The Trump Administration has already signaled its intent to take a far different approach with respect to ESG-related issues than the Biden administration. Among other things, the White House has issued orders ordering a dismantling of federal agency DEI initiatives, and the SEC has withdrawn its court defense of its recently issued Climate Change Disclosure guidelines. These actions suggest that other governmental authorities’ climate change-related initiatives – such as those of the EU and of the various U.S. states — could increase in importance, as the U.S. federal government changes its policy direction. However, the EU has recently indicated its intent to step back some of its initiatives. And the Trump Administration has now issued an executive order expressly targeting what it calls “state overreach” with respect to climate change policies.

The White House’s April 8, 2025, Executive Order, entitled “Protecting American Energy from State Overreach,” can be found here.

Background

Even before the White House recently issued its executive order, there were indications that governmental approaches to climate change were changing. As referenced above, and as discussed here, the SEC previously announced that it had voted to end its court defense of the agency’s climate change disclosure guidelines, which the agency had just finalized in March 2024. As discussed in detail here, earlier in March, the  European Commission proposed an “Omnibus package” of proposed revisions to streamline a number of EU laws, including the EU’s Corporate Sustainability Reporting Directive (CSRD). The CSRD would have required many companies, including many U.S. companies, to make periodic disclosures concerning climate change-related issues. The Omnibus package, if approved, will adjust and streamline the scope, timeline, and requirements of the CSRD.

The California Climate Change Disclosure Guidelines

With these pullbacks from prior climate change-related disclosure requirements, the California climate change disclosure guidelines potentially became significantly more important. As discussed here, in September 2023, the California legislature enacted far-reaching climate change disclosure guidelines. As I previously discussed on this site (here), with the pullback of the SEC and the EU disclosure requirements, the California climate change disclosure guidelines arguably have taken on a much greater significance. According to an April 12, 2025 post on the Harvard Law School Forum on Corporate Governance by The Conference Board (here), the California requirements “are poised to become the de facto standards for corporate climate disclosure in the U.S.”

The California disclosure requirements clearly represent a different approach to climate change disclosure than the one being taken by the current Trump administration. It is worth noting that California is not the only state to have enacted ESG-related legislation. The Harvard Law School Forum blog post to which I linked above notes that a number of other states have enacted “pro-ESG measures,” including Colorado, Florida, Illinois, Maine, Maryland, New Hampshire, Oregon, and Utah. Readers will note that this list of states is not restricted to “blue states” alone – there are several “red states” on this list.

The White House Executive Order

Consistent with the Trump Administration’s approach that its policies not only must predominate but must also be both preclusive and exclusive, the White House has now issued the Executive Order to which I linked at the top of this post, targeting these various climate change-related state initiatives.

In an attempt to try to justify the administration’s action, the Executive Order recites the administration’s view that U.S. energy dominance “is threatened when State and local governments seek to regulate energy beyond their constitutional or statutory authorities.” The Executive Order specifically notes that “many states have enacted, or are in the process of enacting, burdensome and ideologically motivated ‘climate change’ or energy policies that threaten American energy dominance and our economic and national security.”

The Executive Order specifically calls out certain state initiatives, including California’s carbon cap and trade policies, as well as legislative initiatives of New York and Vermont. The Executive Order states that “These laws and policies weaken our national security and devastate Americans by driving up energy costs” and “undermine Federalism by projecting the regulatory preference of a few States onto all States.”

The Executive Order directs the U.S. Attorney General to first identify “all State and local laws, regulations, [etc.], burdening the … production and use of domestic energy resources that are or may be unconstitutional, preempted by Federal law, or otherwise unenforceable.” The U.S. AG is specifically instructed to prioritize identification of State laws addressing “climate change” or “environmental, social, and governance” and “environmental justice.”

Second, the order directs the AG to “expeditiously take all appropriate action to stop the enforcement of State laws” that the AG determines to be “illegal.” Finally, the order directs the AG to recommend any additional Presidential or legislative actions necessary to stop the enforcement of State laws identified in response to the order.

Discussion

This and many other Executive Orders the current White House has issued suggest that it is intolerable to this administration that any other branch or level of government should take any governmental action that the White House believes its inconsistent with its policy views and objectives. Any other position by any other governmental actor is both inadmissible, illegal, and must be suppressed. (These views also apparently extend to colleges, universities, law firms, fine arts venues, etc.)

Like so many other Trump administration initiatives, the purpose of this Executive Order is not only to target the identified activity, but to suppress any further activity along the same lines. This order, like others from this administration, seeks to chill legislative activity inconsistent with the Trump administration’s policies, goals, and objectives.

Interestingly, the Executive Order itself does not expressly refer to the California Climate Change Disclosure legislation, but the Order does specifically direct the AG to identify legislation addressing “climate change.”  I don’t think I am assuming too much by projecting that the California Climate Change Disclosure legislation will be among the state laws the AG targets in response to the Executive Order.

All of this raises the question of how companies are to respond in the meantime. An April 14, 2025 memo by the Cadwalader law firm about the Executive Order (here) presents the sensible advice that “until further guidance is delivered by the federal government and unless individual States suspend application of State laws, market participants affected by State laws should continue compliance with State policies and requirements.”

The Cadwalader law firm’s memo also makes the point that the Order, or any actions the AG undertakes pursuant to the Order, may be “challenged in courts if the States allege that the Order and the actions mandated” by the AG “are unconstitutional.”

Other commentators can address much more thoroughly and accurately than I can the likely issues involved in any court challenge, but at a minimum I note that there could be a lot of action ahead on the question of the roles and authority of the states in our system of federal government – a face-off of sorts between the Commerce Clause and the Tenth Amendment.

Interestingly, the Commerce Clause in the U.S. Constitution gives the power to regulate commerce to Congress, not to the President. Which is probably why the Executive Order leans so heavily into the foreign policy considerations potentially involved with climate change-related issues – the President typically is afforded predominant authority with respect to foreign affairs.

In any event, there is a lot more to be heard on these issues in the months ahead. In the meantime, we face a fragmented, uncertain, and changing environment when it comes to ESG issues generally, and to climate change disclosure issues in particular.