Navigating the ESG Mandate Maze: A Global Guide to Emissions Disclosure

This newsletter edition has been split from its original format into two parts. The other can be found here: "Promises vs. Progress: Evaluating Climate Policies Nearly a Decade After Paris".

As climate-related regulations rapidly evolve worldwide, businesses and organizations face increasing pressure to account for and disclose their emissions and climate risks. Prompted by this nice map from Carbon Direct (https://www.carbon-direct.com/climate-policy-navigator), this article provides a breakdown of the key global reporting and disclosure standards, as they currently stand.

Key Themes

1. Global Alignment: While frameworks vary, the emphasis on transparency and emissions accountability is universal.
2. Scope Matters: Scope 1 and 2 disclosures are standard, with Scope 3 gaining traction in jurisdictions like the EU, Brazil, and California.
3. Timelines and Phases: Many regulations phase in compliance, giving businesses time to adapt while encouraging early action. There's a lot of variability and uncertainty here.
4. Sector-Specific Rules: Financial services face unique regulations, such as the EU’s SFDR, while manufacturing-heavy regions focus on Scope 3 accountability.

Timeline to Compliance

Obviously all of the below is subject to change, but here's where we are currently sitting (considering the mandates summarized in this article).

December 2024

• SEC Climate Disclosure Rule (US): Finalized but implementation stayed pending judicial review. If upheld, large companies could begin disclosing Scope 1 and 2 emissions in FY 2025.
• California Air Resources Board (CARB): Prepares frameworks for compliance with SB 253 (Scope 1, 2, and 3 reporting for companies with over $1 billion in annual revenue).

January 2025

• Australia: Large entities begin mandatory reporting of Scope 1 and 2 emissions under Australian Climate Disclosure Standards. Smaller entities phased in by 2028.
• EU Corporate Sustainability Reporting Directive (CSRD): First reporting deadline for large companies, based on 2024 calendar-year data. This includes Scope 1, 2, and 3 emissions, and climate risks under the double-materiality framework.
• Illinois HB 4268 (US): (Proposed) State-level emissions reporting mandates for Scope 1, 2, and 3 emissions, potentially aligning with California’s SB 253.

July 2025

• California SB 253 (US): CARB finalizes frameworks for Scope 1, 2, and 3 reporting.

January 2026

• California SB 253: Scope 1 and 2 emissions reporting becomes mandatory for companies with over $1 billion in revenue.
• Washington SB 6092 (US): Scope 1 and 2 reporting for large businesses, aligning with California standards (pending approval).
• Minnesota SF 2744 (US): Banking and credit institutions to report on climate risks via state-specific survey forms.

July 2026

• Federal Supplier Rule (US): Major federal contractors to disclose Scope 1 and 2 emissions and financial risks related to climate change if the rule is finalized by late 2025.

January 2027

• California SB 253: Scope 3 emissions reporting begins, requiring detailed disclosures from businesses.
• Washington SB 6092 (US): Scope 3 reporting starts, aligning with California standards.

July 2027

• Australia: Medium-sized entities must comply with Scope 1 and 2 emissions reporting.

January 2028

• Australia: Medium-sized businesses finalize their first mandatory reports under Climate Disclosure Standards, continuing the phased compliance schedule.
• EU CSRD: Final rollout phase for smaller entities and non-EU companies generating over EUR 150 million in revenue within the EU market.

July 2028

• California SB 253: Assurance requirements for all Scope 1, 2, and 3 disclosures to ensure accuracy and compliance.

July 2030:

• Australia: All businesses subject to reporting must obtain reasonable assurance for disclosures, setting a global benchmark for reliability.

Australia: Leading with Phased Compliance

Australian Climate Disclosure Standards (IN EFFECT)

Australia’s landmark amendment to its financial legislation now mandates climate disclosures for large businesses, including Scope 1 and 2 emissions reporting, climate targets, and risk management strategies. Compliance phases in starting January 2025 for the largest entities, extending to medium and smaller companies by 2028.

In September 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 was enacted, amending the existing Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 to now require large businesses and financial institutions to include climate-related disclosures in their annual reports. Companies covered by these standards are categorized into three groups based on company size. There is a phase-in compliance timeframe for entities of different sizes.

Requirements

• Report climate-related risks and opportunities
• Report scope 1 and scope 2 emissions
• Set climate targets and report metrics
• Disclose risk management strategies and processes

Brazil: Transparency Through ESG Reporting

Brazilian Securities Commission Resolution No. 59 (IN EFFECT)

Brazil now - as of January 2023 - requires publicly traded companies to disclose environmental, social, and governance (ESG) metrics, including greenhouse gas (GHG) inventories and alignment with TCFD and UN SDG recommendations. While this regulation doesn’t impose specific ESG practices, it boosts transparency and accountability for businesses operating in Brazil and globally.

Through the issuance of Resolution No. 59 (RCVM 59), the Brazilian Securities Commission (CVM) now requires all registered, publicly traded companies to disclose environmental, social, and governance (ESG) information relevant to the company. Among the new disclosure requirements, Section 1.9 on the Reference Form (see rule text) now inquires whether the issuer has carried out a greenhouse gas emissions inventory and whether the issuer has published an annual report that demonstrates the recommendations of the Task Force on Climate-related Financial Disclosures and the United Nations Sustainable Development Goals. While RCVM 59 does not create obligations for companies to implement specific ESG practices, it significantly increases transparency among publicly traded companies in Brazil.

Exemption for small-sized businesses and microbusinesses; small-sized business is defined as “a business company incorporated in Brazil, not registered as a securities issuer with the CVM, and with annual gross revenue, calculated in the fiscal year ended in the year prior to the offering, of up to BRL 40,000,000 (forty million reais).”

European Union: Double-Materiality as the Standard

CSRD, Corporate Sustainability Reporting Directive (IN EFFECT)

The EU’s CSRD expands reporting obligations to nearly 60,000 companies, introducing the “double-materiality” framework. Organizations must disclose Scope 1, 2, and 3 emissions and climate risks impacting their business and broader societal impact. Compliance starts in 2025 for larger entities, with staggered deadlines based on company size and type.

The Corporate Sustainability Reporting Directive (CSRD) provides a framework for companies to report on environmental, social, and governance (ESG) metrics material to their organizations. Its goal is to make reporting more consistent, transparent, and verifiable. This rule supersedes a previous European Union (EU) reporting rule, the Non-financial Reporting Directive (NFRD). The CSRD raises the number of companies affected by mandatory ESG reporting from 11,000 to nearly 50,000 EU companies and at least 10,000 foreign enterprises with EU operations. Based on the EU Sustainability Reporting Standard (ESRS), climate reporting requirements are grounded by the principle of “double-materiality.” This means companies must disclose the impacts of climate change on their company, as well as the impacts they have on the climate and people across their entire value chain.?

Requirements

• Disclose scope 1, scope 2, and scope 3 emissions
• Report climate and sustainability risks associated with business model and strategies

Required for non-EU companies if they generate over EUR 150 million on the EU market.

The first reporting deadline is January 2025, based on 2024 calendar year data. Disclosure standards vary according to the size and type of company. Effective dates will roll out on a staggered schedule, with initial disclosures based on the previous calendar year.?

Member States: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

SFDR, Sustainable Finance Disclosure Regulation (IN EFFECT)

The SFDR focuses on financial services, mandating disclosure of sustainable investments and ESG risks. It aims to prevent greenwashing while holding asset managers, institutional investors, and advisors accountable.

The Sustainable Finance Disclosure Regulation (SFDR) requires financial services companies and financial advisors to disclose sustainability investments and risks. By standardizing these environmental, social, and governance (ESG) disclosure measures and mandating accountability, the SFDR aims to increase transparency in ESG claims and discourage greenwashing caused by vague or internally designated criteria.

500 employees or larger; organizations with less than 500 employees have the option to opt out of entity-level disclosures; does not apply to independent investment advisors (i.e., self-employed advisors) or advisory organizations with three or fewer employees

Company Type includes Financial market participants and financial advisors, including: asset managers, institutional investors, insurance companies, and pension funds for both EU entities and non-EU entities that engage with EU clients.

Requirements began to apply on February 20, 2023.

India: ESG Transparency in the Spotlight

BRSR, Business Responsibility and Sustainability Reporting (IN EFFECT)

India’s BRSR requires the top 1,000 listed companies to disclose Scope 1 and 2 emissions annually. This initiative promotes transparency while encouraging voluntary reporting from private companies outside the mandate.

Starting in fiscal year 2023, the Securities and Exchange Board of India mandates the top 1,000 Indian companies by market capitalization to provide quantifiable environment, social, and governance (ESG) metrics on an annual basis. The rules for this mandate are defined by the country’s Business Responsibility and Sustainability Reporting (BRSR).

Mandatory for listed companies, voluntary for non-listed companies.

Annual reporting is required, beginning in fiscal year 2023.

United Kingdom: Streamlined Carbon Accountability

SECR, Streamlined Energy and Carbon Reporting Regulation (IN EFFECT)

Since 2019, SECR has mandated Scope 1 and 2 emissions reporting and energy efficiency disclosures for large UK businesses. Affecting over 11,000 companies, this regulation sets a clear precedent for corporate accountability in reducing carbon footprints.

The Streamlined Energy and Carbon Reporting Regulation (SECR), in effect since 2019, mandates large businesses in the United Kingdom (UK) to report on their yearly greenhouse gas emissions and energy use. These businesses must also describe any steps they are taking to improve energy efficiency. The policy, which affects an estimated 11,900 companies in the UK, is designed to encourage companies to implement sustainability measures.

Companies with gross income of greater than USD 45 million and assets above USD 23 million and 250 employees or more.

United States: Diverse Standards for Federal and State Levels

Federal Acquisition Regulation: Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk (PROPOSED, NOT YET FINALIZED)

This proposed rule targets federal contractors, requiring Scope 1, 2, and (for major contractors) Scope 3 emissions disclosures. It also mandates climate-risk assessments and science-based targets.

Formally proposed in the fall of 2022, the Federal Supplier Climate Risks and Resilience Rule would require almost all Federal contractors to publicly disclose their greenhouse gas emissions. Major contractors would also have to disclose climate-related financial risks and set science-based emissions reduction targets. In addition to reducing emissions, the rule is intended to promote clean energy and jobs, mitigate climate-related financial risk, and protect vulnerable supply chains from the increasing risk of climate disruptions. The Federal Acquisition Regulation Council estimates that this rule will affect 5,766 contractors.

Requirements

• Disclose scope 1 and scope 2 emissions
• Disclose scope 3 emissions (major suppliers only)
• Disclose climate-related financial risks
• Set science-based targets to reduce emissions

Affected Companies: Federal contractors with annual billing over USD 7.5 million

• Significant contractors are those billing more than USD 7.5 million per year. They are required to disclose scope 1 and scope 2 emissions.
• Major contractors are those billing more than USD 50 million per year. They are required to disclose scope 1, scope 2, and scope 3 emissions, disclose climate-related financial risks, and set science-based targets to reduce emissions.

One year after the publication of the final rule, significant and major contractors will be required to complete an inventory of their scope 1 and scope 2 emissions. Starting two years after publication of a final rule, major contractors will be subject to the compliance requirements of this rule as described above.

Securities and Exchange Commission Climate Reporting Disclosure (ADOPTED, STAYED PENDING JUDICIAL REVIEW)

Finalized in March 2024, this SEC rule mandates Scope 1 and 2 emissions reporting and material climate-related risks for publicly listed companies. Its implementation is paused pending judicial review.

On March 21, 2022, the Securities and Exchange Commission (SEC) issued a proposed rule that would enhance and standardize climate disclosure rules for publicly listed companies and require them to integrate the information into their SEC filings. The rule was finalized on March 6, 2024. The final rule is significantly less stringent than the initial proposal. Most notably, the final rule has looser thresholds for reporting scope 1 and scope 2 emissions, and there are no requirements to report scope 3 emissions. Under the final rule, companies must only report emissions information when those emissions are “material.” The final rule will still require disclosure of information regarding a registrant's climate-related risks that “have had or are reasonably likely to have material impact on its business strategy, results of operation, or financial condition.” The rule impacts approximately 2,000 publicly listed companies in the United States (US).?

Requirements

• Measure and disclose scope 1 and scope 2 emissions
• Disclose climate-related risks
• Disclose climate targets and goals (if material)

Affected Companies: Publicly listed and private; registered with the SEC under forms S-1, F-1, S-3, F-3, S-4, F-4, S-11, 6-K, 10, 10-Q, 10-K, and 20-F

The rule was adopted by the SEC on March 6, 2024 and mandates reporting for fiscal year 2025 from large accelerated filers. However, the execution and implementation of this rule is temporarily on hold while it undergoes a judicial review.

California SB-253 Climate Corporate Data Accountability Act (PENDING RULEMAKING)

California's forthcoming law will require companies with revenues over $1 billion to report Scope 1, 2, and 3 emissions annually, with phased implementation beginning in 2026.

During the 2023 session of the California State Legislature, SB-253 Climate Corporate Data Accountability Act was passed and signed into law. This law requires certain companies to disclose their greenhouse gas emissions annually. It affects companies “doing business in California,” a phrase with which many companies will need to become familiar. During the 2024 Legislative session, SB-219 was passed and signed into law as well. This bill amends the timeline for implementation of SB-253 by giving the California Air Resources Board (CARB) six more months to promulgate the necessary regulations.

Companies doing business in California meet any of the following:

• Engage in any transaction for the purpose of financial gain within California
• Are organized or commercially domiciled in California
• Your California sales, property, or payroll exceed these amounts.

Frameworks for reporting are to be published by CARB by July 1, 2025. Scope 1 and scope 2 reporting is to begin in 2026, on or by a date to be determined by CARB, and annually thereafter on or by that date. Scope 3 reporting is to begin in 2027 and annually thereafter, on a schedule specified by CARB.

Who's Next?

• Washington SB 6092: This bill is the same as California SB 253, mandating companies with more than $1 billion in annual revenue to report Scope 1 and 2 in 2026 and Scope 3 the year after and get assurances. Washington's bill is the furthest along, having passed multiple House and Senate committees, and is likely to become the second approved state-level climate disclosure law. Washington does not include a climate risk reporting mandate.
• New York SB S897C and SB 5437: New York's bills also align with the California climate laws. Senate Bill S897C establishes the climate corporate data accountability act and Senate Bill S5437 requires certain corporations to annually prepare a climate-related financial risk report. The only slight difference is that SB 5437 requires annual climate risk reporting, whereas California's SB 261 requires biennial reporting.
• Illinois HB 4268: This bill is aligned with California's SB 253 (emissions reporting) and would require companies doing business in Illinois with over $1 billion in revenue to report Scope 1, 2, and 3 emissions. It differs from California's law in that it requires Scope 3 reporting in the same year as Scope 1 and 2, but gives companies an additional 180 days to disclose. This bill also has a planned January 2025 reporting deadline.
• Minnesota SF 2744: This bill will require banks and credit unions with more than $1 billion in assets to make climate risk disclosures by completing a survey by July 30th each year. The state commissioner has to provide banks and credit unions with a survey form for them to use, but that is yet to be released.

These state-level policies indicate a sense of inevitability to climate reporting in the US, regardless of what happens with the California and SEC rules. And ideally, with these states largely aligning to California's legislation, there is also hope for less reporting fragmentation.

Why It Matters

These evolving regulations signal a shift toward a standardized approach to climate disclosure, leveling the playing field and enabling global accountability. Collaboration among diverse stakeholders, including government, private sector, civil society, and academics, is vital for the success of these policies.

And for businesses, compliance isn’t just a potential legal obligation—it’s a chance to innovate, reduce risk, and lead in the transition to a low-carbon economy.