In this week’s edition of Economy and Society:
- EU Parliament rejects plan to simplify ESG rules
- New Zealand eases corporate climate disclosure rules
- Exxon sues California over new climate disclosure laws
- ESG stocks continue to lag behind S&P500
- French court finds oil company liable for greenwashing
Around the world
EU Parliament rejects plan to simplify ESG rules
What’s the story?
The European Parliament voted on Oct. 22, 2025, to reject a proposal that would have simplified the European Union’s (EU) sustainability reporting and due diligence rules. The bill sought to narrow company-size thresholds and reduce specific disclosure requirements under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). Opponents of the bill said it went either too far in weakening climate accountability or not far enough in reducing compliance burdens.
Why does it matter?
The vote underscores divisions in the EU over how to balance corporate reporting obligations with competitiveness. Supporters of reform argued that smaller firms face disproportionate costs, while opponents warned that broad exemptions could undercut Europe’s climate-policy credibility. The decision also highlights ongoing transatlantic pressure, with the United States reportedly urging the EU to pursue reductions in disclosure mandates.
What’s the background?
The CSRD and CSDDD require large companies to disclose climate-related financial risks and ensure environmental and human-rights due diligence throughout their supply chains. The rejected proposal sought to narrow company coverage and simplify disclosure rules following complaints from businesses, like Exxon Mobile, about cost and administrative complexity. It is part of ongoing proposals to scale back both directives by raising reporting thresholds and delaying implementation.
New Zealand eases corporate climate disclosure rules
What’s the story?
New Zealand has raised the threshold for companies required to report under its climate-related disclosure law, citing the compliance burden on smaller firms. The new rule increases the reporting threshold for listed issuers from NZ $60 million to NZ $1 billion in market value and removes investment funds from the requirement. Officials said the change aims to reduce costs and reverse a slowdown in listings on the New Zealand Exchange (NZX).
Why does it matter?
The update reflects concerns that stringent reporting requirements can weigh disproportionately on smaller firms. By easing its threshold, New Zealand joins other jurisdictions re-evaluating how climate regulations affect market participation and competitiveness, similar to the European Union’s recent vote to limit the reach of its ESG disclosure directives.
What’s the background?
New Zealand’s mandatory climate-related disclosures law, enacted in 2021 and effective in 2024, requires large financial institutions and listed companies to disclose climate risks and mitigation strategies in line with international standards. The law made New Zealand the first country to mandate climate-risk reporting for large listed companies, insurers, and banks.
In the states
Exxon sues California over new climate disclosure laws
What’s the story?
Exxon Mobil filed a lawsuit on Oct. 24, 2025, in the U.S. District Court for Eastern California challenging two new state climate laws. The laws require large companies doing business in California to disclose both direct and indirect greenhouse gas emissions and to report on their climate-related financial risks. Exxon says the measures compel speech in violation of its First Amendment rights and that California exceeds its jurisdiction by requiring global emissions data unrelated to in-state operations.
Why does it matter?
The Exxon lawsuit questions how far states can go in requiring corporate climate disclosures. California is the first state to mandate reporting of global emissions, and the outcome could clarify whether such requirements conflict with constitutional free speech protections. The case also highlights growing tension between state-level climate initiatives and corporate claims of regulatory overreach.
What’s the background?
In 2023, California enacted Senate Bills 253 and 261, known as the California Climate Accountability Package. The package created the nation’s first state-level requirements for public reporting of greenhouse gas emissions and climate-related financial risks by large businesses. The rules apply to companies with more than $1 billion in annual revenue operating in the state. Lawmakers said the laws aimed to increase transparency and align corporate climate reporting with global standards. Exxon’s challenge follows similar industry concerns raised during the rulemaking process about cost, complexity, and extraterritorial reach.
On Wall Street and in the private sector
ESG stocks continue to lag behind S&P500
What’s the story?
The Kiplinger ESG 20, a list of major U.S. companies chosen for their environmental, social, and governance (ESG) practices, gained 4.3% over the past year—far below the S&P 500’s 15.9% rise. Kiplinger noted that only six of the 15 stocks in its ESG 20 beat the S&P 500, and just one of its recommended ESG funds outperformed the index. Morningstar reported that U.S. sustainable funds saw their first annual outflows in 2023, as investor interest in ESG strategies declined amid weaker performance and political backlash.
Why does it matter?
The results show that even well-known ESG portfolios are struggling to match broader market returns. Many ESG funds hold large positions in renewable-energy, which underperformed this year. The weaker results could lead investors to question whether ESG criteria come at the cost of lower returns.
What’s the background?
Many investors have followed President Donald Trump’s (R) criticism of ESG investing, pulling $12.2 billion from U.S. sustainable funds in the first half of 2025, according to Morningstar, as political pushback and weaker returns have made ESG strategies less popular.
French court finds oil company liable for greenwashing
What’s the story?
On Oct. 23, 2025, the Paris Judicial Court ruled that TotalEnergies, a French oil and gas company, made misleading claims about its climate commitments and pursuit of carbon neutrality. The court found that the company’s marketing gave a false impression of progress toward net zero, ordering the company to remove the claims, post the judgment on its website, and pay damages and legal fees.
Why does it matter?
The decision marks one of the most significant court rulings to date on corporate greenwashing, or misleading environmental marketing, according to environmental groups involved in the case. The groups said the judgment strengthens legal accountability for companies making climate-related claims. The case could influence how other European courts interpret consumer protection and advertising laws when applied to environmental disclosures.
What’s the background?
TotalEnergies, one of the world’s largest publicly traded oil and gas companies, has promoted its “net zero by 2050” target while continuing to expand fossil fuel production. A 2022 lawsuit brought by three French environmental organizations alleged that such claims misrepresented the company’s environmental impact and misled consumers.