Governance & Sustainability Roundup – July 6, 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 Defers Initial SB 253 Scope 1 and 2 Reporting Deadline to November 10
• Texas Reincorporation Update
• Prediction Markets: The Next Frontier of Insider Trading Risks
• SEC Updates to Five-Day Debt Tender and Exchange Offers
• 17 States and Industry Group Challenge California Packaging EPR Law
• ISO Announces Draft Net Zero Standard
• Indiana and Kansas Proxy Advisor Laws Blocked by Preliminary Injunction
• Supreme Court Narrows Roundup Failure-to-Warn Litigation Against Bayer

CARB Defers Initial SB 253 Scope 1 and 2 Reporting Deadline to November 10

The California Air Resources Board (“CARB”) has given companies subject to California’s Climate Corporate Data Accountability Act (“SB 253”) an additional three months to submit their first Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions reports, moving the initial deadline from August 10, 2026 to November 10, 2026. The extension is expected to be implemented through a limited rulemaking amendment to CARB’s Initial Regulation, with a 15-day public comment period before the revised regulation is resubmitted to the Office of Administrative Law for final approval. Importantly, the deferral is limited to Scope 1 and Scope 2 reporting; Scope 3 reporting remains on track for 2027.

The extra time should be treated as a short runway — not a reason to stand down. Although litigation over California’s climate disclosure laws continues and SB 261 remains preliminarily enjoined, SB 253 remains in effect, and companies subject to the law should continue preparing as though the November deadline will hold.

For more detail, see V&E’s client alert, “CARB Defers SB 253 Scope 1 & 2 Reporting Deadline by Three Months”. Additional background is available in V&E’s alerts on the ongoing legal battle over California’s climate disclosure laws and the emergency request to block SB 253 and SB 261.

Texas Reincorporation Update

Reincorporations to Texas accelerated meaningfully in 2025 and 2026, driven in part by concerns about certain Delaware court decisions and efforts made by Texas in recent years to become a more attractive domicile and business-friendly state. Texas’s legislative changes include the creation of the Texas Business Court, codification of the business judgment rule, and introduction of provisions allowing certain corporations to impose ownership thresholds in their governing documents as a prerequisite to shareholders taking certain actions (e.g., initiating derivative proceedings or submitting shareholder proposals).

Since Tesla’s June 2024 reincorporation, at least twenty public companies have completed or sought shareholder approval to reincorporate in Texas, including ExxonMobil Corporation (“Exxon”), Dell Technologies Inc., and ArcBest Corporation. Of the reincorporation proposals that have gone to a shareholder vote, the majority have passed at a median approval rate of approximately 70%¹ despite proxy advisors Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”) largely recommending against the proposals (citing concerns about perceived erosion of shareholder rights). Nevertheless, widely held public companies have faced a more contested path than controlled or founder-led companies, which generally need only the support of a few individuals or a concentrated group. The largest passive index fund managers have largely applied a case-by-case voting approach, with voting data suggesting that at least some such large investors have supported recent proposals to reincorporate in Texas. The success or failure of a reincorporation vote is, thus, not guaranteed for widely held companies, but careful solicitation and development of compelling rationales for a proposed move are very important elements of a successful reincorporation campaign.

Companies considering making a move should work well in advance of shareholder meetings to understand their shareholder base and the legal backdrop for their potential reincorporation (e.g., applicable voting standard for reincorporation), develop a compelling record of appropriate deliberation by its board in considering the move, solicit investor feedback, determine an acceptable Texas corporate governance structure, and educate voters on the benefits of reincorporation. For those companies contemplating reincorporation in Texas, it would be prudent to consider the corporate governance and shareholder outreach strategies employed by recent successfully redomiciled public companies, which you can read about in more detail here. If your company is contemplating a Texas reincorporation in 2027, we recommend speaking with counsel and outside advisors now.

Prediction Markets: The Next Frontier of Insider Trading Risks

Corporate legal departments are confronting a novel insider trading problem as prediction markets have exploded in popularity, which we discuss in more detail here. A prediction market is a regulated exchange on which participants can place bets on almost any event, from politics and pop culture to company-specific topics, such as corporate earnings, product launches, and CEO promotions. Unlike regulated securities markets, these platforms are primarily regulated by the Commodity Futures Trading Commission (“CFTC”), not the Securities and Exchange Commission (“SEC”). In 2026, the CFTC confirmed that trading prediction market contracts on the basis of nonpublic information constitutes fraud, and several civil and criminal complaints involving events contracts have since been filed. The CFTC has also proposed a sweeping new set of federal rules for prediction markets, which V&E continues to monitor.

Most insider trading policies define their scope in terms of “securities” or the company’s own stock, but are silent on event contracts, prediction markets, and CFTC-regulated instruments. Insider trading policies also define the relevant information as material in a securities law framework. There is, therefore, a coverage gap that existing insider trading policies have not closed. Nevertheless, adding a blanket prohibition on transactions in prediction markets into the company’s insider trading policy might not be the proper solution, as prediction markets involve a different regulator, different instruments, and different platforms that employees may not intuitively associate with “trading” at all. Instead, companies should consider a short, distinct policy that is separate from the insider trading policy, which could be housed in the general employee handbook or code of conduct.

Both public and private companies should monitor regulatory developments in this space and speak with their outside advisors to determine whether any changes to their training programs and compliance policies are advisable in light of these developments.

SEC Updates to Five-Day Debt Tender and Exchange Offers

The Division of Corporation Finance of the SEC issued an exemptive order on June 30, 2026 that updates and formalizes the practices governing five-day abbreviated debt tender and exchange offers under the SEC’s rules. The SEC’s order modifies guidance first given in 2015 and provides significantly improved clarity and flexibility for issuers considering liability management and opportunistic refinancing transactions. The SEC’s order does the following:

• Broadens the types of debt securities that may be issued in an exchange offer, as practices under the rules previously did not allow most liability management exchanges to utilize a five-day exchange offer.
• Enables five-day offers to be structured as partial, rather than “any and all.”
• Permits concurrent consent solicitations that require a simple majority of the outstanding principal amount.
• Allows private exchanges targeted at QIBs, non-U.S. persons and certain institutional accredited investors, without cash offers to other holders.
• Provides latitude to fund a tender offer with proceeds from new issuances of senior or secured debt.
• Streamlines communication requirements for public companies.

17 States and Industry Group Challenge California Packaging EPR Law

As discussed in our June 17 Roundup, California’s final regulations implementing SB 54 — the state’s Plastic Pollution Prevention and Packaging Producer Responsibility Act — are already facing litigation from environmental groups arguing that the rules are too weak. Now, a separate challenge has been filed from the opposite direction: A coalition of 17 states led by the Nebraska attorney general, together with the National Association of Wholesaler-Distributors (“NAW”), has sued the Director of CalRecycle and the Circular Action Alliance (“CAA”) in the U.S. District Court for the Eastern District of California, seeking to block enforcement of SB 54 and its implementing regulations.

SB 54, enacted in 2022, establishes an extended producer responsibility (“EPR”) program for single-use packaging and plastic single-use food service ware sold in California. The statute and final regulations require covered producers to work toward 2032 targets, including 100% recyclability or compostability for covered single-use packaging and plastic food service ware, a 65% recycling rate, and a 25% reduction in single-use plastic packaging and food service ware. The program also requires producers to participate through CAA, California’s approved producer responsibility organization, or pursue an individual compliance path with CalRecycle. Obligations triggered on May 1, 2026.

The new federal lawsuit alleges that SB 54 unconstitutionally burdens interstate commerce, compels speech or association, and improperly delegates governmental authority to CAA — a private entity with significant fee-setting and implementation power. The Commerce Clause claim reflects a pattern playing out across environmental regulations more broadly: As certain states push ambitious unilateral mandates, other states and affected industries are increasingly arguing those mandates should not constitutionally reach beyond state borders to reshape national markets.

The litigation does not suspend existing SB 54 obligations. Companies selling packaged products into California should continue monitoring both lawsuits and related EPR developments in other states.

ISO Announces Draft Net Zero Standard

On June 17, 2026, the International Organization for Standardization (“ISO”) launched a 12-week public consultation on the draft ISO Net Zero Aligned Organizations Standard (ISO 14060), which ISO describes as the first international, independently verifiable standard designed to help organizations develop credible and comprehensive net-zero transition plans. The draft standard is intended to provide a common framework for organizations of all sizes and sectors to demonstrate that their net-zero strategies, targets, and actions are compatible with reaching net zero and that they are making credible and verifiable progress in line with the Paris Agreement.

The proposal builds on ISO’s 2022 Net Zero Guidelines and comes as companies continue to navigate a crowded landscape of voluntary climate frameworks, investor expectations, and emerging disclosure regimes. Among other things, the draft standard would address interim and long-term emissions-reduction targets, publication of a transition plan within two years of setting a target, integration of the plan into business strategy, measurement and reporting of progress, and validation and verification requirements. Companies and other interested parties are encouraged to participate in the public consultation process through their National Standards Body.

Indiana and Kansas Proxy Advisor Laws Blocked by Preliminary Injunction

Federal courts in Indiana and Kansas issued preliminary injunctions in late June halting enforcement of two state laws regulating proxy advisory firms, in cases brought by ISS and Glass Lewis. The Kansas court enjoined enforcement of the Proxy Advisory Transparency Act (SB 375) on June 24, 2026, and the Indiana court enjoined enforcement of HB 1273, the state’s proxy disclosure law, on June 28, 2026. Both measures were designed to regulate the ability of proxy advisers to communicate voting recommendations that diverge from company management, required them to provide either a written financial analysis justifying the recommendation or affirmatively state that the recommendation was made without basing it on such a pecuniary analysis. Both laws had been set to take effect on July 1, 2026, but the injunctions will halt enforcement of the laws while the cases continue through the courts. In granting relief, the courts cited First Amendment concerns based on viewpoint discrimination. The rulings echo an injunction last year against a similar law in Texas. While the immediate compliance obligations under the Indiana and Kansas statutes are suspended for the moment, the broader multistate effort to regulate proxy advisers remains active. V&E will continue monitoring these cases as the underlying litigation proceeds.

Supreme Court Narrows Roundup Failure-to-Warn Litigation Against Bayer

On June 25, 2026, the U.S. Supreme Court held 7-2 in Monsanto Co. v. Durnell that FIFRA expressly preempts a Missouri state-law failure-to-warn claim alleging that Monsanto should have added a cancer warning to Roundup’s EPA-approved label. The case arose from a $1.25 million verdict for a plaintiff alleging long-term Roundup exposure caused his non-Hodgkin lymphoma, against the backdrop of a massive wave of similar claims following Bayer’s 2018 acquisition of Monsanto. The majority held that, because EPA requires manufacturers to use the approved label unless and until the agency approves a change, a state-law duty to add a cancer warning imposes a requirement “in addition to or different from” federal requirements — squarely within FIFRA’s preemption clause.

The decision’s reach extends well past agriculture and the chemicals industries. The Court expressly signaled that its reasoning applies across other federally regulated product categories. The broader takeaway is that a federal agency’s affirmative, product-specific label approval can be a powerful basis for early dismissal of failure-to-warn claims. That defense is strongest where the agency has specifically evaluated the risk at issue, so companies should ensure the regulatory record reflects robust agency engagement on relevant hazards. Design defect, manufacturing defect, and risks the agency did not affirmatively consider remain viable plaintiff theories. Bayer has indicated it still plans to proceed with a proposed class-action settlement to resolve many remaining Roundup claims.

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.

¹Shane Goodwin, The Reincorporation Index (rev137), SMU Corp. Governance Initiative (2026-06-29), https://reincorporation-tracker.pages.dev/ (last visited July 2, 2026). Note that the shareholder vote required for reincorporation varies based on, among other things, the company’s current jurisdiction (e.g., a Delaware corporation converting under Section 266 of the Delaware General Corporation Law would need a majority of all outstanding shares to vote in favor of the reincorporation).  

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.