Governance & Sustainability Roundup – August 10, 2026

Welcome to our Governance & Sustainability Roundup — Our regular briefing that gives a quick overview on what has recently happened in the world of governance and sustainability that may be of interest to your company, your executive team, or your board. This is a fast-evolving space, and we hope to share brief highlights with you on a regular basis. V&E continues to monitor these developments and is happy to discuss any of these updates in more detail, so please reach out with any questions.

Key Developments You Should Know

• CARB Proposes Limiting Initial Scope 3 GHG Emissions Reporting
• SEC Releases Spring 2026 Reg Flex Agenda
• SEC Proposes Updates for E-Delivery
• EFRAG Releases Proposed CSRD Reporting Standards for Non-EU Companies
• Federal Court Enjoins California Recycling Law

CARB Proposes Limiting Initial Scope 3 GHG Emissions Reporting

The California Air Resources Board (“CARB”) continues to refine its approach to implementing California’s landmark climate disclosure law, the Climate Corporate Data Accountability Act (“SB 253”). At a public workshop held on July 21, 2026, CARB staff proposed limiting companies’ initial, mandatory Scope 3 (value chain) emissions disclosures to five of the fifteen Scope 3 categories under the GHG Protocol after stakeholders raised concerns that requiring reporting across all categories beginning in 2027 would pose significant cost and data availability challenges. The five categories CARB has proposed for mandatory initial reporting are (1) Purchased Goods and Services, (2) Fuel- and Energy-Related Activities, (3) Waste Generated in Operations, (4) Business Travel, and (5) Employee Commuting — categories CARB noted are already frequently reported and supported by the most mature data sources and quantification methods. Companies would be permitted, but not required, to voluntarily disclose the remaining ten categories.

For companies preparing for compliance, CARB’s proposed phase-in offers welcome near-term relief on the data collection burden, but it does not eliminate the obligation to build durable emissions-tracking infrastructure since the remaining categories may be phased in over time. As a reminder, companies should keep in mind that CARB has already deferred the initial SB 253 Scope 1 and Scope 2 reporting deadline by three months, from August 10, 2026, to November 10, 2026, which provides some additional runway to prepare but should not be treated as a reason to delay compliance efforts. Scope 3 reporting remains on track for 2027. Companies should also note that SB 253 remains in effect and enforceable notwithstanding the ongoing constitutional challenge pending before the Ninth Circuit, which has enjoined only the companion law, SB 261.

For more detail, see V&E’s client alerts, “CARB Defers SB 253 Scope 1 & 2 Reporting Deadline by Three Months”, “Ongoing Legal Battle Over California’s Climate-Related Disclosure Laws”, and “SCOTUS Asked to Block California Climate Laws Ahead of Pending SB 261 Compliance Deadline”.

SEC Releases Spring 2026 Reg Flex Agenda

On July 7, 2026, the Securities and Exchange Commission (“SEC”) released its Spring 2026 Regulatory Agenda, reflecting the SEC’s robust rulemaking efforts aimed at reducing compliance burdens, facilitating capital formation, and embracing innovation and new technology. The list includes 36 items at the Proposed Rule Stage, including a number of new rulemaking efforts that were not reflected in the 2025 agenda, such as amendments to modernize rules regarding the proxy solicitation process to reduce costs and compliance burdens (October 2026 anticipated proposal date).

In addition to proposals that have already made a splash this year, including semiannual reporting, filer status simplification, and registered offerings reform, the agenda includes highly anticipated proposals carried over from the 2025 agenda, such as executive compensation disclosure, shareholder proposal modernization, and rationalization of disclosure practices, each of which reflect an anticipated proposal date of October 2026. These dates are, as always, aspirational and general, which means that we could see proposals announced any time before or after this coming October.

SEC Proposes Updates for E-Delivery

On July 16, 2026, the SEC proposed Regulation E-Delivery in what Chairman Paul Atkins called a “step toward allowing the financial services industry to harness technology for the benefit of everyday American investors.” Regulation E-Delivery, if adopted, would replace the SEC’s guidance-based, opt-in approach with a new framework allowing “covered entities,” including issuers, investment advisers, and broker-dealers, to use electronic means for delivering regulatory information required under the federal securities laws, including by default. Regulation E-Delivery would allow covered entities to satisfy delivery obligations via electronic means so long as the “covered recipient,” which could include prospective customers, clients, investors, security holders, and counterparties, has provided an electronic address, received prominent disclosure that materials will be sent electronically, and has not opted out. Paper delivery would remain available upon request (to Commissioner Hester Peirce’s chagrin), free of charge, and covered recipients could opt out at any time to receive paper materials, free of charge.

Covered entities switching from paper communications to default e-delivery would need to provide covered recipients not already receiving e-delivery with both an initial notice at least 180 days before the transition and a follow-up at least 30 days before the transition (both in paper). If adopted, Regulation E-Delivery could have meaningful benefits for public companies, including reducing the printing, mailing, and administrative costs associated with paper delivery of proxy statements, annual reports, and other investor materials. The proposal also removes the longstanding prohibition on using the notice-and-access method for business combination proxy solicitations.

The comment period closes September 21, 2026, and, if adopted, Regulation E-Delivery would become effective 60 days after publication in the Federal Register. A two-year interim period would follow the effective date before the SEC’s existing guidance is rescinded. Given the potential cost savings, companies may wish to begin assessing the completeness of their electronic address records for shareholders, discussing transfer agent and proxy service provider capabilities, and evaluating investor-relations website infrastructure.

EFRAG Releases Proposed CSRD Reporting Standards for Non-EU Companies

On July 23, 2026, the European Financial Reporting Advisory Group (“EFRAG”) published an Exposure Draft of the European Sustainability Reporting Standards (“ESRS”) for certain non-EU undertakings under Article 40a of the Accounting Directive (the “ESRS-40a”). The proposed standard sets out how in-scope non-EU groups would report sustainability information under the European Union’s (“EU”) Corporate Sustainability Reporting Directive (“CSRD”) framework. EFRAG has opened a 100-day public consultation on the draft, with the comment period running through October 31, 2026. EFRAG expects to deliver its technical advice to the European Commission in January 2027.

As we noted in a prior Roundup, the EU’s Omnibus simplification package significantly narrowed the scope of the CSRD for non-EU companies. Under the revised thresholds, the standard will apply only to non-EU parent companies that generate more than €450 million in net EU revenue for each of the last two consecutive financial years and have an EU subsidiary or branch with revenue exceeding €200 million — up from the original thresholds of €150 million and €40 million, respectively. EFRAG estimates that these changes will reduce the number of in-scope non-EU companies from roughly 10,000 to about 1,200 groups worldwide, including an estimated 350–450 U.S. companies.

Unlike the main ESRS applicable to EU companies, the ESRS-40a is an “impacts-only” standard, meaning that in-scope non-EU groups are not required to perform a full double materiality assessment or report on financial risks, opportunities, or business model resilience. Additionally, for all sustainability topics other than climate change, companies may choose to report only on their EU-related impacts rather than providing a global report. Climate-related impacts, however, must still be reported on a worldwide basis.

Reporting under the ESRS-40a will be mandatory for financial years beginning on or after January 1, 2028, with the first sustainability statements expected to be published in 2029. Non-EU groups should begin assessing whether they fall within the revised scope. Companies should also consider whether any of their EU subsidiaries have separate reporting obligations under the revised main ESRS, which the European Commission adopted on July 3, 2026, applicable for financial years beginning on or after January 1, 2027.

Federal Court Enjoins California Recycling Law

On July 14, 2026, the U.S. District Court for the Southern District of California granted a preliminary injunction blocking the state Attorney General’s enforcement of SB 343, California’s “Truth in Recycling” law. See California League of Food Producers et al. v. Bonta, No. 3:26-cv-01675-WQH-JAC (S.D. Cal. July 14, 2026).

Enacted in 2021, SB 343 prohibits the use of the “chasing arrows” recycling symbol or any other recyclability claim on products or packaging sold in California unless the item meets strict recyclability criteria — including that the material is collected by programs serving at least 60 percent of the state’s population and is routinely processed into feedstock for new products. Following the California Department of Resources Recycling and Recovery’s (CalRecycle) publication of its material characterization study on April 4, 2025, SB 343’s 18-month compliance period established an October 4, 2026 effective date for labeling restrictions on products manufactured after that date. In March 2026, a coalition of trade associations filed suit challenging the statute on constitutional grounds, arguing that key provisions are unconstitutionally vague under the Fourteenth Amendment and that SB 343 restricts truthful commercial speech in violation of the First Amendment. The plaintiffs moved for a preliminary injunction in April 2026.

Following a June hearing, the court found that the plaintiffs demonstrated (1) a likelihood of success on the merits on both their vagueness and First Amendment claims, (2) irreparable harm absent relief, and (3) the balance of equities and public interest support injunctive relief. On the First Amendment analysis, the court concluded that California had not met its burden under intermediate scrutiny of establishing that SB 343 advances the state’s interests in reducing consumer confusion or improving recycling rates, and that the statute’s restrictions were more extensive than necessary. The court also found that the plaintiffs were likely to succeed on their vagueness challenges to four separate provisions of the statute.

The preliminary injunction halts enforcement of SB 343 by the California Attorney General, and “and all those in privity or acting in concert with [him],” pending further proceedings. Although the injunction is not a final ruling on constitutionality, and the state may seek appellate review or continue litigating the case on the merits, the injunction represents a large hurdle in California’s attempt to limit recyclability claims. However, private litigation exposure outside SB 343 continues: The injunction does not affect pending or future claims challenging recyclability representations under California’s general consumer protection statutes.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.