ESG trends in the U.S.: navigating fragmentation, backlash, and energy security
Litigation risk has accelerated in parallel, from greenwashing class actions to state investigations and claims asserting novel tort theories, amplifying uncertainty around disclosure, advertising, and fiduciary practice. In this unsettled environment, legal readiness and strategic adaptability have become decisive competitive tools. We explore some of the year’s key legal developments and their implications below.
Prioritizing energy security
Starting on the first day of his new term, the president issued a broad executive order (Unleashing American Energy) instructing agencies to review, pause and revise energy-related actions seen as impeding dependable domestic energy supply— “with particular attention to oil, natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy resources”. The order also contained explicit directions to accelerate permitting under the National Environmental Policy Act, revisit regulatory analyses, and refocus program funds.
Additional executive orders bearing on climate and energy issues followed in April. In the Protecting American Energy from State Overreach executive order, certain states are called out as having “burdensome and ideologically motivated ‘climate change’ or energy policies that threaten American energy dominance and our economic and national security”, including New York’s Climate Superfund Act and California’s Cap-and-Trade Program. The order also directs the attorney general to identify “State laws purporting to address ‘climate change’ or involving ‘environmental, social, and governance’ initiatives, ‘environmental justice,’ carbon or ‘greenhouse gas’ emissions, and funds to collect carbon penalties or carbon taxes”, and take all appropriate action to stop the enforcement of these laws.
This position was bolstered by the “Beautiful Clean Coal” executive order. This order requires the Environmental Protection Agency (EPA) and the Departments of Transportation, Interior, Energy, Labor, and Treasury to identify any guidance, regulations, programs, or policies that “seek to transition the [U.S.] away from coal production and electricity generation.” Furthermore, the order requires agencies to (i) rescind policies or regulations that discourage investment in coal production and coal-fired electricity generation, (ii) encourage coal exports, and (iii) assess potential uses for coal in steel production and the operation of AI data centers.
Retreat on federal ESG programs
The EPA acted in March 2025 to terminate grant agreements worth USD20 billion which had been granted to eight NGOs through the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. After legal challenge, the U.S. Court of Appeals for the District of Columbia Circuit sided with the EPA in September, finding that federal officials have broad latitude to cancel funds that have been appropriated by Congress.
Likewise, many other Obama- and Biden-era environmental regulations and mandates have been rescinded or revised.
In September, the EPA proposed amending the Greenhouse Gas Reporting Program (GHGRP) to remove program obligations for most source categories (i.e., industries required to report under the GHGRP), including the distribution segment of the petroleum and natural gas systems source category. The proposal included suspending other program obligations until 2034. If finalized, the proposal would remove reporting obligations for most large facilities, as well as for fuel and industrial gas suppliers and CO2 injection sites.
In March, the Securities and Exchange Commission (SEC) voted to end its legal defence of the Climate Disclosure Rule, calling the rule “costly and unnecessarily intrusive”. In a filing with the U.S. Court of Appeals for the Eighth Circuit, the SEC said its lawyers are “no longer authorized to advance” arguments the agency had made in support of the 2024 rule. Then, on September 12, 2025, the court issued an order holding in abeyance petitions for review of the SEC’s climate disclosure rules. The court stated that the order will remain in place until the SEC decides to rescind or modify the Climate Disclosure Rule through ordinary rulemaking, or renews its defence of the rule in the litigation (which appears unlikely).
The Unleashing American Energy executive order also specifically targeted several key electric vehicle policies, mandates and funding mechanisms, including a prior Biden executive order that established a goal for 50% of new light-duty vehicle sales to be zero-emission by 2030. This effectively eliminated the federal government’s policy goal for electric vehicle adoption. It also called for terminating, “where appropriate”, state emissions waivers granted by the EPA that allow states to enforce stricter standards.