Issue - September 2, 2025

Good morning. It’s Tuesday, September 2, and this week’s ESG Litigation Weekly covers a federal injunction blocking Texas’s SB 2337 ESG disclosure law, China’s plan to impose absolute emissions caps by 2027, a German court ruling against Apple’s “CO2 neutral” advertising, and more.

⚖️ ESG Casefile

Federal Judge Blocks Texas ESG Disclosure Law SB 2337
A federal judge in Texas has temporarily blocked SB 2337, a new state law that would have required proxy advisory firms to tell clients that ESG-related recommendations go beyond maximizing earnings. US District Judge Alan Albright granted a preliminary injunction after Glass Lewis and Institutional Shareholder Services argued the law violated free speech by compelling disclosures they deemed inaccurate. The law was set to take effect on September 1. Albright said he will issue a written order within 30 days and set a trial for February 2. Glass Lewis welcomed the ruling, while the Texas Association of Business declined to comment.
🔗 Read more → Bloomberg Law

Volkswagen Ordered to Pay $30 Million for Amazon Slave Labor Case
A Brazilian labor court ordered Volkswagen to pay 165 million reais (about $30 million) in collective moral damages for subjecting workers to slave-like conditions at a company-owned farm in the Amazon during the 1970s and 1980s. Prosecutors called it the largest reparation of its kind in Brazil’s history. Court findings showed hundreds of workers lived in degrading conditions under armed guard, in debt bondage, and without medical care, including for malaria. Judge Otavio Bruno da Silva Ferreira ruled the practices met the legal definition of slavery. Volkswagen said it will appeal.
🔗 Read more → AP News

German Court Rules Against Apple’s “CO₂ Neutral” Advertising
The Regional Court of Frankfurt ruled that Apple must stop advertising the Apple Watch as its “first CO₂ neutral product,” finding the claim misleading under Germany’s unfair competition law. The court said consumers, guided by the Paris Agreement’s 2050 climate targets, would expect long-term carbon offsetting. Apple’s Paraguay forestry project, however, secures offsets only through 2029 on most of its land, with no guarantee of extension. While judges also rejected Apple’s reliance on Verra buffer accounts as inadequate for offsets beyond 2029, the court did not view Apple’s “Carbon Neutral” logo as a misleading official seal. Apple can appeal the decision.
🔗 Read more → Hessen Judiciary (in German)

Former Credit Suisse Leaders Settle Risk Management Case for $115 Million
Nineteen former Credit Suisse executives and directors, including ex-chairman Urs Rohner, reached a $115 million settlement over shareholder claims that poor risk management led to major losses tied to Archegos and other failures between 2020 and 2021. A New York state judge approved the preliminary deal, with insurers funding the settlement payment to UBS, which rescued Credit Suisse in 2023. The defendants denied wrongdoing. The shareholder suit, led by the Employees Retirement System for the City of Providence, alleged violations of Swiss law by the defendants.
🔗 Read more → Reuters

North Dakota Supreme Court Revives Landowner Challenge to Carbon Storage Law
The North Dakota Supreme Court issued a split ruling in Northwest Landowners Association v. State, partly reviving a challenge to laws governing underground CO₂ storage. Landowners argued that state statutes allowing the Industrial Commission to amalgamate pore space for CO₂ storage without jury-determined compensation violate constitutional takings protections. The court held that the plaintiffs lack standing to challenge oil and gas storage laws or delegation provisions, but do have standing to contest CO₂ storage amalgamation. It reversed the lower court’s dismissal on statute-of-limitations grounds and remanded for further proceedings. Other claims regarding pre-condemnation survey access remain barred by precedent.
🔗 Read more → North Dakota Supreme Court’s Decision

Cruise Industry Sues Hawaii Over Climate-Related Tourist Tax
The Cruise Lines International Association and local businesses have sued Hawaii to block enforcement of a new tourist tax that includes an 11% levy on cruise passengers’ fares, prorated for days spent in Hawaii ports. Signed into law in May, the measure is the first in the nation aimed at funding climate adaptation, with officials projecting nearly $100 million annually for shoreline protection, wildfire response, and other needs. Plaintiffs argue the surcharge violates constitutional principles on navigable waters and could drive visitors away. A hearing on the injunction request is set for October 31.
🔗 Read more → AP News

🏛️ Regulatory Developments

South Korea Passes Controversial ‘Yellow Envelope Bill’ on Labor Rights
On August 24, South Korea’s parliament approved the “Yellow Envelope Bill,” amending the Trade Union and Labor Relations Adjustment Act despite strong business opposition. The law broadens the definition of “employer” to include entities with substantive control over working conditions, raising concerns that parent companies could face direct bargaining duties for subcontractors’ workers. It also expands the scope of lawful labor disputes to cover management decisions like restructuring and overseas factory moves. Business groups warned of confusion, litigation, and reduced investment, while unions hailed the reform as a historic victory and pledged further demands.
🔗 Read more → Chosunilbo

China to Impose Absolute Emissions Caps by 2027
China announced plans to introduce absolute emissions caps for major industrial sectors by 2027, replacing the current intensity-based system. According to a policy document published by the State Council and Communist Party, the move will pave the way for a nationwide emissions trading scheme (ETS) by 2030. Likely sectors include chemicals, petrochemicals, papermaking, and aviation. The new scheme will combine free and paid carbon allowances and operate alongside a voluntary carbon market aligned with international standards. Analysts say the move will tighten compliance, raise carbon prices, and incentivize investment in emissions reduction, while also aligning with trade pressures such as the EU’s Carbon Border Adjustment Mechanism (CBAM).
🔗 Read more → Dialogue Earth

Singapore Extends Timelines for Climate Reporting Requirements
Singapore’s Accounting and Corporate Regulatory Authority and Exchange Regulation have extended climate reporting deadlines to support companies’ readiness. All listed companies must still report Scope 1 and 2 emissions from FY2025, but only Straits Times Index (STI) constituents must disclose other ISSB-aligned climate data from FY2025 and Scope 3 emissions from FY2026. Depending on market capitalization, non-STI listed companies will phase in ISSB-based disclosures from FY2028 or FY2030, with Scope 3 reporting remaining voluntary. For large non-listed companies, ISSB-based climate disclosures are delayed to FY2030. More details are available through the link below.
🔗 Read more → SGX Group

US DOT Cancels $679 Million in Offshore Wind Grants
US Department of Transportation (DOT) Secretary Sean P. Duffy announced the termination or withdrawal of $679 million in federal funding for 12 offshore wind projects, calling them “wasteful” and misaligned with the Trump administration’s priorities. The rescinded grants spanned projects from Maryland’s Sparrows Point marshaling port to California’s Humboldt Bay offshore wind hub, and the funds would be redirected toward port upgrades, shipbuilding, and traditional energy infrastructure to bolster America’s maritime and energy industries. Last week, the administration also paused construction of the nearly completed $4B Revolution Wind farm off Rhode Island and Connecticut.
🔗 Read more → US DOT, ESG Dive

EU’s Call for Evidence on CBAM Emissions Methodology, Free Allocation Adjustment, and Carbon Price Paid in Third Countries
The European Commission has launched a call for evidence to refine the CBAM, introduced in 2023 to prevent carbon leakage by applying EU-equivalent carbon costs to imports of cement, steel, aluminum, fertilizers, electricity, and hydrogen. The initiative seeks feedback on three key areas: rules for calculating embedded emissions, adjustments to CBAM certificates to reflect EU ETS free allocations, and deductions for carbon prices already paid in third countries. By simplifying these methods, the Commission aims to reduce costs and improve clarity for businesses and regulators. Stakeholder feedback is open until 25 September 2025.
🔗 Read more → European Commission

🧼 Greenwashing Watch

FCA Probes Drax Over Biomass Sourcing Claims
UK power company Drax revealed that the Financial Conduct Authority (FCA) is investigating “historical statements” it made about the sourcing of wood pellets for its biomass power station. The FCA inquiry will cover January  2022 through March 2024, examining whether Drax’s disclosures, including its 2021, 2022, and 2023 annual reports, complied with reporting and transparency rules. Drax said it will cooperate fully. The company, which has received large government subsidies for biomass, paid a £25 million fine last year after regulators found it supplied inaccurate data on wood pellet sourcing. News of the FCA probe sent Drax shares down 8% amid concerns it could delay a new subsidy contract beyond 2027.
🔗 Read more → The Guardian

Arizona Sues Hefty® Maker Over Misleading Recycling Claims
Arizona Attorney General Kris Mayes filed suit against Reynolds Consumer Products, alleging its Hefty® “Blue,” “Clear,” and “Recycling” bags were deceptively marketed as recyclable and ideal for collecting recyclables. In reality, plastic bags cannot be processed in municipal recycling systems and often contaminate otherwise recyclable materials. The complaint details packaging since 2019 that prominently displayed recycling symbols and imagery, despite the bags being non-recyclable. Mayes accused Reynolds of profiting from consumer good faith and engaging in “greenwashing.” The state seeks restitution, civil penalties, and an injunction to stop the misleading practices.
🔗 Read more → Arizona Attorney General

Alcoa Reported for Alleged Misleading Environmental Claims
Community groups in Western Australia have reported Alcoa to Ad Standards Australia and the Australian Securities & Investments Commission over advertisements about its mining in the Northern Jarrah Forest. The ads claimed Alcoa’s operations had not harmed Perth’s drinking water supply, that it conducts “World Class Mining Rehabilitation" and that 75% of cleared forest was restored. Critics say none of Alcoa’s rehabilitation over 60 years of operation has met government standards, and an independent review of Alcoa’s rehabilitation raised doubts about whether the potential environmental impacts could be managed through it. The complaints come as Alcoa seeks to expand its mining operations across an additional 11,500 hectares.
🔗 Read more → Environmental Defenders Office

💡 Insight of the Week

Fast Fashion Faces Growing Legal and Regulatory Pressure
Fast fashion’s environmental impact spans the entire supply chain, from resource-heavy fabric sourcing and toxic dye pollution to enormous volumes of textile waste that mostly end up in landfills. Regulators in the United States and Europe are increasing scrutiny of the industry, with new rules and lawsuits targeting misleading green claims, labor rights violations, and intellectual property theft. Insurers are also considering companies’ ESG practices in their risk assessments. To reduce this risk exposure, brands are beginning to adopt circular economy strategies such as resale, rental, and textile recycling.
🔗 Read more → ACCESS Newswire

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