Key news in this edition:
- Trump’s executive orders shape the future of sustainability.
- US court rules against focus on ESG in retirement plan.
- Net-Zero Asset Managers initiative suspends activities.
Editorial
The ESG landscape is changing rapidly, with recent developments highlighting both setbacks and progress across different regions. From the US to Australia and Tanzania, the response to sustainability and climate-related governance is diverging, presenting both risks and opportunities for businesses worldwide.
In the US, President Trump’s recent executive orders signal a clear departure from the previous administration’s pro-ESG stance. His rollback of climate policies, withdrawal from the Paris Agreement, and termination of DEI programs threaten to erode hard-fought sustainability gains. However, corporate responses have been mixed—while some firms have scaled back their commitments, others are doubling down on their ESG initiatives, recognizing long-term strategic value over short-term political shifts. The suspension of activities by the Net-Zero Asset Managers initiative (NZAMI) further complicates the ESG outlook. The withdrawal of major US financial institutions, including BlackRock, from climate-focused alliances highlights growing regulatory scrutiny and political pressure. While this raises concerns about firms backtracking on climate commitments, it also highlights the fragility of voluntary ESG pledges. Without stronger regulatory frameworks, the onus remains on companies to demonstrate genuine progress rather than treating sustainability as a branding exercise. Meanwhile, the recent Texan court ruling against ESG-focused retirement plans sets a legal precedent that could embolden further challenges to ESG integration in financial decision-making. The case against American Airlines suggests that fiduciary duty arguments could be weaponized against sustainability efforts, which adds legal uncertainty for pension fund managers and investors.
In contrast, Australia has taken a decisive step forward with the rollout of mandatory climate-related financial disclosures. As of January 2025, large Australian companies are required to report climate-related risks and opportunities. By implementing a structured and phased approach, Australia is fostering corporate transparency and addressing previous inconsistencies in ESG reporting. Similarly, the Bank of Tanzania’s new climate risk reporting guidelines signal growing ESG momentum in Africa. By requiring financial institutions to integrate sustainability into governance and annual reporting, Tanzania joins other African nations in efforts on climate accountability. This move dispels the assumption that ESG regulation will remain confined to Western economies.
Taken together, these developments illustrate an ESG landscape in flux. While US policy shifts may present challenges, international efforts in Australia and Tanzania demonstrate that sustainability remains a business imperative.
Trump’s executive orders shape the future of sustainability
Since President Trump took office on 20 January 2025, he has signed and issued a series of executive orders (‘EOs’), including several relating to environmental concerns, climate change, energy policy, and social responsibility. In the weeks since Trump’s inauguration, he has worked to unravel the majority of President Biden’s climate change initiatives, including pulling the US out of the Paris Agreement, an international treaty on climate change. Additional EOs signed by Trump thus far have focused on his “America First Priorities,” and through these his administration has (1) announced a national energy emergency, claiming that the US energy supply is inadequate; (2) announced a set of policy priorities aimed to increase domestic fossil fuel production; (3) encouraged US agencies to support the extraction of oil and natural gas in Alaska; and (4) sought to eliminate all federal agencies, programs, and policies dedicated to environmental justice.
Within these and other overarching EOs, Trump has also taken strides to terminate the Green New Deal and therefore the electric vehicle mandate, as well as ceased approvals of on- and offshore wind projects. The EOs also mandated the termination of DEI programs in the federal government, and pledged to combat DEI programs and initiatives in the private sector.
The aforementioned EOs will largely be implemented in the coming months, while some policies – including the US’ withdrawal from the Paris Agreement – immediately came into effect upon their signing. The true global impact of Trump’s actions will likely come to light in the coming months. However, these EOs do not indicate the end of ESG or DEI initiatives as a whole; though these actions have created certain and specific roadblocks to positive change, and triggered many US-based corporations to roll back their DEI and ESG initiatives, many leading corporations have in fact reinstated their commitment to pro-social and environmental policies.
So what?
Trump’s attempts to rollback corporate regulatory requirements presents real threats to the last decade’s pro-environmental and social governance policies. The flurry of EOs and abrupt policy changes signify that ESG as a whole may be at a crossroads, especially in the US-vs.-global context; as Trump works to dismantle ESG issues, many European countries have actively put them at centre-stage. While many large-scale corporations have followed Trump’s lead and disintegrated their DEI initiatives, more still have held strong even in the face of repealed actions and dissolved agreements. As companies continue to evaluate their response and determine their future ESG programmes, it does reinforce the need for sensible ESG programmes that are also pro-business, and for programmes that that emphasise both return on investment for organisations and promote social or environmental good.
[Contributor: Haddie Hamal]
Net-Zero Asset Managers initiative suspends activities
The Net-Zero Asset Managers initiative (‘NZAMI’), a UN-backed coalition created in 2021 to align the asset management industry with global climate goals, has announced the suspension of all activities related to tracking signatories’ reporting and assessing their commitments. As part of this decision, NZAMI has removed the full list of its signatories, their targets, and related case studies from its website. Before taking down the list of its signatories, the initiative had more than 325 signatories managing over USD 57.5 trillion in assets. The review has reportedly been prompted by evolving regulatory landscapes, particularly in the U.S., alongside varying client expectations across jurisdictions.
The decision comes in the wake of BlackRock’s departure from the initiative, citing concerns over the ambiguity of climate commitments and increasing legal scrutiny from public officials. Blackrock’s retreat marks the latest withdrawal by a US-based financial firms from group initiatives aimed at addressing climate change, reflecting a broader trend of major financial institutions reassessing their commitments to net-zero initiatives. In February 2024, JPMorgan’s fund arm withdrew from the Climate Action 100+ investor group; between December 2024 and January 2025, several US banks, including Citi, Bank of America, Morgan Stanley, Goldman Sachs, JPMorgan, and Wells Fargo, pulled out of the Net-Zero Banking Alliance (‘NZBA’), a UN-backed coalition of financial sector groups focused on net-zero alignment. Their departure was soon followed by the exit of several Canadian banks.
NZAMI’s review takes place amid a complex global landscape of climate disclosures and ESG policies. Like similar organizations, NZAMI has faced intense scrutiny, particularly from US Republicans, who have warned financial institutions—including banks, insurers, asset owners, and investors—of potential legal risks tied to climate-focused collaborations. In December 2024, the Republican-led U.S. House Judiciary Committee requested information from approximately 60 US asset managers regarding their involvement with NZAMI. This inquiry followed a committee report, in which Republicans reiterated claims that asset managers had colluded to reduce emissions. NZAMI is not the only organization facing political scrutiny. In 2022, 14 Republican state attorneys general launched an investigation into the Net-Zero Banking Alliance, examining climate commitments by signatories amid claims that banks were restricting credit to oil companies.
So what?
The decision to withdraw from initiatives, like NZAMI and NZBA, raises concerns that companies might use this as an opportunity to scale back their climate efforts. These fears are compounded by uncertainty over future regulatory oversight, which could become even more pronounced under the incoming presidency of Donald Trump. NZAMI’s review also highlights the inherent limitations of voluntary climate commitments, underscoring both the challenges of relying solely on corporate goodwill to drive meaningful environmental change and the urgent need for stronger state-level leadership to ensure sustained climate progress.
[Contributor: Federico Ingretolli]
US court rules against focus on ESG in retirement plan
On 10 January 2025 the US District Court for the Northern District of Texas ruled in a class action lawsuit initiated by pilot Bryan Spence against US flagship carrier American Airlines. The plaintiffs alleged that the airline violated their fiduciary duties of prudence and loyalty by utilising “investment managers pursuing non-financial and nonpecuniary ESG policy goals,” referring specifically to BlackRock Institutional Trust Company, Inc. The court found that American Airlines “breached their fiduciary duty by failing to loyally act solely in the retirement plan’s best financial interests.” Specifically, by allowing BlackRock Institutional Trust Company, Inc, which – according to the plaintiff – “pursues a pervasive ESG agenda”, to influence the management of the retirement plan, American Airlines failed in its duty of loyalty to the members of its pension scheme. The court noted that American Airlines met or exceeded the norms in the investment and pension sector and as such did not fail in its fiduciary prudence to the members of the pension scheme. A final judgement, including what if any damages are to be paid, as part of a full resolution of this case, is still pending.
So what?
This ruling sets an important precedent as other plaintiffs may now decide to file similar suits in the future. It is also possible that activists may use this case to argue the opposite and claim that by investing in and through an asset manager with significant coal, oil, and gas stocks, is a similar breach of the fiduciary duty as, argued in the Spence v American Airlines case. This ruling also sets a precedent for judicial scrutiny of broad ESG-adjacent activity, as no specific ESG funds or ESG investment options are available through the American Airlines pension scheme.
[Contributor: Nickolas Bruetsch]
Australia’s mandatory climate-related financial disclosures come into effect
On 1 January, Australia’s climate-related reporting policy for Australian companies came into effect. The policy, whose legislation passed in 2024, aims to phase Australian companies into mandatory climate-related disclosure over a period of four years. Starting on January, Australian companies classified as “Group 1 reporters”, those that meet at least two out of the following three requirements of: (1) over 500 employees, (2) AUD 500 million in revenue or (3) AUD 1 billion in gross assets, are required to report information regarding their company’s climate related risks and opportunities. By July 2027 Australian companies that meet two of: (1) 100 or more employees, (2) AUD 50 million in revenue, or (3) AUD 25 million in gross assets will be expected to disclose their climate-related financials. Disclosure requirements include information relating to the company’s governance, risk management, strategy, metrics and targets, including both Scope 1 and Scope 2 greenhouse gas emissions. From the second year of the program, information related to the Scope 3 emissions of the company will be required.
Until now, Australia’s company sustainability and climate reporting has been conducted on a voluntary basis and using varying standards and procedures, which is one of the main issues the programme aims to tackle. Under the new reporting requirements, companies will be required to disclose their sustainability reporting according to the International Sustainability Standards Board (ISSB), as well as disclose the data and assumptions they used when measuring the future impact on the climate that their business operations will have. With the ISBB standards only recently being standardised in 2021, the legislation makes Australia one of the first countries to adopt mandatory climate reporting according to internationally aligned standards, following in the footsteps of the EU’s Corporate Sustainability Reporting Directive.
So what?
Climate-related disclosure requirements have often been criticised for failing to encompass the market-wide standardisation needed to accurately and fairly gauge the true impact that a company’s operations have on the environment. By adopting an internationally standardised approach, as well as implementing the programme over a period of several years and phases, the Australian government has given local businesses the time they need to familiarise themselves with the new requirements and provided a clear framework on how to conduct their disclosures.
[Contributor: Sam Timson]
Bank of Tanzania issues guidelines on mandatory climate risk reporting for financial institutions
On 31 January 2025, the Bank of Tanzania, the Tanzanian central bank, issued two new sets of guidelines for banks and financial institutions operating in the country to integrate sustainability- and climate-related risks and opportunities into their governance frameworks and annual reporting. The guidelines place a specific focus on governance, and company boards are designated with overarching responsibility for the identification of climate-related risks, building out response strategies, setting relevant targets, and monitoring progress. Senior management will be responsible for the implementation of sustainability strategies and integrating awareness of the identified risks into everyday operations. Financial institutions will also be required to disclose their risk and opportunities findings, strategies, targets, and progress on an annual basis as an addition to their annual audited financial statements.
So what?
In issuing these new regulations, Tanzania has joined several other African countries, including Kenya, Nigeria, and South Africa, that have also applied similar requirements to their respective financial sectors. Although ESG regulatory frameworks in Africa are nascent, these policies indicate a willingness on the part of African governments to prioritise sustainability issues and begin holding companies to account for their environmental and social impact. Those with interests in Africa cannot presume the continent will lag far behind its Western counterparts on sustainability issues and should be proactive in their identification and management of sustainability- and climate-related risks and opportunities.
[Contributor: Emma Shewell]
