With growing concerns about social responsibility, climate change, and corporate governance, governments and regulatory bodies worldwide are implementing measures to ensure companies adhere to environmental, social, and governance (ESG) standards.

As ESG considerations continue to shape the business landscape, companies are increasingly recognizing the importance of integrating ESG practices into their operations to meet regulatory requirements and demonstrate their commitment to sustainability.

Although the implementation of several key pieces of legislation has been paused, companies that proactively prepare and become early movers in ESG integration will be better positioned to meet future reporting demands and reap the benefits of responsible business practices.

The Global ESG Landscape

The current global ESG compliance landscape is a mix of mandatory and voluntary frameworks. In Europe, the European Union’s Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD) are key regulatory initiatives mandating ESG disclosures.

In the United States, the SEC is increasing its focus on ESG disclosures and released the final Climate Disclosure Rule on the federal level. At the state level, California has released the Climate Corporate Accountability package and other states, such as Illinois, Washington, and New York, are issuing similar acts.

The International Sustainability Standards Board (ISSB) has released global sustainability disclosure standards—IFRS Sustainability Disclosure Standards, or ISSB Standards, and have developed guidelines and frameworks to promote ESG reporting and transparency.

Jurisdictions including Brazil, Costa Rica, Sri Lanka, Nigeria, and Turkey have already announced decisions to adopt or otherwise use the ISSB Standards. Canada, Japan, and Singapore are consulting on the introduction of sustainability-related disclosures in their respective regulatory frameworks through the adoption or other use of the standards. Further jurisdictions—such as Australia and Malaysia—have recently closed similar consultations.

This global shift towards recognizing the strategic and business benefits of robust ESG reporting is increasing. Organizations now value this information when assessing their peers and predicting stability, leading to increased confidence among stakeholders.

ESG Regulatory Overview

Below is an overview of reporting timelines for emerging regulations illustrating a common theme for 2026 as the initial year of ESG reporting for US-based regulations.

SEC Climate Disclosure Rule

The SEC’s new climate disclosure rule expands the scope of climate disclosures in SEC filings to determine and disclose the anticipated impacts of climate risks on an organization. Depending on the registrant filer status, the compliance time can be as soon as FYB2025—fiscal year beginning in calendar year.

CA SB-253

California Senate Bill 253 (CA SB-253) establishes essential greenhouse gas (GHG) emissions disclosure requirements for public and private companies with annual revenues exceeding $1 billion that operate or conduct business in California. Companies are required to disclose Scope 1 and Scope 2 emissions beginning in 2026 for the prior fiscal year and Scope 3 emissions in 2027.

CA SB-261

California Senate Bill 261 (CA SB-261) establishes important climate-related financial disclosure requirements for public and private companies with annual revenues exceeding $500 million that operate or conduct business in California, excluding insurance companies. Organizations must prepare and publish on their organization’s website their climate-related financial risk report in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) framework on or before January 1, 2026.

The Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) requires all large EU companies or subsidiaries, including subsidiaries of non-EU parents, if they meet certain criteria, to report on a wide range of sustainability issues beyond just climate-related issues to include information on business model, strategy and policies; company and sustainability governance; double materiality assessment and due diligence; KPIs and targets; and risk and opportunity management. Depending on impacted party type, reporting for calendar-year-end filers can be as soon as 2025 based on FY 2024 data.

Benefits of Being Proactive

There’s a growing demand for ESG data, from requests for proposals (RFPs), investors, customers, and communities in which organizations operate. Even if certain parts of the regulation are altered or removed, current data can contribute to your bottom line and stakeholders want to review it.

Below are core components of these regulations and noted benefits outside of regulatory compliance.

Greenhouse Gas (GHG) Emission Data

Each of these regulations includes a GHG emission disclosure component. Calculating first year GHG emission disclosures can be tedious and often includes estimates and assumptions due to data limitations. The baseline year, the starting point which future GHG emissions are measured against, is important and impacts your organization’s reduction strategy. Start early to improve emission calculations over time and have reliable data for your organization’s baseline year.

Task Force on Climate-Related Financial Disclosures (TCFD) Framework

The TCFD framework is a core component of the SEC Climate Disclosure Rule and SB-261. The TCFD framework is broken down into four core components:

• Governance
• Strategy
• Risk management
• Metrics and targets

All four components should be considered in an ESG program and provide a good starting point for understanding your organization’s ESG program and focus areas.

Board Oversight

The SEC Climate Disclosure Rule and SB-261 require disclosures related to board level oversight. Even if these are removed from the regulation and act, this isn’t a trend that’s going to ebb. Increasingly boards are focused on ESG data as it provides a holistic view of the risks and opportunities that their organization is facing.

We’re Here to Help

To learn how your organization can proactively plan for ESG regulations, contact your Moss Adams professional.

Additional Resources

• Environmental, Social, and Governance (ESG) Services
• ESG Assurance Services