Last Earth Day I wrote an article on the regulatory landscape around ESG (Environmental, Social, and Governance) during the Biden administration. This Earth Day, I am revisiting that piece to consider that changes we’ve seen to ESG initiatives and requirements in the U.S., particularly under the Trump administration.
The Trump administration has taken a different approach to ESG, focusing on deregulation and support for traditional energy sectors. This has led to significant changes in federal policies, including the withdrawal from the Paris Agreement and the rollback of numerous environmental regulations. These actions have created uncertainty around the future of ESG standards at the federal level.
Despite these challenges, ESG-focused funds and initiatives continue to thrive, driven by consumer and investor demand. Companies are increasingly recognizing the importance of sustainable practices, even as federal support wanes. This resilience highlights the growing influence of market-driven sustainability efforts. Additionally, individual states like California, New York, and Colorado have taken proactive steps to establish their own environmental reporting requirements, reflecting a growing trend towards localized ESG initiatives.
California’s Climate Reporting Laws
California remains at the forefront of climate-related disclosure regulations. The Climate Corporate Data Accountability Act (SB 253) and The Greenhouse Gases: Climate-Related Financial Risk) Act (SB 261) require companies with significant revenues in California to disclose their greenhouse gas emissions and climate-related financial risks.
| Law | Details | Requirements | Deadlines |
| SB 253: Climate Corporate Data Accountability Act (CCDA) | Requires large businesses operating in California to publicly report their greenhouse gas emissions. | – Applies to public and private companies with global annual revenue > $1 billion. – Disclose Scope 1 and Scope 2 GHG emissions starting in 2026. – Disclose Scope 3 emissions starting in 2027. – Obtain third-party assurance of reports. – Pay annual filing fee. – Administrative penalties up to $500,000 for non-compliance. | – Scope 1 and Scope 2 emissions: January 1, 2026. – Scope 3 emissions: January 1, 2027. |
| SB 261: Greenhouse Gases: Climate-Related Financial Risk (CRFRA) | Mandates companies to disclose climate-related financial risks and mitigation strategies. | – Applies to businesses with annual revenues > $500 million. – Prepare a climate-related financial risk report biennially. – Make the report publicly available on the company’s website. – Pay annual fee for state board’s costs. – Administrative penalties for non-compliance. | – First report: January 1, 2026. – Biennial reporting thereafter. |
New York State’s Environmental Reporting Regulations
The New York State Department of Environmental Conservation (DEC) has recently announced draft regulations for a Mandatory Greenhouse Gas Reporting Program. This program requires certain significant greenhouse gas (GHG) emissions sources to report their emissions data annually starting in June 2027. The reporting rule is solely for data collection and does not require pollution reductions or the purchase of allowances. Large emission sources must verify their emissions data report annually using DEC-accredited third-party verification services. The DEC is developing an online platform to streamline the reporting process and will offer training on using the platform once it launches. They are currently accepting public comments proposal through July 1, 2025.
Colorado State Environmental Reporting
In Colorado, Senate Bill 19-096 requires sources of greenhouse gases to monitor and report their emissions to the state. The Colorado Greenhouse Gas Reporting Rule, adopted in 2020, mandates certain reporting requirements for greenhouse gas sources and establishes supplemental data reporting requirements for Colorado electric service providers or utilities.
Moving Forward with ESG
Management teams eager to advance their ESG compliance and positioning should consider the following:
- Risk Mitigation: Incorporating ESG principles helps companies anticipate and mitigate environmental risks, safeguarding against financial or reputational damage.
- Investor Attraction and Retention: Investors are increasingly drawn to companies with sustainable practices, enhancing market valuation and stability.
- Brand Reputation and Customer Loyalty: Customers prefer brands that prioritize sustainability, boosting brand image and fostering loyalty.
- Employee Engagement and Corporate Culture: Embracing environmental sustainability enhances employee morale and attracts top talent.
While federal regulations remain uncertain, companies can still make meaningful progress in their ESG efforts. Resource allocation and organizational changes can drive initial efforts as the litigation around final rules continues to unfold.
This Earth Day, U.S. companies should pause, consider what can be done now, and keep in mind that final reports, standards, and accountability are not yet finalized at the federal level. However, proactive steps can still be taken to align with evolving ESG expectations and prepare for future regulatory changes.
If you need further guidance or have any questions on these topics, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
