California Air Resources Board Approves SB 253 and SB 261 Draft Regulation: The California Air Resources Board (“CARB”) has approved an initial regulation establishing the administration and implementation fees for the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261), as well as the first-year reporting deadline for SB 253 (August 10, 2026 for Scope 1 and 2 greenhouse gas (“GHG”) emissions). The initial regulation also establishes key definitions including “doing business in California,” “revenue,” “parent” and “subsidiary,” all of which track the approaches described by CARB during its virtual public workshop held in November 2025. CARB’s action, however, does not change the status of SB 261 compliance which is still enjoined following a Ninth Circuit order in late 2025. Although CARB’s approval is not final adoption of the regulation yet, it is certainly a move in this direction.
Supreme Court Will Hear Case on Whether States Can Sue Fossil Fuel Companies over Climate Change-Related Harms: The Supreme Court justices issued an order on February 23, 2026 agreeing to consider argument from Exxon Mobil and Suncor Energy that local governments are barred by federal law from seeking relief for alleged effects of fossil fuel producers on the climate (specifically, increased GHG emissions). In 2018, the City and County of Boulder, Colorado, sued Exxon Mobil and Suncor Energy for deception of the public regarding the dangers of burning fossil fuels and, relatedly, seeking compensation for the costs of climate change (rising temperatures and intensifying storms). The Colorado Supreme Court allowed the lawsuit to proceed in state court which led to the oil companies appealing to the Supreme Court to overturn the decision. Exxon Mobil and Suncor Energy assert that the Colorado Supreme Court’s decision could lead to a patchwork of case law. The Supreme Court’s request for briefing includes, in addition to whether federal law precludes state law claims here, whether the Court has statutory and Article III jurisdiction to hear the case. Oral argument will be heard in fall 2026.
New York State Senate Passes Bill Establishing the Climate Corporate Data Accountability Act: On February 10, 2026, the New York State Senate passed Senate Bill S3456 — the New York Climate Corporate Data Accountability Act (CCDAA) — requiring businesses operating in New York with annual revenues exceeding $1 billion to publicly disclose their GHG emissions annually. Large companies — both private and public — will be required to detail their Scope 1, 2, and 3 GHG emissions, with emissions reports made available to the public via a centralized digital platform. Emissions must be calculated using GHG protocol standards, such as the GHG Protocol. New York’s CCDAA will take effect starting in 2027. If this all sounds familiar, it is — the New York CCDAA is very similar to California’s CCDAA (SB 253), which passed back in October 2023 and is set to require reporting in August 2026, barring judicial intervention.
State Attorneys General Issue Letters to Sustainability Groups and Their Current Members Asserting Plastics Recycling Initiatives May Violate Antitrust and Consumer Protection Laws: In October 2025, the attorneys general (“AGs”) of Florida, Texas, Iowa, Nebraska, and Montana jointly issued letters to the Consumer Goods Forum, the Green Blue Institute, and the U.S. Plastics Pact regarding each group’s plastics recycling initiatives. The letters — aimed at the setting of targets and standards for recyclable packing materials, private initiatives to support the transition to a circular economy, and collaborative engagement between various stakeholders — asserted that these activities may artificially inflate prices and violate antitrust and consumer protection laws. Additionally, the letters dismissed sustainability-related justifications pitched as “social welfare concerns” as a defense justifying restraint on competition. The State AGs requested each of the groups to respond to the concerns set forth in the letters and explain the “legal basis” for why they have not violated any laws. In February 2026, the State AGs, alongside the AGs from Georgia, North Dakota, South Dakota, Kansas, and West Virginia, sent an additional letter to current members of the three sustainability groups asserting that such members may be “participating in, implementing, or enforcing” the activities set forth in the October 2025 letter. These letters appear to be an extension of state AG enforcement activity with respect to sustainability-related matters. Companies should remain vigilant and diligent of such actions taken by state AGs, like the issuance of these letters, and ensure adequate compliance and protection measures are embedded in internal sustainability-related initiatives.
Kick-off of Global Carbon Accounting Framework: In September 2025, the International Organization for Standardization (“ISO”) and the GHG Protocol announced a “strategic partnership” aimed at harmonizing the GHG reporting landscape and co-developing new standards. On February 20, 2026, ISO and the GHG Protocol held a webinar — Harmonizing Global Carbon Accounting under the COP30 Action Agenda — with over 4,000 businesses and practitioners signed up to attend. The webinar focused on the development of a climate science-aligned global framework designed to accelerate action and enable business, investors, and policymakers to measure emissions accurately, consistently, and credibly. On February 10, 2026, the GHG Protocol Steering Committee Chair published a letter advising of the continued focus to develop a “joint product-level standard” with ISO.
“Omnibus Package” Approved by European Council: On February 24, 2026, European Union (“EU”) member states in the European Council voted to approve the “Omnibus” simplification package, dramatically cutting back the number of companies covered by the Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CSDDD”). This final Omnibus agreement goes much farther than the package initially proposed in early 2025 by the European Commission, making both the CSRD and CSDDD considerably less burdensome. For example, with the new thresholds in place, an estimated 90% of companies have been removed from the CSRD’s sustainability reporting requirements. Other changes include a lowering of potential penalties and removal of the CSDDD’s obligation for companies to prepare climate transition plans. An updated act is to be published in the EU’s official journal and will come into force 20 days after publication.
Relaunch of the Net Zero Asset Managers Initiative: In early 2025, the Net Zero Asset Managers (“NZAM”) initiative announced suspension of its primary activities, removal of its commitment statement and list of signatories from its website, and the launch of a review of the initiative, in large part due to the multifaceted challenges directed at its members and industry collaborations, including allegations of industry boycotts and improper antitrust behaviors. On February 25, 2026, the NZAM initiative officially relaunched, with more than 250 asset management signatories. The NZAM coalition has a new signatory commitment which carefully avoids reference to reaching net zero by 2050, but seeks signatories to set climate targets “consistent with the global goal of net zero GHG emissions.” Additionally, the commitment statement is broader in its approach, not just focused on decarbonizing portfolios but also, among other actions, providing clients with requisite information regarding climate-related financial risks and opportunities, making transition finance and climate-resilient investments, and engaging with various actors in this space.
SEC Adopts Final Rules Requiring Section 16(a) Compliance for Foreign Private Issuers. On February 27, 2026, the SEC adopted final rules implementing the Holding Foreign Insiders Accountable Act (“HFIAA”), which was signed into law on December 18, 2025 as part of the National Defense Authorization Act. Under the new rules, directors and officers of Foreign Private Issuers (“FPI”) must begin disclosing their holdings and transactions in the FPI’s equity securities beginning March 18, 2026. Beneficial owners of more than 10% of an FPI’s stock remain exempt from these reporting obligations, unlike their counterparts at domestic issuers. The SEC has authority under the HFIAA to exempt persons, securities, or transactions from Section 16(a) reporting if a foreign jurisdiction imposes “substantially similar” requirements, and staff are actively evaluating whether to recommend that the Commission exercise this exemptive authority, which may be issued in a separate rulemaking or order. Separately, the SEC is reviewing more than 80 comment letters submitted in response to its June 2025 Concept Release on FPI eligibility, which solicited feedback on potentially narrowing the definition of FPIs given trends showing that many FPIs now trade almost exclusively in U.S. markets and are incorporated in jurisdictions with limited regulatory oversight. Companies who are classified as FPIs should ensure they have processes in place to transition to compliance with the newly applicable reporting requirements.
Shareholders File Lawsuits Against Companies for Excluding Proposals. Several shareholders have filed lawsuits against companies that have followed SEC’s current guidance for excluding shareholder proposals. The SEC, which historically weighed in on requests by companies to confirm it would not object to the exclusion of certain proposals, has taken a deferential approach this season by allowing a company to assert it has a reasonable basis to omit the proposal. Without the SEC as a referee, shareholders have shifted to the courts to get their proposals included. For instance, four New York City pension funds are suing AT&T to include a shareholder proposal, after the company filed a brief notice with the SEC that the company believed it had a reasonable basis to exclude the proposal on substantive grounds. The lawsuit has since been settled, with AT&T agreeing to include the proposal on its proxy statement. On February 20, 2026, the People for the Ethical Treatment of Animals (PETA) filed a lawsuit in the U.S. District Court for the Southern District of New York challenging PepsiCo, Inc.’s attempts to exclude a shareholder proposal from its 2026 proxy materials. PETA had submitted a shareholder proposal on behalf of a shareholder regarding PepsiCo’s use of animal labor in its supply chain. In response, PepsiCo notified SEC staff that the company had a reasonable basis to exclude the shareholder proposal on procedural grounds. On January 13, 2026, the SEC responded that it would not object if PepsiCo were to exclude the proposal, based on PepsiCo’s representations. The proponent then sued, alleging that PepsiCo failed to adequately notify the proponent of the deficiencies in the proposal. These lawsuits serve as a reminder that the Rule 14a-8 process has historically functioned as a method for shareholders to air their grievances, and in light of both recent and proposed changes to the shareholder proposal process, proponents may look for alternative avenues including litigation, vote no campaigns, and other creative methods.
California Subjects Venture Capital Companies to New Diversity Law. California has issued a new diversity reporting law for venture capital companies that takes effect this month. The Fair Investment Practices by Venture Capital Companies requires venture capital firms with a California nexus, including those headquartered in the state, investing in California companies, or soliciting California investors, to register with the California Department of Financial Protection and Innovation by March 1, 2026, and submit annual demographic reports on portfolio company founding teams starting April 1, 2026. The law mandates that covered firms distribute standardized voluntary surveys to founding team members of portfolio companies to collect anonymized demographic data, including gender identity, race, ethnicity, disability status, LGBTQ+ identification, and veteran status. Noncompliance can result in penalties of up to $5,000 per day, with the added possibility of investigations and enforcement actions. The law’s broad scope captures many venture capital companies, including those with minimal contacts to the state of California. Companies should assess whether the organization qualifies as a “covered entity” and, if subject to the law, develop data collection and privacy protocols for sensitive demographic information and coordinate survey distributions to portfolio company founders in advance of the April 2026 deadline. Given the current landscape on disclosures relating to sensitive topics like diversity, reporting entities need also to carefully navigate how any disclosures are collected and framed and to demonstrate that demographics do not play a role in investment decisions.
