Q2 2025 Compliance & Remediation Update

Introduction

Welcome to our Turnberry Compliance and Remediation update for Q2 2025. Each quarter, our C&R team will present a brief rundown of the latest news and analysis of recent compliance, regulation, and security trends. We will explore the challenges, risks, and opportunities we face as we help our clients navigate their compliance and remediation journeys. We also hope to inform our team members of the latest trends in compliance, including changes presented by AI, new regulations, and global events.

This quarter’s contents:

• U.S.: Possible ESG and sustainability regulatory changes
• Regulatory rundown: Proposed state-level AI regulations

U.S.: Possible ESG and Sustainability Regulatory Changes

ESG and sustainability regulations

For the past decade, environmental, social, and governance (ESG) and sustainability efforts have become a major focus for companies across the globe. However, in the U.S., these efforts have had a rocky start to the year. Since the 2024 U.S. presidential election, there has been a significant rollback of ESG efforts and regulations. Key developments include:

• Regulatory rollbacks: The Trump administration has reversed numerous environmental regulations. This includes withdrawing the U.S. from the Paris Climate Agreement, easing restrictions on oil and gas drilling, and suspending environmental protections to boost fossil fuel extraction.
• Corporate shifts: There are several examples of corporate retrenchment when it comes to recent ESG initiatives. For example, many automotive manufacturers have shifted focus back to combustion engines, moving away from electric vehicle development. Asset management firms like BlackRock and Vanguard have also retreated from previous climate commitments, influenced by political pressures and new regulatory guidance.
• SEC regulatory changes: Under the leadership of acting chairman Mark Uyeda, the Securities and Exchange Commission (SEC) has implemented policies that shift power from investors to corporate boards. These changes make it more challenging for shareholders to propose resolutions on climate policy and workforce diversity, thereby reducing the influence of ESG considerations in corporate governance.

IRA rollbacks

Several proposals have been made to roll back or modify provisions of the Inflation Reduction Act (IRA) since its enactment in August 2022. During his 2024 presidential campaign, Donald Trump pledged to rescind any unspent funds under the IRA. Following his election in November 2024, reports indicated that Trump’s advisors were considering reallocating funds from IRA programs, particularly those related to electric vehicle incentives, to other priorities such as national defense. Specific proposals included ending consumer tax credits for electric vehicle purchases and canceling contracts for zero-emission postal trucks. Recently, the federal government paused a $5 billion program to build half a million chargers across the country.

While the recent proposals and statements indicate a desire among some policymakers to modify or rescind parts of the IRA, any significant changes would require legislative action and face varying levels of support and opposition within Congress and the broader public. Some industry leaders and Republican lawmakers have expressed support for maintaining certain IRA provisions, especially those that have spurred economic growth and job creation in their constituencies. In addition, a group of 18 Republican members of Congress have urged party leaders to prioritize business and market certainty when considering changes to the IRA, acknowledging the positive impact of energy tax credits on innovation and investment.

At Turnberry

The evolving landscape of ESG regulations, coupled with potential policy shifts such as rollbacks of the IRA, presents opportunities for Turnberry to assist our clients in navigating these changes. While there has been some withdrawal from ESG in the U.S., other developments worldwide have intensified the focus on compliance. For instance, the European Union’s Corporate Sustainability Reporting Directive (CSRD), effective beginning January 1, 2024, mandates that certain companies disclose information on climate-related risks and societal impacts. In addition, similar regulatory initiatives are emerging worldwide, compelling companies to adapt to new reporting standards and sustainability practices. Similarly, there is a growing recognition of the strategic value of sustainability beyond compliance. Investors are increasingly seeking transparent and credible ESG disclosures to inform their decisions.

Turnberry can assist clients in understanding and implementing necessary measures to meet new ESG reporting requirements. We can also offer data management solutions to accurately collect, manage, and report ESG-related data. Companies with robust sustainability practices can differentiate themselves in the market, appealing to environmentally conscious consumers and partners. Turnberry can help in embedding sustainability into companies’ core business strategies.

The dynamic regulatory environment and potential policy shifts present Turnberry with opportunities to provide value to our partners. By staying abreast of legislative developments and understanding the broader sustainability landscape, we can help clients not only comply with regulations but also leverage sustainability as a driver for innovation and growth.

Regulatory Rundown: AI regulations (state-level and industry recommended)

In our last newsletter, we discussed the state of AI regulations across the U.S., European Union, and China. While China and the EU have implemented comprehensive AI regulations, national-level American efforts have largely stalled in Congress. Recently, U.S. Vice President JD Vance spoke at the Artificial Intelligence Action Summit in Paris. According to Vance, “We believe that excessive regulation of the AI sector could kill a transformative industry just as it’s taking off.” The vice president stated that he’d favor a more “deregulatory” stance at the conference.

In contrast to the Federal government, state-level regulations for AI in the United States have been rapidly evolving. Numerous states are introducing and enacting legislation to address various aspects of AI governance. As of 2025, at least 45 states, Puerto Rico, the Virgin Islands, and Washington, D.C., have introduced AI-related bills, with 31 states, Puerto Rico, and the Virgin Islands adopting resolutions or enacting legislation.

Key areas of state-level AI legislation:

1. Algorithmic accountability and bias prevention:
   • Employment decisions: States like Illinois and New York have enacted laws requiring bias audits for AI tools used in hiring processes to prevent discrimination.
   • Consumer protection: Some states mandate that AI systems adhere to responsible standards, emphasizing transparency, fairness, and the avoidance of harm.
2. Deepfake and digital replica regulations:
   • Tennessee’s ELVIS Act: Enacted in March 2024, this legislation addresses unauthorized AI-generated simulations of individuals’ voices and likenesses, aiming to protect artists’ rights against misuse.
   • California’s legislation: In September 2024, Governor Gavin Newsom signed bills to protect minors from AI-generated explicit content, making it illegal to create or distribute such material without consent.
3. Comprehensive AI governance frameworks:
   • Utah’s AI Policy Act: Signed into law in March 2024, this act establishes guidelines for AI use, including liability provisions and the creation of an Office of Artificial Intelligence Policy.
   • California’s SB 1047: Introduced by Senator Scott Wiener, this bill aimed to mandate safety testing for advanced AI models. Despite passing the legislature, it was vetoed by Governor Newsom in September 2024, who cited concerns over its broad application.
4. AI in political campaigns and education:
   • Some states have proposed bills to regulate AI usage in political advertisements and educational settings, though not all have been enacted. For instance, Mississippi considered legislation to regulate AI in these areas, but the bills did not pass.

In addition to the areas noted above, in January 2025, Mississippi’s Governor Tate Reeves signed an executive order directing the Mississippi Department of Information Technology Services to develop AI policy recommendations for state agencies, focusing on fairness, security, transparency, and accountability.

The landscape of AI regulation at the state level is dynamic, with ongoing legislative activities reflecting the growing recognition of AI’s impact on society. For the most current information, resources like the National Conference of State Legislatures’ AI legislation tracker provide up-to-date insights into state-level AI governance.

Analysis: State-level AI regulation presents several pros and cons to companies hoping to use AI in their day-to-day business. On the plus side, state-level regulations can lead to faster implementation; states can act more quickly than the federal government, responding to AI-related issues like bias, privacy, and accountability without waiting for nationwide consensus. States can also tailor their AI regulations to their unique industries, workforce, and economic conditions (e.g., California’s AI laws may focus on tech, while Texas might emphasize energy-sector AI applications). In addition, faster action by individual states may encourage federal action. If multiple states enact AI laws, it can push the federal government to create a unified national framework.

There are some negatives with a state-based approach as well, including creating a patchwork of laws, regulatory uncertainty, risk of overregulation, and possible conflicts with federal policies or other states’ rules. Also, because AI systems often operate across state and national borders, it can be hard for a single state’s regulation to effectively control AI practices.

At Turnberry

As U.S. states begin enacting AI regulations to govern ethical use, data privacy, and risk mitigation, Turnberry has a growing opportunity to assist our clients in navigating compliance. We can assist with state-level policy mapping to help comply with the latest AI regulations. Turnberry can also leverage our industry expertise, talented compliance and remediation staff, and compliance-centered AI tools to ensure our clients remain in compliance with the latest regulations, wherever they may do business. We can also offer AI policy and compliance training. As AI continues to grow and evolve the way we do business, Turnberry will be there to guide our clients forward.