Sustainability/ESG

The Independent Anti-Slavery Commissioner has proposed model drafting for a Forced Labour and Human Rights Bill to introduce: human rights supply chain due diligence requirements; a forced labour products ban; and annual human rights compliance reporting in the UK, replacing section 54 of the Modern Slavery Act 2015.

Sustainability ‘Omnibus’

The European Parliament, the Council of the EU, and European Commission (EC) negotiators have reached provisional political agreement on the final text of the Omnibus directive simplifying sustainability reporting and due diligence requirements introduced by the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD):

• The CSRD threshold for EU companies is raised to 1,000 employees and a net annual turnover of EUR450 million.
• The EU net turnover threshold for non-EU companies is raised to EUR450 million.
• Financial holding undertakings are exempt and sector-specific reporting is voluntary.
• A transition exemption applies for “first wave” companies (those required to comply for financial years starting in 2024) if they fall out of scope for 2025 and 2026.
• The CSDDD’s scope is limited to EU companies with over 5,000 employees and a net annual turnover of more than EUR1.5 billion. An EU turnover of EUR1.5 billion applies for non-EU companies.
• The requirement to identify and assess actual and potential adverse impacts as part of due diligence is limited to a general scoping exercise.
• No requirement for transition plans.
• No EU-wide civil liability mechanism (although this is subject to review).
• Fines capped at 3% of net worldwide turnover.
• Compliance required by July 2029.
• A review clause is inserted to consider extending the scope of CSRD and CSDDD.

The Council of the EU has confirmed it will formally adopt if the text stays in its agreed form. Businesses may soon have clarity on scope and obligations.

ESG litigation

The high profile, $48 billion, Mariana Dam case is reportedly the largest mass tort claim ever brought in the UK. It follows failure of the Mariana Dam in Brazil, which caused pollution of the Doce River and widespread devastation to the surrounding communities, waterways, land and infrastructure. Although decided under Brazilian law, the case was litigated in the UK. The judgment has significant implications for the law of England and Wales, signalling the English courts’ capacity and willingness to handle large-scale [overseas] mass tort claims and to scrutinise parent companies for the actions of their subsidiaries. It’s likely to encourage more ESG-related claims, including those arising from overseas/subsidiary activities.

A claim described as a ‘first-of-its-kind’ in the UK was filed against Shell on 9 December. It alleges Shell knew about the dangers of climate change from the 1960s, but nevertheless tripled annual emissions from 1965 to 2021, and lobbied to undermine emerging scientific consensus, therefore materially contributing to human-driven climate change. The claim demands financial compensation for the damage caused by Super Typhoon Odette in December 2021, on the basis Shell’s actions “significantly intensified the typhoon’s impact and likelihood”. The claim is brought on the ‘polluter pays’ principle in the UK, but will apply Filipino law. It will be interesting to see how the case impacts English environmental/pollution litigation. In particular, the case will consider whether damages caused by extreme weather events, and corporate liability, can be linked to an entity’s historic emissions. If so, the impact on companies, their directors and officers, and insurers, would be significant. It’s one to watch.

A High Court decision to dismiss a legal challenge against the expansion of Luton airport has clarified aspects of the Finch Supreme Court ruling on Scope 3 downstream GHG emissions. In the Luton airport case, the airport’s position was that Finch decision doesn’t require assessment of indirect GHG emissions in circumstances where either (a) there is insufficient information on which to make a reasonable assessment, or (b) where it is possible to make a judgment, the effects are not significant. The High Court agreed. The decision will be welcomed for its suggestion that, provided decision-makers properly consider environmental and scientific evidence against appropriate benchmarks, and explain their reasoning, there is a reasonable margin of discretion in how they assess Scope 3 GHG emissions.

Decarbonisation

The UK government has published a revised Carbon Budget and Growth Delivery Plan, which includes commitments to invest in clean energy, reduce energy bills, introduce the Warm Homes Plan, improve electric vehicle charging and reduce transport emissions, and to protect and restore nature and wildlife.

In related news, the government also published its response to the April 2025 Climate Change Committee report on UK climate change adaptation.

The government has published a revised Environmental Improvement Plan, designed to restore nature, improve environmental quality and security, build a circular economy, and make nature easier for everyone to access.

The government has published the outcome of its technical consultation on the UK carbon border adjustment mechanism (CBAM). CBAM will apply from 1 January 2027, initially covering direct emissions only with indirect emissions delayed until 2029 at the earliest. Draft secondary legislation and HMRC guidance are expected before 2027.

The EU Deforestation Regulation (EUDR) looks set to be postponed again, with new proposed dates of 30 December 2026 for large and medium businesses and 30 June 2027 for micro and small businesses. For the latest on what’s happening, check out our recent briefing.

Greenwashing

21 airlines have agreed to change their practices on environmental claims to ensure that they aren’t misleading. Contact us for advice on greenwashing and how to protect your business.

In related news, the ICC published a new version of its Framework for Responsible Environmental Marketing Communications.

COP30 has been characterised by the Global Mutirão Decision – a historic call for a collective global effort to accelerate climate action from negotiation to implementation. Key outcomes from COP30 include: launch of the Global Implementation Accelerator and the Belém Mission to help countries deliver on their climate pledges and adaptation plans; $1.3 trillion annually by 2035 for climate action (up from $300 billion in 2030); adaptation finance to double by 2025 and triple by 2035; operationalisation and replenishment of the Loss and Damage Fund; the Just Transition Mechanism to embed inclusion, labour and human rights and equity principles; next round of National Adaption Plans agreed and adoption of 59 indicators to track progress; launch of the Tropical Forest Forever Facility; and recognition of Indigenous Peoples’ land rights backed by $1.8 billion funding. Roadmaps for phasing out fossil fuels and halting deforestation were deferred to voluntary initiatives outside the COP process.

Climate transition and disclosures

The International Capital Market Association and the executive committee of the Green, Social, Sustainability and Sustainability-Linked Bond Principles have announced the release of the Climate Transition Bond Guidelines and a new edition of the Climate Transition Handbook. The guidelines introduce the climate transition bond, the proceeds of which are used to finance climate transition projects.

The EC has published its proposal to amend the Sustainable Finance Disclosure Regulation.

The International Sustainability Standards Board (ISSB) has issued targeted amendments to greenhouse gas emissions disclosure requirements in IFRS S2, effective for reporting periods beginning on or after 1 January 2027.

The Transition Finance Council has published revised draft transition finance guidelines with explainer; a draft Implementation Handbook; and a consultation questions and update paper.

The Taskforce on Nature-related Disclosures has published new guidance to help businesses incorporate nature into their transition planning. For help with your transition planning generally, see our briefing.

Corporate/corporate reporting

We’ve previously reported that the government has published draft legislation so that, from June 2028, any environmental, social, governance (ESG) ratings provider serving clients in the UK will be subject to FCA oversight. The aim is to provide transparency and consistency in ESG ratings. The FCA is now consulting, until 31 March 2026, on a comprehensive regulatory framework for ESG rating providers. Final rules are expected by the end of 2026, with the authorisations gateway opening in June 2027, and the regime going live on 29 June 2028.

The FCA is consulting on further changes to the listing processes for new securities, the UK Listing Rules and the Public Offers and Admissions to Trading Regime. Different response deadlines apply to different aspects of the consultation, so please see here.

FRC news

The Financial Reporting Council (FRC) has published its annual review of corporate governance reporting against the UK Corporate Governance Code, highlighting examples of good reporting and areas for improvement. The FRC has also published a thematic review of reporting by smaller listed companies, to help them improve their annual reports.

The FRC has also published a report on preparing for the UK Stewardship Code 2026 to support signatories in reporting to the 2026 Code. The report provides insights into how signatories can demonstrate their approach to stewardship through reporting in a clear, evidence-based and outcome-focused way. The 2026 Code came into effect on 1 January 2026.

Also in FRC news, see the revised guidance on the Corporate Governance Code 2024. The guidance now provides clarity on how companies can structure remuneration for non-executive directors.

The FRC has published its first reporting insights of the Wates Corporate Governance Principles for Large Private Companies.

Companies House has published new guidance explaining how it intends to use its enforcement powers to ensure compliance with new mandatory identity verification requirements now in force.

A reminder that the Companies (Directors’ Report) (Payment Reporting) Regulations 2025 introduce a new requirement for large companies to report annually on their payment practices and performance in relation to suppliers in their directors’ reports. The regulations came into force on 1 January 2026 and are effective for financial years beginning on or after that date. See the Explanatory Memorandum.

In related news, the Department for Business and Trade has published guidance on reporting on payment data in directors’ reports.

On 8 December 2025, GC100 published its guidance for virtual meetings of shareholders. The recommendations aim to maintain/enhance the quality and effectiveness of shareholder engagement, transparency and board accountability in virtual meetings. Whilst legislation is expected to clarify that virtual meetings are allowed, it’s not expected to override existing company articles. Companies without appropriate provisions in their articles will need shareholder approval to amend them before conducting virtual meetings.

The London Stock Exchange has published its Feedback Statement: Shaping the Future of AIM, in which it summarises the feedback it received on its Discussion Paper – Shaping the Future of AIM, published in April 2025. The LSE will consult on AIM Rule amendments and a new technical note for nominated advisers in 2026.

Pensions UK has published its Stewardship and Voting Guidelines 2026, providing guidance for pension schemes considering the exercise of their voting rights during the 2026 AGM season. The publication should also be of interest to other institutional investors and large asset managers.

The Supreme Court has confirmed, in Mitchell & Anor (Joint Liquidators of MBI International), that a director, or anyone who assumes fiduciary duties for a company, can be held liable for breach of those duties even after the company has entered liquidation. The case also clarifies the courts’ approach to assessing loss and causation in cases of misappropriation of assets, including where subsequent events affect the value of those assets. It confirms that, if a defaulting fiduciary is involved in/orchestrates or benefits from events that diminish the value of misappropriated property, they can’t rely on those events to avoid or reduce their liability.

Data protection/cyber security/tech and digital

AI news

See this Walker Morris article for an analysis of the recent Getty Images v Stability AI judgment.

The UK government has announced a multi-billion-pound investment and major reforms to put AI at the centre of its growth strategy. Plans include an AI Growth Zone in South Wales, expanded computer access for researchers, and £137 million to support breakthroughs in science and healthcare.

The FCA has announced a strategic partnership with the Monetary Authority of Singapore to promote safe and responsible AI innovation, alongside plans to facilitate cross-border collaboration, joint testing of AI solutions, and regulatory ties to support growth and investment.

The UK government has announced a new partnership with Google DeepMind to open its first automated research lab in the UK next year, accelerating scientific breakthroughs in areas like superconductors, clean energy, and advanced materials. The collaboration also includes priority access for UK scientists to cutting-edge AI tools and expanded work with the AI Security Institute to ensure safe and responsible AI development.

Digital markets

The EC has adopted the Digital Omnibus, a package of proposals to simplify and streamline the EU’s digital rulebook. The EC has also launched a consultation and call for evidence (open until 11 March 2026) on a Digital Fitness Check, an initiative to analyse different digital rulebook laws, their impact on business, and how effectively they support the EU’s competitiveness and values.

The EC has opened a Digital Markets Act market investigation into the cloud computing sector.

The EC has published non-binding model contractual terms for data access and use and standard contractual clauses for cloud computing contracts.

On 19 December 2025, the EC renewed its data adequacy decisions for the UK on confirming the UK continues to provide ‘essentially equivalent’ protection, allowing seamless EU‑to‑UK data transfers until at least 27 December 2031.

A series of new ICO guidance documents – covering codes of conduct, recognised legitimate interests, international transfers, and subject access requests – are in development with publication expected in winter 2026.

See our latest Technology & Digital round-ups for further updates: Technology & Digital round-up: December 2025 – Walker Morris; Technology & Digital round-up: January 2026 – Walker Morris

Commercial/general

The UK government has published the outcome of its consultation into mandatory electronic invoicing. E-invoicing will be required for all VAT invoices starting in 2029. The government will work with stakeholders to shape policy and implementation, and will publish a roadmap to implementation at Budget 2026.

The European Union Intellectual Property Office has introduced Early TM Screening, an AI tool to help businesses and practitioners identify potential issues before filing an EU trade mark application.

CMA news

The Competition and Markets Authority (CMA) has published its Strategy 2026 to 2029. The aim is to drive economic growth and improve household prosperity. The strategy focuses on 5 objectives: promoting effective competition; championing consumers; providing expert advice to government with a particular focus on public procurement and regulatory barriers; implementing the 4Ps approach (Pace, Predictability, Proportionality and Process) to contribute to the UK’s reputation as a great place to do business and invest; and prioritising UK interests.

The CMA has announced a major package of action covering online pricing practices, including drip pricing and pressure selling, under the new Digital Markets, Competition and Consumers Act 2024. The measures include eight new investigations into businesses the CMA suspects may have broken consumer law with their online pricing and sales practices, and writing to 100 other businesses to outline concerns.

The CMA has also published updated guidance to help businesses: understand the law on unfair commercial practices, price transparency: CMA209, and getting consent for additional charges when selling online.

Procurement

Late 2025/early 2026 has seen a number of procurement developments:

Newly published PPN 023 sets out procurement thresholds for goods, services and works contracts from 1 January 2026.

The Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 came into force on 3 December 2025.

Guidance has been published (applicable in England) on reserving competitions for below threshold contracts to local and UK businesses. This is a voluntary measure intended to boost to local economies by enabling low value contracts for local businesses. Competitions may also be reserved for SMEs and voluntary and community enterprises.

On 9 December 2025, the Procurement Act 2023 (Commencement No. 4) Regulations 2025 were made, bringing into force the following aspects of the Procurement Act 2023:

• section 69 – on payment compliance notices from 1 January 2026 (except Wales where the date is 1 April 2026). See Guidance: Payments Compliance Notices (HTML) – GOV.UK
• section 70 – on publication of payments under public contracts from 1 April 2026 (except Wales). Guidance is expected soon
• section 71 – assessment of contract performance from 1 January 2026 (applies to England and Wales). See Guidance: Contract Performance Notices (HTML) – GOV.UK.

And, on 20 December 2025, the Cross-Border Public Procurement (Miscellaneous Amendment) (Scotland) Regulations 2025 came into force, facilitating cross-border procurements with Scotland.

The National Health Service (Procurement, Slavery and Human Trafficking) Regulations 2025 will come into force on 17 May 2026. They will require public bodies that procure goods or services for the NHS in England to carry out a modern slavery risk assessment, take reasonable and proportionate steps to address/eliminate identified risks, and regularly reassess. NHS England has published draft guidance. In-scope bodies should now prepare for the new regime.

In Secretary of State for Work and Pensions v Jwanczuk, the Supreme Court has clarified how the courts of England and Wales should treat decisions of equivalent courts in other parts of the UK. The Supreme Court confirmed that decisions of an appellate court in one part of the UK are not binding on the equivalent courts of another part. While such decisions should be treated with great respect, equivalent courts are not obliged to follow decisions they consider to be incorrect – it’s more important for statutory provisions to be interpreted correctly than consistently.

Planning developments

The government is consulting, until 13 January 2026, on streamlining statutory consultees in the planning system. Proposals include: reducing the amount of statutory consultation; reducing blanket/unnecessary referrals; supporting impactful, constructive engagement from statutory consultees; ensuring effective resourcing; targeted support to unlock the most complex sites; empowering local planning authorities as decision makers; developing a new performance framework for statutory consultees; and amending consultation requirements and costs recovery measures for Nationally Significant Infrastructure Projects.

On 16 December, the government launched a consultation on a revamped National Planning Policy Framework. The press release is here. The consultation closes on 10 March. Proposals non-exhaustively include: a rules-based ‘yes’ by default for planning on suitably located proposals; promotion of urban/suburban higher-density redevelopment, upward extensions, and infill schemes; reduced complexity in areas like energy efficiency and Biodiversity Net Gain; BNG revisions for small/brownfield sites; facilitation of mineral extraction; vision-led transport planning; policy changes in relation to data centres and on-site generation; and more.

The Planning and Infrastructure Act 2025 entered into law on 18 December 2025. Government guidance giving an overview of the Act can be found here.

People

Employment Rights Act 2025

The Employment Rights Act 2025 (ERA) became law on 18 December 2025. The Department for Business and Trade has published a factsheet with an overview of measures and confirming the government’s intention to keep to its roadmap, so that the majority of regulations under the Act will take effect on 6 April or 1 October 2026 (although the six-month unfair dismissal qualifying period will take effect on 1 January 2027). Keep updated on what the Act means for you as employers, and how to navigate the changes, with our tracker.

Prior to enactment of the ERA, Laura Oxley, Walker Morris Director and employment specialist, published an article in People Management magazine, on changes making it automatically unfair to dismiss an employee for refusing to agree to a ‘restricted variation’ of their employment contract.

Wellbeing

The House of Lords Committee on Home-based Working (Committee) published its report, Is Working from Home Working?. Recommendations include: funding research into mental and physical health implications of remote/hybrid working; publicise mental health benefits and risks; promote equitable access; publish updated guidance on different forms of home working and implications for employers; publish guidance on best practice; provision of a workable definition of “reasonable” in the context of the requirement that employers can only reject a request for flexible working where reasonable; and, in the context of the government’s plan to implement the right to switch off via a Code of Practice, the Code should be framed in terms of whether employees need to respond outside of their agreed working hours, rather than whether employers should contact them. The report also considers related issues, such as investment in broadband, addressing shifts in demand for transport, and risks AI may pose to remote jobs.

The Health and Safety Executive has published its statistics on work-related ill health and workplace injuries in 2024/25. An estimated 1.9 million workers suffered from work-related ill health during the year, the majority of which were work-related stress, depression or anxiety.

The BSI has published the first British Standard dedicated to addressing the risk of suicide and its impact in the workplace.

Proposed changes to settlement routine

The government is consulting, until 12 February 2026, on plans to reform the current settlement system, including proposals for an “earned settlement” regime. See our recent article.

The government is consulting, until 18 February 2026, on the reform of non-compete clauses in employment contracts.

The government has announced a £725 million package of reforms to the apprenticeship system to help tackle youth unemployment and drive economic growth.

The government has published the following planned increases from April 2026:

• The weekly rate of statutory sick pay will be £123.25 (up from £118.75).
• The weekly rate of statutory maternity pay, maternity allowance, statutory adoption pay, statutory paternity pay, statutory shared parental pay, statutory neonatal care pay and statutory parental bereavement pay will be £194.32 (up from £187.18).
• The lower earnings limit (the weekly earnings threshold for qualifying for the above payments, except maternity allowance) will be £129 (up from £125). For maternity allowance the threshold remains at £30 a week.
  National minimum wage rates.