August 2025 Newsletter

Here is our latest selection of sustainability stories from August 2025.

Proposed Changes to California’s Climate Laws: SB 253 and SB 261

The California Air Resources Board (CARB) has proposed changes to climate regulations: SB 253 and 261, including to the scope and requirements on companies to comply. Proposed scope changes narrow the definition of “revenue” to total global income without deductions while “doing business” will now be based on entities listed with a California agent for service of process. Companies with only remote staff, non-profits, and government bodies may now be exempt. As a result, estimated coverage for SB 261 is likely to drop from around 10,000 companies to 4,160 and for SB 253, from around 5,300 to 2,596.

Other proposed changes include a deadline of 30th June 2026 for initial SB 253 Scope 1 and 2 GHG emissions reporting, with Scope 3 starting in 2027. Draft templates for Scope 1 and 2 reporting will be released by September 2025. For SB 261, initial climate risk reports remain due 1st January 2026, but CARB clarified these reports will not require GHG metrics or scenario analysis initially. CARB will issue a notice of proposed rulemaking on 14th October 2025, covering annual fees and reporting scope, with final adoption expected in December 2025. Public comments on these concepts close on 11th September 2025. More details here.

FCA Publishes Review of TCFD

The FCA has published findings on a review of TCFD reporting, reporting that TCFD rules have improved firms’ integration of climate risks into decision-making and enhanced transparency with clients. The review also found that firms acknowledged that the rules helped embed climate risk into strategies and risk management, particularly for asset managers and insurers. However, challenges remain. Firms struggled with forward-looking data, such as scenario analysis, and found disclosures too complex for retail investors, leading to low engagement at the product level. Accessibility of product-level reports was also limited. Many firms viewed the current regime as overly granular, especially given overlapping sustainability disclosure requirements. They called for simplification and greater proportionality. Firms also sought clarity on the future of TCFD rules, particularly in light of the UK’s move toward International Sustainability Standards Board (ISSB) alignment. The FCA plans to consult on transitioning to ISSB-based standards and streamlining sustainability reporting frameworks to ensure consistency and practicality for firms.

California Climate Laws Overcome Legal Challenge

A federal judge has rejected a legal challenge to California’s landmark climate disclosure laws, allowing them to proceed as planned. The U.S. Chamber of Commerce and other business groups had sought a preliminary injunction, arguing the laws violated First Amendment rights by compelling speech. However, Judge Otis Wright II ruled on 13th August 2025, that the plaintiffs failed to demonstrate a likelihood of success.

The laws (SB 253 and SB 261) require large companies doing business in California to report greenhouse gas emissions and climate-related financial risks. SB 253 applies to firms with over $1 billion in revenue, mandating Scope 1, 2, and 3 emissions disclosures, while SB 261 targets companies earning over $500 million, requiring climate risk assessments. With compliance deadlines beginning in 2026, the ruling paves the way for some of the most stringent corporate climate reporting requirements in the U.S., potentially influencing national standards.

US State Attorneys General Accuse SBTi of Breaking Anti-trust Laws

A coalition of 23 U.S. State Attorneys General (AGs), led by Iowa’s Brenna Bird, has accused the Science Based Targets initiative (SBTi) of potentially violating antitrust and consumer protection laws. Their concerns centre on SBTi’s Financial Institutions Net-Zero (FINZ) Standard, which requires financial institutions to end funding and insurance for fossil fuel expansion. The AGs argue that this could amount to coordinated collusion to deny services to the oil and gas industry, potentially breaching laws against market manipulation. They also raised concerns about greenwashing and unrealistic net-zero targets misleading consumers. The letter demands detailed disclosures from SBTi, including communications, funding sources, and insurer practices.

SHEIN Fined in Italy for Greenwashing

Fashion retailer SHEIN has been fined €1 million by Italy’s Competition Authority (AGCM) for making misleading environmental claims, marking a significant greenwashing case in the fashion industry. The regulator found that SHEIN’s marketing, particularly campaigns such as “evoluSHEIN” and “#SHEINTHEKNOW” used vague and exaggerated sustainability claims that lacked evidence or context. These included misleading suggestions about recyclability, use of “green” materials, and emissions targets, which contradicted the company’s rising greenhouse gas emissions in recent years.  Earlier in 2025, France’s consumer authority fined SHEIN €40 million for similar issues, including deceptive discounting and false environmental claims. The European Union also accused SHEIN of systematic violations of consumer protection laws in 2025, including false or misleading eco-friendly claims.

If you’d like to know more or discuss any of these topics, please get in touch.