Authors: Matt Piotrowski

Climate Disclosure Regulations Advancements and Drawbacks Around the World

The global landscape of climate disclosure regulations continues to evolve rapidly, with significant developments occurring lately across multiple jurisdictions

Recent trends include both advancements and setbacks that will shape corporate transparency on climate disclosure and investor risk analysis in the coming years. In this ever-evolving landscape, Orbitas continues to keep the financial sector up to date on existing and emerging regulatory regimes and due diligence laws around the world. Changes in Q1 2025 reflected in our updated Climate-Related Financial Regulation Explorer stem mostly from updates to climate-related financial disclosure regulations, with some developments tied to supply chain due diligence laws. Read on to see a comprehensive overview of current updates.

Significant Q1 Climate Disclosure Regulation Developments

These developments highlight the ongoing tension between regulatory progress and resistance, making it crucial for companies to stay informed about the shifting landscape.

Recent Advancements

California: Mandatory Emissions Disclosure 

The California Legislature, in September 2024, rejected a proposal to delay the implementation of reporting requirements for their mandatory emissions disclosure laws, maintaining the original timeline for disclosures to begin in 2026. California’s laws mandate that large companies (those with over $1 billion in revenue) disclose their greenhouse gas emissions, including Scope 3 emissions. This legislation aims to increase corporate transparency and accountability regarding climate impacts. The disclosure laws, the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261), were signed into law on October 7, 2023.

Also in September 2024, Senate Bill 219 was signed into law, extending the deadline for the California Air Resources Board (CARB) to adopt implementing regulations for the Climate Corporate Data Accountability Act SB 253 and the Climate-Related Financial Risk Act SB 261 to July 1, 2025. This extension provides CARB with more time to develop necessary regulations, while keeping the reporting obligations for companies the same.

These developments show that California is moving forward with urgency on its climate-related disclosure laws, maintaining a firm timeline for implementation despite the pullback of similar federal initiatives in the United States.

Australia: Climate Reporting Legislation

Australia has continued to take significant strides toward aligning with international climate disclosure standards through the Treasury Laws Amendment Bill 2024, which mandates that large companies disclose their climate-related financial risks. This legislation, which requires large companies to report on climate-related financial risks starting in January 2025, positions Australia among the leaders in the global effort to enhance corporate transparency on climate issues.

The law mandates that large companies, including those with over $1 billion in revenue, disclose their climate-related financial risks and opportunities in line with international standards. By requiring businesses to report on their climate risks and opportunities, Australia is aiming to boost investor confidence and help mitigate the impacts of climate change. Opposition to mandatory disclosure argues that the burden from reporting will hurt small businesses and farmers.

Recent Backsliding

EU’s Corporate Sustainability Reporting Directive

The European Commission is expected to significantly dilute its corporate sustainability requirements. The EU’s Corporate Sustainability Reporting Directive (CSRD), aims to enhance corporate transparency on environmental, social, and governance (ESG) matters and went into effect in 2024, is undergoing revisions, with a proposal to ease reporting requirements for smaller companies and delay the implementation of sector-specific standards and due diligence rules.

The European Commission has proposed changes to the CSRD aimed at streamlining sustainability reporting requirements for businesses. A key aspect of the proposal includes increasing the reporting thresholds to include only companies with over 1,000 employees and a net turnover exceeding €450 million, up from the current thresholds of 250 employees and €40 million in turnover. This adjustment is intended to reduce the reporting burden on smaller companies.

Member states are divided, with some supporting the changes to reduce burdens, while others, like Germany and France, express concerns over weakening standards. Despite these challenges and uncertainties, the directive remains a key part of the EU’s sustainability agenda.

U.S. Securities and Exchange Commission (SEC) Rule

In the United States, the rollback of the SEC’s climate disclosure rule represents a significant setback for climate-related transparency. The Trump administration’s decision to halt mandating detailed corporate reporting on climate risks and emissions is a major shift for national policy.

The impact of the rollback may not be as severe as initially feared, since U.S.-based multinational companies will still be required to comply with climate disclosure regulations in other jurisdictions, such as the EU’s CSRD and California’s mandatory disclosure laws. These obligations would ensure that large U.S. corporations disclose climate-related information, even as the federal rule in the United States is dismantled.

Minimal Supply of Due Diligence Law Changes

Globally, supply chain due diligence laws have, for the most part, not shifted much in recent months, with one exception: the EU Deforestation Regulation (EUDR). Late last year, the EU decided to delay the EUDR’s implementation by one year to allow companies and authorities more time to prepare. The regulation will be mandatory on December 30, 2025 for large operators and traders, while smaller companies will not need to comply until June 30, 2026.

Beyond the EU, the following jurisdictions had shifts in their supply chain due diligence regulatory landscape that can be found within the Climate-Related Financial Regulation Explorer map:

• New York – The Tropical Rainforest Economic & Environmental Sustainability (TREES) Act passed the New York State Legislature but was vetoed by Governor Hochul in December 2024.
• Finland – Finland has initiated the national implementation process of complying with the EU’s Corporate Sustainability Due Diligence Directive by forming a working group to evaluate and prepare the necessary legislation for compliance. A monitoring group was appointed to oversee and support the working group’s activities.

What’s Next?

In recent months, the global landscape of climate-related disclosure rules has seen both progress and setbacks, with various jurisdictions pushing forward to enhance transparency while others reconsider or scale back their initiatives. California and Australia have led the way with strong, proactive measures that require large companies to disclose climate-related risks and emissions, positioning themselves as leaders in global climate accountability.

At the same time, the EU is facing setbacks with its CSRD and the U.S. climate disclosure rule may never see the light of day. Despite these drawbacks on climate disclosure, companies operating across international markets will need to comply with strict regulations throughout a number of jurisdictions, ensuring that the momentum for climate-related disclosures will continue to build globally.

Header Image: The Treasury Building, Parkes, Australian Capital Territory | Photo Attribution/Licensing