Regulations on the Horizon

From the United States to the European Union to India, there is a flurry of regulatory activity, particularly related to carbon disclosure and green claims. With emerging regulations impacting both private and public companies, keeping a close eye on the movement of regulations is critical to risk management and preparedness. Below are updates related to impending regulations that impact companies doing business in California and/or the European Union.

Doing Business in California?

With anticipated regulatory deadlines set in early 2026, California SB 261 and SB 253 will require new climate-related disclosures for both private and public companies doing business in California. In order to meet full compliance, early preparedness activities include:

  • Start or continue to conduct a Scope 1, 2, and 3 greenhouse gas emissions inventory

  • Develop a TCFD/ISSB aligned framework for inclusion to your annual sustainability or financial report(s)

  • Understand the governance of your organization - particularly in relation to disclosure assurance

  • Document all past green claims

  • Comprehensive recordkeeping policies and practices in preparation of internal audit and third-party validation

California SB 261 and SB 253; emerging regulations; carbon disclosure

Doing Business in the EU?

Corporate Sustainability Reporting Directive (CSRD)

The CSRD establishes a framework for organizations to report extensive sustainability related information.

  • Disclosure include details on business model and strategy, policies, risks, targets and due diligence covering material ESG matters including:

    • Environmental matters

    • Social and employee aspects

    • Respect for human rights

    • Anticorruption and bribery issues

    • Diversity with regard to gender and other aspects such as, age, or

    • Educational and professional backgrounds in their board of directors

  • Disclosure via management report which must be publicly available and provided in a digital format to aide analysis

  • Mandatory 3rd party assurance (limited and then reasonable)

A company or group has a significant presence in the EU if it:

  1. Carries on substantial activity in the EU, meaning the company’s net turnover in Europe in two consecutive financial years was over €150 million per annum; and,

  2. The company has at least one:

    a) branch in the EU that has a net turnover of at least €40 million; or

b) subsidiary in the EU that is a “large” undertaking.