U.S.: DOL Plans to Rescind the ESG Rule for ERISA Fiduciaries

On May 28, 2025, the U.S. Department of Labor (the “DOL”), by notice provided by the U.S. Department of Justice, informed the U.S. Court of Appeals for the Fifth Circuit that it will pursue new rulemaking to replace the rule permitting ERISA fiduciaries to consider ESG factors when making certain investment decisions.  The DOL intends to include the rulemaking in its Spring 2025 Regulatory Agenda and will proceed through the rulemaking process “as expeditiously as possible.”

The DOL’s decision follows the Fifth Circuit’s April 28, 2025 stay of proceedings, which granted the DOL 30 days to decide whether it would rescind the Rule on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (the “Rule”).  The Biden-era Rule took effect in January 2023 and allowed ERISA fiduciaries to consider ESG factors and other collateral benefits as tiebreakers when choosing between investment options that equally serve plan participants’ financial interests.  A coalition of 26 Republican state attorneys general sued to block the Rule in 2023, but the U.S. District Court for the Northern District of Texas upheld it twice, including after the U.S. Supreme Court overturned the “Chevron doctrine” in Loper Enterprises v. Raimondo, 603 U.S. 369 (2024).

While the substance of the new proposal remains uncertain, the DOL’s decision marks a policy reversal under the Trump administration and highlights its ongoing efforts to limit the role of ESG considerations in U.S. federal policy.

Link:

DOL Status Report

EU: European Parliament Report Proposes Significant Amendments to CSRD and CSDDD

On June 12, 2025, European Parliament Rapporteur Jörgen Warborn published a draft report dated May 26, 2025, proposing amendments to the EU Corporate Sustainability Reporting Directive (the “CSRD”) and the Corporate Sustainability Due Diligence Directive (the “CSDDD”). The amendments are part of the Omnibus package aiming to simplify the EU’s sustainability legislation and increase the EU’s competitiveness. For more information on the European Commission’s proposed amendments to the CSRD and the CSDDD, see our Debevoise In Depth article here.

The report proposes significant changes, including by (i) raising the thresholds for the CSRD and CSDDD to apply to firms with 3,000 employees exceeding €450 million in net turnover, (ii) limiting the trickle-down effect of due diligence obligations under the CSDDD by requiring companies to rely on reasonably available information, and (iii) removing the obligation under the CSDDD to adopt a climate transition plan. 

As the next step, the European Parliament, Council of the European Union and the European Commission are expected to engage in informal “trilogue” negotiations to reach a position on the proposed amendments to the CSRD and the CSDDD.

Link:
European Parliament Draft Report

Global:  Basel Committee Updates Climate Risk Disclosure Recommendations

On June 13, 2025, the Basel Committee on Banking Supervision (“the Committee”), a group of banking regulators and central bankers, published a framework for banks to voluntarily disclose their climate-related risks. The framework sets forth guidelines for banks to identify how climate risk, including both “physical risk” and “transition risk,” could impact their financial risks, and broader financial stability.

The framework follows a consultation proposal published by the Committee in November 2023. Compared to the proposal, the framework makes implementation voluntary, allowing individual jurisdictions to decide which of the Committee’s recommendations to adopt. The change follows resistance from the U.S. Federal Reserve and other U.S. banking regulators to the framework being mandatory. The Committee explained that the change to a voluntary framework represents a necessity given the evolving “accuracy, consistency, and quality of climate-related data”.  The Committee also removed a previous template for reporting referred to as “facilitated emissions”, namely carbon emissions associated with capital markets activities and trading.

There are no set timelines for implementation of the disclosure framework, which must be done at the national level, by local banking regulators.

Links:

Basel Committee Framework

Basel Committee Consultative Document (Nov. 2023)

Global: IFRS Foundation Publishes Jurisdictional Profiles on ISSB Standards Adoption

On June 12, 2025, the International Financial Reporting Standards Foundation (the “IFRS”) announced that 36 jurisdictions have or will incorporate the IFRS Sustainability Disclosure Standards (the “ISSB Standards”) into their regulatory systems. Around half of these jurisdictions have finalized their ISSB Standards-aligned sustainability regimes, while the other half are in the process of finalizing their sustainability reporting regimes. The majority of these 36 jurisdictions have or will fully adopt the ISSB Standards, with others instead adopting select ISSB Standards disclosure requirements such as the climate-related standards (IFRS S2). This marks an increase from November 2024, when 30 jurisdictions were reported to be making “progress towards” using the ISSB Standards.

Established by the IFRS at COP26 in 2021, the ISSB Standards aim to provide investors with consistent, useful information about companies’ sustainability risks and opportunities. In June 2023, the ISSB released its first set of standards: IFRS S1 (General Requirements for Disclosure of Sustainability-Related Financial Information) and IFRS S2 (Climate-Related Disclosures). For more information about the adoption of the ISSB Standards, please see our Debevoise In Depth on the topic.

Links:

IFRS News

Inaugural Jurisdictional Guide

Jurisdictional Profiles

This publication is for general information purposes only. It is not intended to provide, nor is it to be used as, a substitute for legal advice. In some jurisdictions it may be considered attorney advertising.