes $17.5 million in penalties and costs, $71 million for air quality mitigation, and $108 million for emissions-reduction projects in California. Volvo also agreed to offer a recall repair and extended warranty for certain model year 2014 to 2016 engines. The agreement does not include an admission by Volvo.
🔗 Read more → CARB (News Release, Settlement Agreement, FAQ)

Youth Petitioners Seek Stay of EPA Repeal of Endangerment Finding and Vehicle GHG Standards
Eighteen youth petitioners asked the U.S. Court of Appeals for the D.C. Circuit to stay the Environmental Protection Agency’s (EPA) 2026 rule rescinding the 2009 Endangerment Finding and repealing greenhouse gas emission standards for light-, medium-, and heavy-duty vehicles and engines. The motion in Venner v. EPA argues that, without a stay, automakers’ near-term fleet decisions could lock in more internal-combustion vehicles and additional emissions while the case is litigated. The petitioners claim the rule causes irreparable harm to their health, religious practices, and constitutional rights. EPA denied their earlier stay request.
🔗 Read more → Our Children’s Trust (Press Release, Motion to Stay, Case Background)

States Sue ISS Over Alleged ESG-Related Proxy Advice Practices
Texas, Iowa, Nebraska, and West Virginia filed consumer-protection lawsuits against Institutional Shareholder Services (ISS), alleging that the proxy adviser marketed its benchmark proxy research as objective while incorporating ESG, climate, and board-diversity criteria that the states say were not tied to clients’ financial interests. The complaints allege ISS used policies such as “Climate Accountability” and “Say on Climate,” coordinated with ESG-focused groups, and failed to disclose conflicts related to its consulting business and ownership structure. The states seek injunctive relief, civil penalties, and other remedies. Florida previously filed a similar lawsuit in November 2025, and the states are coordinating through a Multistate Proxy Advisor Coalition.
🔗 Read more → Texas AG (Press Release, Court Filing), Iowa AG (Press Release, Court Filing), Nebraska AG (Press Release, Court Filing), West Virginia AG (Press Release, Court Filing)

UN General Assembly Backs ICJ Climate Advisory Opinion
The United Nations (UN) General Assembly adopted a resolution welcoming the International Court of Justice’s (ICJ) July 2025 advisory opinion on States’ climate change obligations. The resolution, approved by 141 votes to 8 with 28 abstentions, affirms the opinion as an authoritative contribution to clarifying existing international law and calls on States to comply with obligations identified by the ICJ to protect the climate system from anthropogenic greenhouse gas emissions. It also asks the UN Secretary-General to report on ways to advance compliance. UN Secretary-General António Guterres welcomed the vote as an affirmation of international law, climate justice, and science.
🔗 Read more → UN (General Assembly Coverage, Secretary-General Statement)

FASB Issues Standard on Environmental Credits and Obligations
The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2026-02, creating new Generally Accepted Accounting Principles (GAAP) guidance for environmental credits and environmental credit obligations. The standard applies to entities that generate, buy, or receive environmental credits, or have regulatory compliance obligations that may be settled with credits. It defines when credits are recognized as assets, distinguishes compliance and non-compliance credits for measurement, and requires disclosures on how credits are obtained, used, and valued. FASB emphasized that the standard addresses financial statement amounts only, not tracking voluntary net-zero initiatives or actual greenhouse gas emissions. For public companies, the amendments apply to annual periods beginning after December 15, 2027, including interim periods within those annual periods.
🔗 Read more → FASB (Press Release, Accounting Standards Update “Environmental Credits and Environmental Credit Obligations (Topic 818)”)

EPA Revises HFC Refrigerant Rules and Proposes Transport Refrigeration Exemption
The U.S. EPA finalized revisions to the 2023 Technology Transitions Rule under the American Innovation and Manufacturing Act, extending compliance deadlines and adjusting hydrofluorocarbons (HFC) refrigerant requirements for sectors including supermarkets, cold storage, semiconductor manufacturing, residential and light-commercial air conditioning, and certain refrigerated transport and laboratory equipment. EPA also proposed exempting road and intermodal container transport refrigeration units from HFC leak repair requirements under the 2024 Emissions Reduction and Reclamation rule. HFCs are greenhouse gases with high global warming potential. EPA estimates the final rule will save $976 million through 2050, while the proposed transport refrigeration exemption could save $1.5 billion over 25 years if finalized.
🔗 Read more → EPA (Press Release, Final Rule Fact Sheet, Prepublication Final Rule, Proposed Rule Fact Sheet), White House’s Fact Sheets

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Ninth Circuit Hears Venue Fight in California ExxonMobil Plastics Case
The Ninth Circuit heard argument over whether California’s plastics-related lawsuit against ExxonMobil should proceed in state court or be litigated in federal court. California alleges ExxonMobil misled the public for decades by promoting plastic recycling as an effective solution despite knowing most plastics are not recycled. ExxonMobil argues the case belongs in federal court because the state’s claims include alleged injuries to navigable waterways, raising admiralty jurisdiction issues. California asserts the lawsuit is based on state-law deception and nuisance claims and should remain in state court. A district court had previously remanded the case.
🔗 Watch the hearing recording → U.S. Courts for the Ninth Circuit

New Zealand FMA Issues Guidance on Sustainability-Related Product Claims
New Zealand’s Financial Markets Authority (FMA) issued updated guidance for issuers of financial products with sustainability-related characteristics. The guidance explains how fair dealing and disclosure obligations under the Financial Markets Conduct Act apply to sustainability claims, including green, ethical, responsible, transition, and impact labels. The FMA sets out four principles: claims should be clear, substantiated, consistent across platforms, and supported by effective third-party oversight. It also warns that vague claims, omitted limitations, inconsistent screening policies, or unclear third-party certifications may mislead investors. The guidance replaces earlier 2020 and 2022 FMA materials.
🔗 Read more → FMA (Press Release, Guidance)

ASIC Flags Early Lessons From Australia’s First Sustainability Reports
The Australian Securities and Investments Commission (ASIC) issued early observations from its review of Australia’s first compulsory sustainability reports, ahead of the 30 June 2026 reporting season. The regulator said the new regime has improved the quantity and quality of climate-related financial information, but identified areas for improvement. ASIC warned that disclaimers conflicting with Chapter 2M of the Corporations Act 2001’s reporting objectives may confuse or mislead users, and emphasized clearer disclosure of climate-related risks, assumptions, measurement uncertainty, cross-references, and legally required climate targets. Final observations are expected in the second half of 2026.
🔗 Read more → ASIC

Additional Notable Update:
The Science Based Targets initiative (SBTi) published its 2026-2030 strategy, which it says marks a shift from setting corporate climate ambition to supporting implementation, and from acting primarily as a target validator to becoming a transition partner.
🔗 Read more → SBTi 2026-2030 Strategy, Summary

Catch up on previous editions → ESGLitigation.com

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