Sustainability accounting & reporting webcast

Sustainability Reporting's Regulatory Reckoning

Sustainability accounting and reporting has shifted from optional corporate virtue-signaling to a compliance obligation with hard deadlines and tangible costs. In early 2025, the EU enacted major simplifications to its Corporate Sustainability Reporting Directive via the Omnibus package, delaying waves of reporting by two years and narrowing scope to larger entities, easing immediate pressure but signaling that detailed environmental, social, and governance disclosures are here to stay.

Across the Atlantic, the SEC's 2024 climate disclosure rule—once poised to standardize US public company reporting on emissions and risks—has been effectively sidelined, with the agency ceasing defense in litigation and no revival likely. This federal retreat contrasts sharply with state-level action: California's SB 253 requires businesses with over $1 billion revenue doing business in the state to disclose Scope 1 and 2 GHG emissions starting in 2026, with Scope 3 following in 2027, while SB 261 mandates biennial climate risk reports. Non-compliance risks fines and reputational damage, and legal challenges have only partially enjoined enforcement.

Internationally, the ISSB's IFRS S1 and S2 standards are gaining traction as a global reference point. By early 2026, more than 20 jurisdictions have adopted or mandated them on a voluntary or required basis, with phased rollouts hitting in places like Australia (mandatory climate disclosures for large entities from 2025 onward) and Brazil (required from 2026 for certain entities). This creates pressure on multinationals to align reporting, even absent uniform rules.

The stakes are concrete: companies face mounting assurance costs as limited or reasonable assurance becomes normalized, supply-chain scrutiny intensifies under mechanisms like the EU's CBAM entering full financial phase in 2026, and fragmented regimes raise the risk of double-reporting or gaps that erode investor confidence. Non-obvious tensions include the trade-off between streamlined EU rules reducing burden yet potentially weakening comparability, and the US state-federal divide forcing companies to prioritize regional compliance over a coherent national strategy. Inaction risks exclusion from markets, higher capital costs, or regulatory penalties as sustainability data increasingly influences lending, insurance, and procurement decisions.