What are the emissions reporting requirements for businesses in the US?

What are the emissions reporting requirements for businesses in the US?

In March 2024, the long-anticipated Climate-Related Disclosure Rules from the US Securities and Exchange Commission (SEC) were finally released. Initially proposed in March 2022 and expected to be finalised in 2023 alongside major global frameworks like ISSB and CSRD, the rules faced significant pushback, leading to multiple revisions. The 2024 version reflects a scaled-back approach compared to international counterparts, with the most notable change being that companies are only required to disclose greenhouse gas (GHG) emissions if deemed material. Despite this compromise, the rules continue to face opposition, and their implementation is currently paused. 

Learn more on what the SEC Climate Rules require for GHG emissions here in A summary: SEC Climate Rules

While federal regulations remain in limbo, individual US states are taking matters into their own hands by enacting their own climate reporting legislation. These state-level mandates are driving new requirements for greenhouse gas (GHG) emissions disclosure and increasing corporate accountability. As of September 11, 2024, five states have either passed or are actively considering climate disclosure legislation, signalling the shift towards mandatory climate reporting in the US and the need for businesses to be carbon accounting. See our short summary below.

1. California - SB 253

• Summary: Requires annual disclosure of Scope 1, 2, and 3 emissions for public and private entities doing business in California with revenues over $1 billion. Reporting for Scopes 1 and 2 starts in 2026 using FY25 data, and Scope 3 starts in 2027 using FY26 data. 
• Status: Adopted as law in Fall 2023. 
• Source: SB 253 Legislation
• Other notes: There are two other significant bills as part of California's Climate Accountability Package. SB 261 requires bi-annual disclosure of climate risks and mitigation steps for public and private entities with revenues over $500 million, AB 1305 requires businesses involved in carbon offsets in California to disclose details about the offset projects, including accountability measures, and to report claims about net zero emissions. The proposed SB 219, an amendment bill to SB 253 and SB 261, is pending until the end of September - reporting deadlines are unchanged but grants the California Air Resources Board a six-month extension to issue guiding regulations, moving the deadline from January 1, 2025, to July 1, 2025.
• The Update: Senate Bill 219 (SB 219) has passed the Assembly and Senate, and was signed into law by Governor Newson on the 27th of September. Learn more here.

2. New York - S897A

• Summary: Requires large entities in New York with over $1 billion in revenue to disclose Scope 1, 2, and 3 emissions annually.
• Status: The bill is pending final approval and is expected to be enacted by the end of 2024.
• Source: S897A Legislation
• Other notes: The other bill in progress, S5437 will require public and private entities doing business in New York with revenues over $500M to annually prepare a climate-related financial risk report for submission to the secretary of state and to make such report available to the public

3. Washington - SB 6092

• Summary: Requires large entities in Washington with over $1 billion in revenue to disclose Scope 1, 2, and 3 emissions annually starting in 2026 and 2027, respectively.
• Status: The bill is in the Senate for a third reading.
• Source: SB 6092 Legislation

4. Illinois - HB 4268

• Summary: Requires large entities in Illinois with over $1 billion in revenue to disclose Scope 1, 2, and 3 emissions annually starting in 2025, with Scope 3 allowed to be submitted no later than 180 days after submission date.
• Status: Currently under review, update expected in November 2024.
• Source: HB 4268 Legislation

5. Minnesota - SF 2744

• Summary: Requires banks and credit unions with over $1 billion in assets to submit an annual climate risk survey to the Department of Revenue.
• Status: Adopted, with reporting starting in July 2024.
• Source: SF 2744 Legislation

Curious about how other jurisdictions around the world are shaping the future of sustainability reporting? 

As the US and individual states refine their climate disclosure rules, many other countries are setting their own ambitious requirements. From Europe’s comprehensive Corporate Sustainability Reporting Directive (CSRD) to New Zealand’s world first mandatory climate related disclosures, the global landscape is rapidly evolving. 

In our next article, An overview on the sustainability reporting landscape, we’ll explore the international frameworks that are leading the charge, the latest mandates from key markets, and how these regulations are converging toward global standardisation. Dive into the details to understand what companies worldwide need to prepare for next.

Will these state level and international requirements impact my business?

Even if your business isn't directly captured by state-level or international climate reporting regulations, the ripple effect through supply chains will likely impact you. Many large companies that are subject to these regulations are increasingly requiring their suppliers to provide emissions data and climate-related disclosures to meet their own reporting obligations. As a result, businesses of all sizes are feeling the pressure to track and report on their greenhouse gas emissions, sustainability practices, and climate risks, even if they aren't directly mandated by law.

For example, a large corporation in California or New York required to disclose Scope 3 emissions will need detailed data from its entire supply chain, pushing for suppliers to provide accurate emissions data. This trend is creating an environment where climate transparency is not just about compliance but also about maintaining business relationships and securing contracts. As supply chain pressures mount, businesses that proactively manage their emissions reporting will have a competitive advantage, ensuring they remain preferred partners in an increasingly regulated market.

Amazon and Lego have made it clear they will be requiring emissions data from their suppliers, because without it, they’ll never be able to reduce their carbon footprint and progress towards Net Zero. 

"We will prioritize our business toward those who provide their plans and results on their path to net-zero carbon emissions.”

Source: Amazon 2023 Sustainability Report, page 13

At Sumday, we know there’s a lot to learn in this evolving ecosystem, we take an education first approach and are here to help you accelerate your learning and get upskilled! We have courses designed to take you through what’s required to measure your business’ GHG emissions. Book a chat here to discuss how you can prepare or jump straight into Sumday Academy with a free trial here.