Climate disclosure is moving into execution
Corporate climate disclosure in the United States has moved from concept to operational reality, but the path is uneven. Emissions transparency is advancing faster than broad, cross‑industry climate‑risk reporting. California’s framework shows this split clearly: SB 253 focuses on greenhouse gas (GHG) emissions reporting, while SB 261 focuses on climate‑related financial risk reporting. The California Air Resources Board’s (CARB’s) official program overview describes both programs and their different scopes.
For sustainability leaders, enterprise risk owners, and environmental, social, and governance (ESG) practitioners, the practical question is whether to wait until every climate‑risk mandate is enforceable. The answer is no. Climate risk is increasingly evaluated through financial, market, and counterparty lenses, even where US regulation remains unsettled.
The US trend is emissions‑first
California is the clearest near‑term example. SB 253 applies to certain entities doing business in California with more than $1 billion in annual revenue and requires annual reporting of Scope 1, 2, and 3 GHG emissions. CARB set an initial August 10, 2026 deadline for Scope 1 and Scope 2 emissions reporting in its February 2026 release, with Scope 3 reporting expected to follow in later reporting cycles.
SB 261 applies to covered entities doing business in California with more than $500 million in annual revenue and requires biennial climate‑related financial risk reports aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations or an equivalent framework. However, CARB’s SB 261 Enforcement Advisory states that it will not enforce the statutory January 1, 2026 reporting deadline while the Ninth Circuit injunction remains in effect, and that it will provide an alternate reporting date after the appeal is resolved.
At the federal level, the US Securities and Exchange Commission’s (SEC’s) March 2024 climate related disclosure rules remain stayed and have not taken effect. Following its March 2025 decision to stop defending the rules in litigation, the SEC proposed on May 29, 2026 to rescind the rules in their entirety, as described in the SEC’s “SEC Proposes Rescission of Climate-Related Disclosure Rules”. This leaves companies navigating a fragmented disclosure landscape shaped by state programs, sector expectations, market counterparties, and international regimes.
Other states are also moving faster on emissions disclosure than on broader climate-risk reporting. In New York, S9072A has advanced to the Assembly, while S3697A, the climate-related financial risk bill, remains in Senate Finance. California shows a similar split: SB 253 emissions reporting continues, while SB 261 climate-risk reporting is stayed pending appeal. Colorado’s HB25-1119 was also postponed indefinitely, underscoring that emissions reporting is becoming operational sooner while climate-risk mandates remain less settled.
Why climate‑risk quantification should not wait
Emissions data and climate‑risk analysis answer different questions. Emissions reporting explains a company’s GHG footprint. Climate‑risk quantification explains how physical risks, transition risks, and climate‑related opportunities could affect assets, operations, strategy, cash flows, financing, and resilience. Both are needed for decision‑useful disclosure.
The International Financial Reporting Standards (IFRS) S2 Climate‑related Disclosures frames climate‑related risks and opportunities as matters that could reasonably affect cash flows, access to finance, or cost of capital over the short, medium, or long term. That framing is important because climate risk is not only a compliance topic; it is an enterprise value and capital‑allocation topic.
Global regimes can also influence US companies. Multinationals may face disclosure expectations through the EU Corporate Sustainability Reporting Directive and other International Sustainability Standards Board (ISSB) aligned approaches. Even companies outside direct regulatory scope may receive climate‑risk questions from lenders, insurers, customers, and investors seeking comparable, forward‑looking information.
Roadmap for readiness
Organizations can build readiness by treating climate risk as part of enterprise risk management and financial planning—not as a last‑minute reporting exercise. Practical steps include:
- Confirm applicability and reporting timelines for SB 253, SB 261, and relevant state or international regimes.
- Strengthen Scope 1, 2, and 3 emissions data governance, controls, and documentation.
- Identify material physical and transition risks across assets, supply chains, products, markets, and operations.
- Use scenario analysis to test strategic resilience under plausible climate and policy pathways.
- Translate risk findings into financial implications, such as revenue exposure, operating cost changes, capital expenditure needs, asset impairment considerations, insurance availability, and financing impacts.
- Align governance, risk management, metrics, and targets with TCFD and IFRS S2 so outputs are disclosure‑ready.
In the near term, the US remains emissions‑first. However, market expectations are moving toward quantified, financially relevant climate‑risk disclosure.
How BSI Consulting can help
BSI Consulting helps companies prepare for California’s SB 253 and SB 261 with practical support for Scope 1–3 GHG reporting and climate‑risk quantification aligned to TCFD and IFRS S2. We strengthen ESG governance, data, controls, and documentation so disclosures can withstand regulator, lender, and insurer scrutiny.
Meet our experts
- Gouri Ganbavale, PhD, Senior Consultant, Climate Risk and Resilience Consulting, BSI
- Shanayia Munoz, ESG and Sustainability Reporting Consulting, BSI
- Desmond Zheng, MSSE, GHG Reporting and Carbon Reduction Strategies Consulting, BSI
