Sustainability/ESG

We’ve reported previously on the progress of the EU’s ‘Omnibus package’ on sustainability due diligence and reporting, including via the EU Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). On 13 October 2025, as part of its aim to simplify proposed CSRD and CSDDD reporting, the European Parliament proposed:

• Only companies with over 1,000 employees on average and a net annual turnover above 450 million euro should be within scope
• Voluntary compliance for companies outside proposed thresholds
• CSDDD to apply only to large EU businesses with more than 5,000 employees and a net yearly turnover above 1.5 billion euro, and to foreign businesses with a net turnover in the EU above the same threshold
• A risk-based approach to due diligence of supply chain partners which asks for certain information where there is a plausible prospect of adverse impact (further debate/clarification is expected here)
• Further clarification around climate transition plan requirements
• Businesses to be liable at national level but with the European Commission providing guidance on the penalty regime.

Proposals are expected to be finalised by the end of 2025. This remains one to watch.

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.

Natural England has published a new corporate strategy for the role of nature recovery in driving economic growth. The strategy’s projected outcomes are: 1) recovering nature; 2) building better places; 3) improving health and wellbeing; and 4) delivering security through nature. These will be achieved through: alignment across policies and actions; empowered local decision-making; streamlined regulation; and investment in nature projects.

Circular Economy initiatives

The European Commission is consulting on its proposed Circular Economy Act. The Act, set for adoption in 2026, focuses on enhancing e-waste recycling and boosting demand for secondary critical raw materials. It seeks to reduce reliance on imported resources, improve economic resilience, and support decarbonization. The Scottish government is consulting, until 13 January 2026, on a draft circular economy strategy. And, the UK government is expected to publish its circular economy strategy before the end of 2025.

Defra has published draft regulations to ban supplying single‑use wet wipes containing plastic to consumers in England. The ban will cover pre‑wetted, non‑woven fabric products not intended for reuse, such as baby, cosmetic, hygiene, moist toilet and cleaning wipes. Exemptions apply, including medical uses and certain industrial/B2B channels, and manufacturing is not banned. The ban is expected to commence in summer 2027.

Also on the subject of plastics, talks to deliver a legally binding global plastics treaty broke down at the UN’s fifth Intergovernmental Negotiating Committee session in August 2025. Some states advocated mandatory limits on plastic production and use, while others preferred measures focused on waste management and recycling, so no consensus has yet been reached.

Water resilience and drought risks

The Guardian has recently reported (8 November) that water companies and the government are drawing up emergency plans for a drought next year more extreme than we have seen in decades. The government is also urging all sectors are being urged to take steps to increase water resilience.

The global water crisis is increasing, with more than two billion people already without access to safe drinking water and global water demand projected to exceed supply by 40% as early as 2030. Inefficiencies such as leaky pipes, aging infrastructure, and excessive energy use are behind much of this.

A new report emphasises that water and energy as interconnected systems, and explains that investment in the water sector is crucial to competitiveness and security. See our earlier briefing on environmental and commercial concerns associated with water stress, and how we can help.

It might seem counter-intuitive but, at the same time drought and water resilience are hitting the headlines, so too (and inherently linked) are issues associated with flooding. New analysis from the insurance industry reveals that large swathes of housing and commercial property in the UK are at risk of devastating floods, storms and rising sea levels. Some homes, businesses and even towns may have to be abandoned, and some areas are becoming uninsurable.

Densely populated areas including London, Manchester and parts of north-east England, are likely to be worst hit, but Tenbury Wells in Worcestershire has already become the first in the country to find that its public buildings are uninsurable.

Major environmental pollution litigation

The largest environmental pollution action ever pursued in the UK is being brought in relation to alleged pollution in the rivers Wye, Lugg, Usk and related tributaries. The agricultural food producer and water company defendants are accused of causing: private nuisance by having materially contributed to pollution in the Wye catchment; public nuisance, having endangered the health, safety and comfort of the public and the environment, and obstruction of the right to use the river Wye; and negligence, through breach of “a duty of care to prevent, contain and clean-up the pollution”, and a “duty of care not to cause pollution damage by bio solids and by sewage discharge into the rivers”.

The claim also alleges that discharge of solid particles has affected water quality and settled on the river bed, amounting to trespass; and that the unlawful deposit of manure and biosolids on agricultural land breaches section 73(6) of the Environmental Protection Act 1990.

Last year’s landmark Supreme Court ruling in Finch confirmed that applications for major developments should consider all significant direct and indirect greenhouse gas emissions. However, a recent review of 35 post-Finch proposed intensive farming developments across the UK found that planning applications routinely ignored or downplayed emissions.

Planning applications made/approved without the necessary emissions information and analysis will be open to legal challenge. In the case of so-called mega farm applications, commentators are referring to the withholding of carbon footprint information as an ’emissions scandal’.

Climate litigation and human rights

We’ve reported previously on the so-called ‘Swiss grannies’ case, in which the European Court of Human Rights found that Switzerland had taken inadequate steps to combat climate change and, in doing so, had breached the human rights of an association of elderly Swiss women concerned by the impact of climate change. The women were found to have been particularly affected by climate change due to their age and gender, which made them especially vulnerable to heatwaves and other climate-related health risks.

We anticipated that the ruling could prompt other innovative and strategic claims, challenging the failure of states to achieve, or set, adequate climate targets. That, in turn, could have a regulatory impact. The Good Law Project, in collaboration with Global Legal Action Network with claimants SOS UK, Tipping Point, and Save Hemsby Coastline, have now commenced legal action against the UK government arguing that, following the ‘Swiss grannies’ judgment, the government’s climate plans fall short of an enforceable climate duty. There’s no doubt the risk of strategic/green litigation is on the rise.

The practical advice set out in our earlier briefing is perhaps even more important today. Businesses may also want to check out our more recent advice in relation to the Corporate Sustainability Due Diligence Directive and climate transition planning.

The FCA has updated its Climate Risk Financial Forum webpage to include a suite of newly published materials on climate and nature risk.

Corporate/corporate reporting

The government has announced proposals to reduce the narrative reporting burden in the UK. As part of the government’s Regulation Action Plan, aimed at reforming the UK regulatory framework, the changes will: exempt most medium-sized private companies from the requirement to produce a strategic report; exempt wholly-owned subsidiaries from producing their own strategic report where they are included in the reporting of their parent company; and remove the requirement to produce a directors’ report for all companies.

In related news, the government will launch an expanded consultation on the modernisation of corporate reporting in 2026.

The FRC has published final guidance to the UK Stewardship Code 2026. The Code 2026 will apply from 1 January 2026 but, to support signatories in adapting to the new Code, 2026 will serve as a transition year.

The Registrar of Companies (Fees) (Amendment) Regulations 2025 have been published with an Explanatory Memorandum. These regulations amend a range of Companies House fees, effective from 1 February 2026. See the changes to Companies House fees. Some fees have increased significantly.

New regulations come into force on 1 January 2026, requiring large companies to report information about their payment practices and performance within their directors’ reports. See the Explanatory Memorandum.

The government has published terms of reference for the Dematerialisation Market Action Taskforce (DEMAT), regarding reforms to the UK’s shareholding framework. DEMAT has been asked to report by summer 2026, with a recommended ‘go live’ date for step 1 (the replacement of paper-based certificated share registers with digital) of before the end of 2027.

HM Treasury has published Consultation Response: Reform of the Anti-Money Laundering and Counter-Terrorism Finance supervision regime, confirming the decision to consolidate supervision of the legal and accountancy professions, and trust and company service providers, under the FCA as Single Professional Services Supervisor.

Data protection/cyber security/tech and digital

On 14 October 2025, the UK government published its letter to UK companies with urgent advice to ensure they are protected from cyber threats. It was sent following recent high profile cyber incidents and in the week in which the National Cyber Security Centre (NCSC) annual report revealed the UK is experiencing 4 “nationally significant” cyber attacks every week.

Recommended steps include: making cyber risk a board-level priority; using the Cyber Governance Code of Practice; signing up to the NCSC’s Early Warning service; and checking cyber risk in supply chains (the government’s Cyber Essentials scheme is signposted as a certification for minimum cyber security measures).

The UK and US have agreed the Tech Prosperity Deal to boost fast-growing technologies like AI, quantum, and nuclear. Leading US tech firms -including Microsoft, NVIDIA, Google, OpenAI, and CoreWeave – are investing £31 billion into UK AI infrastructure, building on £44 billion already committed under this government.

North East AI Growth Zone

A new taskforce has been launched to accelerate development of the North East’s AI Growth Zone, expected to create thousands of jobs across sectors from construction to advanced AI. Backed by universities, industry leaders, and firms, the initiative will fast-track planning, investment, and training routes, with spades in the ground within weeks as part of the government’s Plan for Change.

On 24 October 2025, the Home Office published Supply chain resilience against ransomware to help organisations reduce the impact of ransomware by strengthening their supply chain security.

Cyber Security and Resilience Bill

On 12 November, new laws were introduced to Parliament, as part of the Cyber Security and Resilience Bill, to boost cyber protections for healthcare, transport, energy and water. Under the proposals: medium and large companies providing services like IT management/support and cyber security to private and public sector organisations will be regulated for the first time; regulators will be given new powers to designate critical suppliers to the UK’s essential services; enforcement will be modernised, including tougher turnover-based penalties for serious breaches; and the Technology Secretary gets new powers to instruct regulators and the organisations they oversee.

The European Commission (EC) has published draft guidance, a reporting template and a consultation seeking stakeholder input on the proposed reporting of serious incidents regime under the EU AI Act. The reporting requirements aren’t applicable until August 2026, but the draft guidance and reporting template are available now to help providers prepare for compliance.

Also on the EU AI Act, the EC has launched the AI Act Single Information Platform and Service Desk to help businesses prepare for implementation.

For more on the EU AI Act, see our recent series of snap shot briefings.

AI in dispute resolution

The American Arbitration Association-International Centre for Dispute Resolution is launching an AI arbitrator – initially for documents-only construction cases under human oversight. Expansion to other industries and more complex disputes is expected next year, marking a significant shift in the future of dispute resolution.

The European Commission has announced it’s starting work on a code of practice on marking and labelling AI-generated content. The EU AI Act transparency provisions apply from 2 August 2026 and are intended to ensure people are aware they’re interacting with, or being exposed to, AI.

Commercial/general

Earlier this year, the government published the Regulation Action Plan to tackle the complexity and burden of regulation and challenge risk aversion within the system. The government has now published its progress update and next steps. The government has said it will:

• Launch a Regulator Dashboard, displaying performance against KPIs
• Convene a Regulators Council to ensure regular dialogue between regulators and ministers focused on promoting economic growth across the regulatory landscape
• Deliver independent expert performance reviews for key regulators to help regulators tackle challenges and barriers that prevent growth. The first will be a review of the Office of Rail and Road
• Undertake a targeted deep dive to review the burden of central government regulation implemented at local level. This initiative will engage directly with businesses and local authorities to identify practical policy solutions that reduce unnecessary regulatory burdens.

In related news, the government is consulting, until 16 December, on examples of where UK regulation inhibits growth, innovation and investment. Responses should help the government with its aim is to “reduce the administrative burdens of regulation on business by 25%”.

Guidance on responding to trade sanctions

The UK government has published a starter guide to UK sanctions, new guidance on reporting suspected breaches and guidance on what information to provide in response to a trade sanctions information request. These documents are helpful for UK businesses engaged in transactions, financial services, trading, or supplying professional services or insurance.

Also on sanctions, the government has announced that a single sanctions list for UK designations will be implemented from 28 January 2026. Guidance has been published to help businesses prepare for the transition.

The FCA published its long-awaited consultation on a proposed motor finance redress scheme that could begin in 2026, aiming to return an estimated £8.2 billion to consumers affected by around 14 million unfair motor finance agreements. The scheme addresses historic misconduct where lenders failed to disclose key commission arrangements, leading to consumers overpaying and missing opportunities to negotiate better deals.

The EC is consulting on reform of the EU public procurement rules. It intends to publish proposals for reform in the second quarter of 2026.

In the UK, the Chair of the Competition and Markets Authority (CMA) indicated, in a speech at the International Chamber of Commerce conference, that public procurement reform may be on the horizon.

Getty Images v Stability AI judgment

The Getty Images v Stability AI judgment is one of the first rulings on IP infringement by an AI developer. It offers insight to how courts may approach such cases in the absence of clear legislation, with key implications for both AI developers and content owners. See our briefing here.

People

The Employment Rights Bill was originally expected to receive Royal Assent in autumn 2025. However, several provisions have run into opposition in the House of Lords, delaying its passage through parliament.  The bill is currently going through a parliamentary ‘ping pong’ process. Key areas of contention currently include:

• Unfair dismissal – the Lords oppose making unfair dismissal a day one right and propose a six-month qualifying period instead
• Zero-hours contracts – the Lords want workers to have an opt out from the right to guaranteed hours and they also want to the bill to include a definition of seasonal work
• Political levy – the Lords want trade unions to be required to opt out their members from contributions to political funds, unless they have expressly opted in
• Turnout threshold for industrial action – the Lords want to retain the requirement for a 50% turnout threshold for industrial action ballots.

Employment Rights Bill consultations

While parliamentary debate continues, the government has launched a number of consultations connected with the Employment Rights Bill, including on the duty on employers to inform workers of their right to join a trade union and on trade union workplace access. Both consultations close on 18 December 2025. Consultations on enhancing dismissal protections for pregnant women and new mothers and on leave for bereavement including pregnancy loss, close on 15 January 2026.

The government has published the final report of the Mayfield review into economic inactivity due to ill-health and disability, Keep Britain Working. The report says that: one in five working age people are now out of work and not looking for work; UK employment amongst disabled people stands at 53% and employers face an estimated £85 billion a year in lost output and costs linked to ill health.

The main problems identified are a “culture of fear” preventing constructive conversations, lack of support for managing health and disability, and structural barriers to work for disabled people. Recommendations include asking employers to do more on prevention, rehabilitation and removing barriers for disabled people, and reminding employees about their responsibility to engage and stay connected to work.

Government is asked to: to work with  ‘Vanguard’ employers to develop a new certified Healthy Working Standard and better Workplace Health Provision (WHP); establish a Workplace Health Intelligence Unit to provide an evidence base and drive innovation; provide financial incentives for employers to encourage adoption of the new standard and incentives for employees to stay engaged; and reform welfare, fit notes, Access to Work and the alternative dispute resolution system.

The government have responded to the report by confirming it will partner with 60 employers with the launch of employer led ‘Vanguards’ and that Sir Mayfield will co-lead a Vanguard Taskforce with ministers which will develop interventions and build evidence of what works, and which will inform wider reform. See: Employers join forces with government to tackle ill-health and keep Britain working – GOV.UK

The Council of Europe’s commissioner for human rights has, in a letter referring to the Supreme Court’s judgment in For Women Scotland v Scottish Ministers said the UK needs to respect the human rights of trans people, in line with its international human rights obligations.

The letter has been sent while the Equality and Human Rights Commission’s draft code of practice for services, public functions and associations (updated following the Supreme Court ruling on the definition of ‘sex’ in the Equality Act 2010) is under review by the government.

Forced labour in supply chains

The UK government has published its response to the UK Joint Committee on Human Rights inquiry into forced labour in international supply chains. The inquiry recommended reform to the current legal framework, including strengthening the reporting duty in Section 54 of the Modern Slavery Act 2015 (MSA) and legislating for mandatory human rights due diligence; an import ban on goods linked to forced labour; and a new duty to prevent forced labour in supply chains. The government response refers throughout to its ongoing review into the UK’s approach to responsible business conduct, which forms part of its Trade Strategy.

The government notes that it is considering how to strengthen the Section 54 regime, but that “significant long-term reform will take time”. It also refers to the Transparency in Supply Chains statutory guidance which calls on businesses to go beyond the requirements of the MSA in their pursuit of eliminating modern slavery from their supply chains.

Businesses will have to await the outcome of the ongoing review into responsible business conduct and the National Baseline Assessment on implementation of the UN Guiding Principles on Business and Human Rights for any clarification of legislative reform.

The CMA has published new guidance, ‘Competing for talent’, on how competition law applies to recruiting and retaining workers. This is a new area of focus for competition authorities. See our briefing.

The government has announced a digital ID scheme for UK citizens and legal residents, aimed at simplifying access to government services and curbing illegal working. Digital ID will become mandatory for Right to Work checks by the end of the Parliament.

The Home Office has confirmed that, from 30 October 2025, visa applicants and dependants who are applying outside the UK for work, study, family or indefinite leave to enter (settlement) visas, may no longer be issued with a visa vignette (visa sticker) in their passport.

Consultation on right to work checks in the gig economy

The government is consulting on extending the right to work check regime to the ‘gig’ economy and to situations where there is a chain of contracts for the provision of work or services outside the traditional employer and employee relationship. The deadline for written responses is 10 December 2025.

After several years of negotiation, Birmingham City Council has settled historic equal pay claims brought by Unison and GMB unions on behalf of hundreds of women employed by the council and Birmingham Children’s Trust. The dispute centred on the underpayment of women working in roles across essential services, compared to male colleagues doing work “of equal value”.

In-house lawyers may be wondering about the Mazur decision, which has featured prominently in recent legal press. The Law Society has published a guidance note, following the case, on who is authorised to practise litigation under the Legal Services Act 2007; the dividing line between conducting litigation and supporting an authorised person to do so; what work can be conducted by a non-authorised person; and the consequences of a breach.

The Law Society has issued draft guidance for in-house solicitors on whistleblowing, and a draft model whistleblowing policy template.

Major fine issued over vibration hazards in the workplace

A social housing management firm has been fined for failing to protect workers from a range of vibration related ill-health conditions. The workers included bricklayers, joiners, electricians, plasterers, caretakers and others. While their work was varied, all included extensive use of power tools, ranging from drills and impact drivers to vibrating plates and road breakers, over an extended period of time.

The company hadn’t properly assessed or controlled worker’s exposure to vibration. As the decision is against a business-type not necessarily immediately associated with vibration risk, it could have far-reaching implications for all businesses employing workers or contractors exposed to vibration.

Health & Safety Executive (HSE) guidance, available here and here, sets out practical guidance to help employers protect their employees and fulfil their legal obligation to control vibration risks. The guidance includes advice on the assessment of risk, ways to control exposure, and in-depth information about health surveillance.

A free online learning tool has been published by HSE on the subject of stress risk assessment.