Strategic Focus: Unpacking Sustainability And Climate Disclosure Laws In The US
24 Nov, 2023
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Executive Summary
The US Securities and Exchange Commission (SEC) has kept firms waiting with baited breath as it continues to delay finalizing its climate disclosure rule, which was first announced in March 2022. Rather than wait for the SEC, other regulators are developing mandatory sustainability-related disclosures, to increase transparency and standardize sustainability-related requirements. The most wide-reaching and immediate of these regulations were signed into law in California in October 2023. The California legislation echoes the SEC’s proposed climate disclosure rule, but is more comprehensive and far-reaching, impacting both publicly listed and privately traded firms, and requiring organizations to disclose their Scope 1 and 2 emissions, as well as their climate-related risks, as soon as 2026. This report will discuss the regulatory landscape and uncertainty around regulatory sustainability-related disclosures in the US, as well as ways that firms can navigate through these uncertainties.
With delays from the SEC, California is driving sustainability-related disclosures in the US
Unpacking California’s climate disclosure bills
California bills were signed into law with caveats, adding to uncertainty for firms
US-based firms need to be aware of other sustainability-related disclosures
Despite uncertainties, firms should begin preparing for disclosures now
Unpacking California’s climate disclosure bills
California bills were signed into law with caveats, adding to uncertainty for firms
US-based firms need to be aware of other sustainability-related disclosures
Despite uncertainties, firms should begin preparing for disclosures now
Figure 1. Key dates for SB 253 and 261
Figure 2. High-level comparison of SB 253, SB 261 and the SEC’s proposed climate disclosure rule
Figure 2. High-level comparison of SB 253, SB 261 and the SEC’s proposed climate disclosure rule
DWS Investment Management Americas, US Federal Deposit Insurance Corporation (FDIC), Task Force on Climate-related Financial Disclosures (TCFD), California Chamber of Commerce, California Air Resources Board (CARB), California State Assembly, GHG Protocol, New York State Senate, European Commission, California State Senate, US Office of the Comptroller of the Currency (OCC), US Federal Reserve Board, Ceres, Deutsche Bank, Harvard Law School Forum on Corporate Governance, US Securities and Exchange Commission (SEC), New York State Assembly, Western States Petroleum Association
About the Authors
Jessica Pransky
Principal Analyst
Jessica is a Principal Analyst in the Verdantix ESG & Sustainability practice, which she joined in 2022. Her current research agenda covers ESG reporting and data manageme…
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Kim Knickle
Research Director, ESG & Sustainability
Kimberly Knickle is Research Director of the ESG & Sustainability practice at Verdantix. Her research areas encompass ESG regulations and reporting, ESG risk, supply chain…
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