Navigating State Sustainability Reporting

As sustainability laws in the US continue to evolve, state governments are implementing new climate-related reporting requirements that impact businesses across all industries. These laws are based on California’s framework, requiring companies to disclose greenhouse gas emissions and, in some cases, climate-related financial risks. Businesses must be prepared to comply with these emerging state regulations to mitigate legal and reputational risks.

California’s Climate and Sustainability Reporting Mandates 

Among the most influential state-level laws, California’s climate reporting requirements (SB 219) finalized in 2024 are set to redefine corporate sustainability obligations. Large companies doing business in California must report on their emissions and climate risks from 2026 onwards. 

Who is Affected? 

• Companies with $500 million+ in revenue must begin reporting climate-related financial risks every two years.

• Companies with $1 billion+ in revenue must disclose Scope 1, 2, and 3 emissions with third-party verification.

Key Reporting Milestones

2026:

• Biennial climate risk reporting in accordance with the Taskforce on Climate-Related Financial Disclosures (TCFD) or International Sustainability Standards Board (ISSB) standards.

• Scope 1 and 2 emissions reporting with limited assurance.

2027:

• Scope 3 emissions disclosure starts.

2030:

• Companies must provide reasonable assurance for Scope 1 and 2 and limited assurance for Scope 3.

The California Air Resources Board (CARB) will finalize the specifics in July 2025, ensuring businesses have time to align their sustainability strategies with these new legal obligations. With more states likely to follow California’s lead, companies should act now to establish comprehensive compliance programs.

 New York’s Climate Reporting Proposals

New York has introduced two pieces of climate-related reporting legislation aimed at increasing corporate transparency around emissions and financial risks:

• Senate Bill 3456 requires companies to report greenhouse gas emissions.

• Senate Bill S3697 mandates climate risk disclosures.

While these proposals are still in early discussions, they are expected to pass.

Who is Affected? 

• From 2028, companies with revenue of $500 million or more will be required to report climate-related financial risks every two years.

• From 2027, companies with $1 billion or more in revenue must begin reporting Scope 1, 2, and 3 emissions.

Key Reporting Milestones 

• 2027: Scope 1 and 2 emissions reporting begins, with limited third-party assurance required.

• 2028: Companies must begin submitting climate risk disclosures.

• 2031: Reasonable assurance for Scope 1 and 2 emissions, and limited assurance for Scope 3, will be required.

Washington’s Climate Reporting Requirements 

Washington’s Senate Bill 6092 introduces a reporting mandate for greenhouse gas emissions but does not include a requirement for climate risk disclosures. This bill has been progressing through the state legislature since 2023.

Who is Affected? 

• Companies with $1 billion or more in revenue that operate in Washington.

Key Reporting Milestones 

• 2026: Companies must begin reporting Scope 1 and 2 emissions.

• 2027: Scope 3 emissions reporting begins.

Colorado’s Climate Disclosure Law 

Colorado introduced House Bill 25-1119 in 2025, aligning closely with California’s reporting framework but allowing for a more gradual transition for Scope 3 emissions (which is broken down into categories). The bill is currently under review by the state’s energy and environment department.

Who is Affected? 

• Companies with $1 billion or more in revenue that do business in Colorado.

Key Reporting Milestones 

• 2028: Third-party verified Scope 1 and 2 emissions reporting begins.

• 2029: Scope 3 reporting starts, covering purchased goods and services, capital goods, and the use of sold products.

• 2030: Additional Scope 3 categories, including fuel and energy activities, waste, and product processing, must be disclosed.

• 2031: Scope 3 reporting expands to transportation, employee commuting, leased assets, and other remaining categories.

With Illinois and New Jersey introducing comparable regulations, the push toward mandatory climate disclosures in the U.S. are becoming unavoidable.

Navigating Sustainability Laws in the US: Steps for Climate Reporting Compliance 

As these climate reporting rules come ever closer, companies must take a structured approach to compliance. While individual states are advancing their own mandates, the landscape is far from complex. All regulations are similar. This means that preparing for any of these rules will help organizations avoid non-compliance-related legal and reputational risks.

Compliance Strategies for Businesses 

• Evaluate Your Reporting Obligations: Businesses should assess whether they are directly subject to state-level climate reporting laws. Even if they are not, they may need to supply data to customers who must comply.

• Start with Foundational Emissions Data: Since state rules require companies to report Scope 1 and 2 emissions first, they should focus on establishing reliable data collection and verification processes for those emissions first. 

• Use Established Sustainability Standards: To align with emerging requirements, businesses should structure their reports according to widely accepted frameworks such as the TCFD and ISSB, which serve as the basis for most state regulations climate risk reporting.

• Engage Suppliers for Scope 3 Compliance: Because Scope 3 emissions reporting typically follows a year after initial requirements, companies should begin engaging with their supply chains to ensure they can access the necessary data.

• Plan for Assurance and External Audits: Many states are requiring companies to obtain independent verification of their climate disclosures. Working with third-party auditors early will streamline the assurance process and help businesses identify compliance gaps.