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
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:
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,
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.