Issue - October 21, 2025

US regulators scrap climate risk rules, IMO delays ship carbon price, California probes bag recycling claims, and much more

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Good morning. It’s Tuesday, October 21, and this week’s ESG Litigation Weekly covers U.S. bank regulators’ withdrawal of climate risk management principles, the IMO’s one-year deferral of a decision on a global shipping carbon price, California’s attorney general settling with four plastic bag makers and suing three others over recyclability claims, and more.

⚖️ ESG Casefile

Germany’s Federal Court of Justice Admits Appeal in DUH Climate Case Against Mercedes
Germany’s Federal Court of Justice (BGH) allowed the appeal sought by Deutsche Umwelthilfe’s (DUH) managing directors in their lawsuit against Mercedes-Benz. The case will bring the automaker’s responsibility for climate-harmful products in front of the country’s highest civil court. Filed in 2021, the suit seeks to require Mercedes to stop selling new combustion engine vehicles by 2030 at the latest or to commit to a Paris-aligned greenhouse gas (GHG) emissions reduction pathway. The Stuttgart Higher Regional Court dismissed the case in 2023. By admitting the appeal, the BGH opens the door to a potential landmark decision on climate protection law in Germany.
🔗 Read more → Deutsche Umwelthilfe (in German)

Coalition Challenges FERC Approval of CP2 LNG Terminal in D.C. Circuit
A coalition of fisherfolk, community members, and public interest groups filed an opening brief in the U.S. Court of Appeals for the D.C. Circuit challenging the Federal Energy Regulatory Commission’s (FERC) approval of Venture Global’s Calcasieu Pass 2 (CP2) LNG terminal and feeder pipeline in southwest Louisiana. They argue FERC failed the Natural Gas Act’s required public interest balancing by downplaying harms to fisheries, local communities, and air quality. The filing highlights a 2024 sediment spill that damaged at least 260 acres of marsh and warns of risks to 1,400 acres of wetlands if construction is allowed to proceed. Commissioner Allison Clements dissented. The coalition seeks vacatur of the authorization.
🔗 Read more → Southern Environmental Law Center (Press Release, Opening Brief of Petitioners)

Thousands Sue J&J in UK Over Alleged Asbestos in Talc Baby Powder
KP Law filed a UK claim for 3,000 people against Johnson & Johnson (J&J) and its subsidiary Kenvue, alleging the company knowingly sold talc baby powder contaminated with asbestos. The suit cites internal memos and scientific reports dating to the 1960s, alleges J&J failed to warn consumers while promoting purity and safety, and claims the company urged regulators to accept less sensitive testing. J&J denies the allegations, stating the product met required standards, contained no asbestos, and does not cause cancer. Talc-based baby powder sales ended in the UK in 2023. Lawyers say damages could reach hundreds of millions of pounds.
🔗 Read more → BBC, KP Law “Talc Scandal”

Federal Judge Dismisses Youth Climate Suit Challenging Trump Energy Orders
U.S. District Judge Dana Christensen dismissed a lawsuit by 22 young climate activists seeking to block President Donald Trump’s executive orders that promote fossil fuels and discourage renewable energy. The judge acknowledged overwhelming evidence that climate change harms the plaintiffs and could worsen under the orders, but found the requested injunction unworkable and beyond the judiciary’s power to craft environmental policy. He said enforcing such relief would require monitoring countless agency actions and cited a prior federal youth climate case in concluding the plaintiffs lacked standing. The activists plan to appeal.
🔗 Read more → The Associated Press

Saskatchewan Court Strikes Climate Suit Over Gas-Fired Power Expansion
On October 10, 2025, the Court of King’s Bench granted the Government of Saskatchewan and SaskPower’s application to strike a climate lawsuit brought by several Saskatchewan citizens and Climate Justice Saskatoon (CJS). The suit argued that expanding natural gas–fired electricity violates Charter rights due to climate change impacts and asked the court to require SaskPower to set a credible net-zero target as soon as possible. The court ruled that the case will not proceed. The Saskatchewan Environmental Society (SES), which sought to intervene to assist the Court, expressed disappointment and noted it had prepared expert evidence.
🔗 Read more → SES, Court Decision (PDF via CJS)

🏛️ Regulatory Developments

U.S. Bank Regulators Withdraw Climate Risk Management Principles
Federal banking regulators withdrew the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions. The agencies said separate climate principles are unnecessary because existing safety and soundness standards already require institutions to manage risks effectively based on size, complexity, and activities. Supervisors expect all institutions to consider and address material financial risks and to be resilient to a range of risks, including emerging ones. The principles, first issued in October 2023, are rescinded effective immediately. The Office of the Comptroller of the Currency had withdrawn from the principles earlier this year.
🔗 Read more → Board of Governors of the Federal Reserve System (Press Release, Federal Register Notice)

Parliament Panel Backs Major CSRD/CSDDD Simplification and Narrower Scope
On October 13, Parliament’s Legal Affairs Committee (17 for, 6 against, 2 abstentions) backed draft changes to cut sustainability reporting and simplify due diligence. Reporting would apply only to companies with over 1,000 employees and €450 million turnover. Sector-specific standards would be voluntary, ESRS would be simplified, and a free digital portal would be created. Firms outside the scope would report voluntarily and could not be compelled by larger partners. Due diligence would cover EU firms with over 5,000 employees and €1.5 billion turnover (and foreign firms above the EU threshold), adopt a risk-based approach, rely on national liability, and cap fines at 5% of global turnover. If approved in plenary, talks with the Council start on October 24.
🔗 Read more → European Parliament

IMO Defers Decision on Global Shipping Carbon Price by One Year
A majority of countries at the International Maritime Organization (IMO) voted to postpone for one year a decision on a global carbon price for international shipping after talks failed to reach consensus amid U.S. pressure. The motion to defer was proposed by Saudi Arabia and passed by 57 to 49 countries. China backed the delay, while Greece, Cyprus, Japan, and South Korea abstained despite earlier support. Even if an agreement is reached next year, timing remains uncertain, with payments previously envisioned from 2028. Industry groups warned that the delay creates uncertainty for fleet investments. Global shipping produces nearly 3% of CO2 emissions and carries 90% of world trade.
🔗 Read more → Reuters, IMO’s Press Briefing

CARB Seeks Comment on Draft Scope 1 and 2 Template, Targets Q1 2026 Rulemaking
The California Air Resources Board (CARB) released a draft reporting template for Scope 1 and Scope 2 GHG emissions and a memo on how to use it under the Corporate GHG Reporting Program. Public comments are invited through October 27, 2025, via CARB’s docket. Following an August 2025 workshop, CARB also posted a Climate-Related Financial Risk Report Checklist and a preliminary list of potentially regulated entities with a survey tool for public consultation. Citing high comment volume and ongoing input on coverage, CARB proposes bringing the initial rulemaking, including fee provisions, to the Board in Q1 2026. The process had initially been scheduled for this month.
🔗 Read more → CARB, SB 253 Emissions Draft Reporting Template

Indonesia Resumes International Carbon Trading Under New Decree
Indonesia issued a presidential decree to restart cross-border carbon credit trading after a four-year pause. The 2021 rules had effectively halted international transactions, including large projects like Katingan Mentaya, to prioritize domestic targets and amid concerns about low prices. The new decree allows trading under Indonesian standards or those of the UNFCCC and other certifiers, and calls for a decentralized, real-time registry to prevent double-counting. Indonesia has signed mutual recognition deals with Verra, Gold Standard, Global Carbon Council, Plan Vivo, and the Joint Crediting Mechanism, and targets net-zero by 2060 or earlier.
🔗 Read more → Reuters, Presidential Decree 110/2025 (PDF, in Bahasa Indonesia)

ESMA Sets 2025 Enforcement Priorities on ESRS Materiality, Segment Reporting, and ESEF
The European Securities and Markets Authority (ESMA) outlined European Common Enforcement Priorities for 2025 annual reports. Issuers should focus on geopolitical risks and uncertainties and segment reporting in IFRS financial statements. In sustainability statements, ESMA highlights materiality considerations under the European Sustainability Reporting Standards (ESRS) and the scope and structure of the statements. For the European Single Electronic Format (ESEF) digital reporting, ESMA flags common filing errors in the Statement of Cash Flows. The statement stresses connectivity between financial and sustainability information and notes findings from a fact-finding review of 2024 ESRS disclosures. Issuers, auditors, and supervisors should apply these recommendations based on materiality and relevance.
🔗 Read more → European Common Enforcement Priorities (ECEP) Statement for 2025 (PDF), Results of a Fact-finding Exercise on 2024 Corporate Reporting Practices under ESRS Set 1 (PDF)

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🧼 Greenwashing Watch

California AG Settles with Four Plastic Bag Makers, Sues Three Over Recyclability Claims
California Attorney General (AG) Rob Bonta announced a settlement with Revolution Sustainable Solutions, Metro Poly, PreZero US Packaging, and Advance Polybag over alleged sales of non-recyclable plastic bags in violation of SB 270, the Environmental Marketing Claims Act, the False Advertising Law, and the Unfair Competition Law. The companies will halt bag sales in California and pay $1,753,000, including $1,115,750 in civil penalties and $636,250 in attorneys’ fees and costs, subject to court approval. Bonta also sued Novolex, Inteplast, and Mettler, citing subpoenas and a statewide survey showing facilities generally do not recycle these bags, despite “chasing arrows” labels and recycling claims.
🔗 Read more → Office of the Attorney General (Press Release, Complaint Document)

UK Parliamentary Briefing Surveys Debate on Fossil Fuel Advertising and Greenwashing
The UK’s House of Commons Library briefing outlines how fossil fuel advertising intersects with greenwashing and climate misinformation, and reviews policy responses. Supporters of bans argue ads downplay climate harms, while opponents cite free expression and the right to market legal products, suggesting stronger Advertising Standards Authority (ASA) and Competition and Markets Authority (CMA) enforcement instead of prohibitions. France banned some fossil fuel ads in 2022. Canada and Ireland have draft bans, and Edinburgh has local restrictions. On July 7, 2025, a Westminster Hall debate triggered by a petition from Chris Packham discussed a UK-wide ban. The government said it has no current plans to restrict such advertising.
🔗 Read more → Research Briefing “Fossil fuels, advertising and ‘greenwashing’” (PDF)

💡 Insight of the Week

China’s Climate Litigation Is Prosecutor-Led and Focused on Enforcement
In China, climate litigation is driven mainly by state prosecutors enforcing existing rules rather than by activists seeking stronger targets. Courts apply climate provisions found across various laws to implement policy, and more than a million environmental cases were resolved between 2019 and 2023, with over 95% settling before trial. Examples include a 2020 case over illegal Freon use and a 2023 ruling that a power company’s failure to meet carbon-trading duties violated mitigation goals. NGOs cannot sue the government, but can challenge companies. China’s new Ecological and Environmental Code, due in 2026 and a long-discussed climate law, could broaden case types over time.
🔗 Read more → Barron’s/AFP 

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