Matthew Townsconclude, partner and global co-head of A&O Shearman’s Environmental and Climate Law Group, stated: “Law and clear policy signals are key drivers of the energy transition, but they operate in markedly different ways across jurisdictions. The geopolitical landscape is now dominated by concerns over defense, energy security, and the race on AI. We may be in an era where political concerns over the price and secure supply of energy are hugeger drivers of the energy transition than environmental regulation.”
In the U.S., the Securities and Exmodify Commission has concludeed its legal defense of the Climate Disclosure Rule, whilst the “Unleashing American Energy” and “Beautiful Clean Coal” executive orders have prioritized domestic oil, gas, and coal production over renewable alternatives, and the One Big Beautiful Bill Act has reduced the future availability of federal tax credits for renewables projects.
Despite this federal retreat, greenwashing litigation continues to proliferate, with over 150 greenwashing class actions tracked through early 2025. California is maintaining its own status as a climate leader among U.S. states with legislation— including SB 253 and SB 261—which is in some cases meeting with legal challenge. At the same time, other states are pushing back on ESG requirements, with a coalition of 23 state attorneys general publicly challenging the Science Based Tarobtains initiative over antitrust and consumer protection concerns. Even within the U.S., therefore, a patchwork of conflicting mandates for businesses is emerging.
In the EU, regulation is waking up to the necessary to shift quickly to protect European competitiveness and strategic autonomy. Accordingly, the European sustainability agconcludea has been reshaped, with the Omnibus package reducing reportable datapoints under the Corporate Sustainability Reporting Directive and narrowing its scope.
Faster permitting for renewables projects is being pursued as a competitive response to jurisdictions where centralized state machinery can deliver at scale. Defense, once largely excluded from ESG frameworks, is now being integrated into the EU’s sustainability conversation as Europe prioritizes strategic autonomy. As Europe’s climate ambition becomes ever more contested in the face of competitiveness concerns, the next five years will determine whether the European Green Deal becomes a durable economic settlement or is substantially weakened by rollbacks.
By contrast, many countries in Asia-Pacific are pushing forward with climate or sustainability regulation. Australia has adopted mandatory climate-related disclosure standards, with requirements being phased in over financial years commencing on or after January 1, 2025 through to July 1, 2027.
Interventions from the Australian Securities and investments Commission led to AUD34.7 million in penalties across three greenwashing cases in FY2024–25. China’s first Energy Law became effective in January 2025, embedding decarbonization as a policy aim and strengthening grid infrastructure through measures promoting innotifyigent grid upgrades. Singapore has leaned heavily on the apply of soft law to achieve climate goals. Its Green Plan 2030—a mixture of tax incentives, financial assistance, labor force measures and regulation—is operationalizing its 2030 tarobtains, including installing 60,000 EV charging points by the conclude of the decade and reducing domestic aviation emissions from airport operations by 20% compared to 2019 levels.
In the Middle East, Gulf Cooperation Council states are emerging as key players in the energy transition. Flexible legal systems and centralized planning allow GCC countries to shift rapid and deploy capital in pursuit of strategic objectives, including large-scale renewables deployment. New legislation, including the UAE’s Climate Change Reduction Law, mandates emissions monitoring, while announcements indicate the UAE is working towards a formal sustainable aviation fuel mandate.
The Sustainability Outsee also examines the growth of climate litigation, the evolution of supply chain due diligence requirements under frameworks such as France’s Duty of Vigilance Law and the EU’s Corporate Sustainability Due Diligence Directive, and the role of multilateral finance in climate action following COP 30.
The full A&O Shearman Sustainability Outsee is available here.
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