U.S.: SEC Extends Compliance Deadlines for Amendments to Funds Names Rule

On March 14, 2025, the U.S. Securities and Exchange Commission (“SEC”) announced that it would extend the deadlines for funds to comply with amendments adopted in 2023 to the Investment Company Act “Names Rule.” The Names Rule addresses certain categories of investment company names that are likely to mislead investors about the company’s investments and risks. The 2023 amendments strengthened and broadened the scope of the requirement that at least 80% of a fund’s investments must reflect its stated objectives by updating notice and recordkeeping requirements.

The extension will give companies an additional six months to ensure that fund investments match their advertised ESG or sustainability strategies in compliance with the amendments to the Names Rule. According to the SEC, “[t]he extension is designed to balance the investor benefit of the amended Names Rule framework with funds’ needs for additional time to implement the amendments properly, develop and finalize their compliance systems, and test their compliance plans.”

Large fund groups, classified as those with more than $1 billion in net assets, now have until June 11, 2026 to become compliant with the amended Names Rule. Smaller fund groups, including all funds with less than $1 billion in assets, will have until December 11, 2026 to become compliant with the amended Names Rule.

The Acting SEC Chair Mark Uyeda suggested similar compliance extensions may be announced for other recent SEC rules.

Link:
SEC Press Release

U.S.: Senator Hagerty (R-TN) Introduces “PROTECT USA” Bill Prohibiting Enforcement of Foreign ESG Rules Against Certain American Businesses

On March 12, 2025, U.S. Senator Bill Hagerty of Tennessee introduced the Prevent Regulatory Overreach from Turning Essential Companies into Targets (PROTECT USA) Act of 2025 bill, which would prohibit:

1. entities “integral to the national interests of the United States” from complying with foreign sustainability due diligence regulations, except where (i) foreign laws align with U.S. legislation or regulation, or (ii) actions taken by these entities are within the ordinary course of business;
2. adverse actions against these entities for non-compliance with such foreign regulations; and
3. U.S. courts from enforcing foreign judgments relating to such foreign regulations against these entities.

Entities within the scope of the bill include fossil fuel and mining companies, entities that conduct business with the federal government, and any entity the President so designates. Notably, from an enforcement perspective, the President is also given expansive powers to “take any action [he] determines is in the public interest” to protect an entity from an adverse action related to a foreign sustainability due diligence regulation. In making such a determination, the President considers, among other factors, the impact of the adverse action on consumers, businesses and foreign relations.

A key foreign regime the bill targets is the EU Corporate Sustainability Due Diligence Directive (“CSDDD”). According to Senator Hagerty, the CSDDD infringes on U.S. sovereignty and harms small and mid-sized businesses by demanding greater and costly oversight of their suppliers.

Links:
Protect USA Bill
Press Release

Australia: Court Fines Pension Fund Trustee A$10.5 Million for Greenwashing

On March 18, 2025, the Federal Court of Australia ordered superannuation fund trustee LGSS to pay a A$10.5 million fine after finding that it engaged in greenwashing by making false and misleading representations about its ESG investment practices. The court determined that a superannuation fund managed by LGSS, Local Government Super (also known as Active Super), continued to hold securities in sectors and from nations it claimed to exclude—such as gambling, coal mining, oil tar sands, and Russian companies—while marketing itself as an ethical ESG-focused fund. The case was brought by the Australian Securities & Investments Commission.

In his judgement accompanying the order, Justice O’Callaghan emphasized the seriousness of the misleading conduct and the benefit LGSS derived from it, as well as the likelihood that it led to investors losing confidence in ESG programs. Justice O’Callaghan also pointed to the fact that LGSS’s senior management failed to put in place properly functioning systems and processes to ensure that its representations were not false or misleading.

This penalty adds to a growing list of greenwashing enforcement actions in Australia’s asset management sector, following similar fines against Vanguard Investments Australia and Mercer Superannuation in 2024.

Link:
Order

Global: SBTi Proposes Updates to Net-Zero Standard to Accelerate Corporate Decarbonization

On March 18, 2025, the Science Based Targets initiative (“SBTi”), a corporate climate action organization, released a draft update, referred to as “Version 2.0,” to its corporate net-zero standard. The update is intended to support companies report on their progress against SBTi targets and serve as the basis for the next target-setting cycle.

Version 2.0 introduces a number of significant changes, including:

• A more nuanced approach to target-setting. The draft proposes to separate Scope 1 and Scope 2 emissions targets to account for the challenges specific to each category. It also introduces new options for assessing Scope 3 emissions by allowing companies to prioritize action relating to the most significant sources of emissions in their value chain.

• Tailored requirements based on the size of the company and whether it operates in a higher- or lower-income geography.

• Recognition that, in addition to setting science-based targets for reducing emissions, companies play an important role by mobilizing capital to mitigate emissions beyond their value chain.

• Consideration of carbon removals as an option for contributing to progress with climate targets under certain circumstances.

The draft standard is under consultation until June 1, 2025; comments to the draft can be submitted to SBTi through this link. If adopted, SBTi intends to roll out Version 2.0 beginning in 2027.

Links:
Press Release
Net-Zero Standard Version 2.0

Denmark: Financial Regulator Identifies Funds’ SFDR Deficiencies

On March 20-21, 2025, the Danish Financial Supervisory Authority (the “Authority”) published inspection reports for three Danish funds. The reports are the result of a thematic inspection carried out in September 2024, which focused on compliance with the EU’s Sustainable Finance Disclosure Regulation (“SFDR”). The three funds had committed to making sustainable investments as their objective, in line with Article 9 of SFDR.

The Authority found several deficiencies in each fund’s controls and processes to meet their resulting sustainability obligations, such as:

• Failing to comply with the “do no significant harm” principle. The Authority found that one of the funds had used a model where the investments’ positive contributions could offset any harm they may cause to environmental or social conditions, which was insufficient to ensure that no significant harm was actually caused.

• Failing to consider the mandatory “principal adverse impact” indicators under SFDR when determining whether the investments do significant harm to environmental or social objectives.

• Insufficient processes in place to assess good governance practices of investee companies.

The Authority requested that each fund rectify their respective issues but did not impose any further penalties.

Links:
Inspection report for StockRate Forvaltning A/S
Inspection report for Nykredit Portefølje Administration A/S
Inspection report for Formuepleje A/S

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