2025 is shaping up to be a defining year for sustainability regulations. Amid shifting global standards to emerging state-level regulations, companies and investors in the US are navigating new complexities. In our recent webinar, Caitlin Pentifallo, Head of Regulatory Strategy and Sustainability, and Teresa Yu, Metrics and Regulations Lead, provided a breakdown of the latest in the sustainability regulatory landscape, with a focus on the impact on US companies.
Here’s a look at what’s changing and how US companies can prepare for the road ahead.
Key Regulatory Updates
1. US states are leading on climate disclosures. This past March, the SEC announced it would no longer defend its climate-disclosure rule in court. While the SEC’s rule is unlikely to pass, a few states are introducing legislation targeted at increasing transparency into corporate climate disclosures. These states, California (SB 253), Colorado (HB25-1119), New Jersey (SB 4117), and New York (SB 3456), represent 31% of US GDP. California is currently the only state in the implementation phase—other states are still under legislative review, meaning there is still room for changes to scope, requirements, and implementation timelines.
2. Carbon disclosures are a common denominator. As US states develop legislation, a common thread among requirements is the need for companies to report on at least Scopes 1 and 2 emissions, with Scope 3 phased in down the line. Additionally, eligibility for climate disclosures in most states is for companies with revenues over $1 billion, and most are looking to require at least limited third-party assurance. It is worth noting that while there are similarities in scope and requirements, as they all closely resemble California’s Climate Disclosure Laws, the language of each bill differs slightly, making it important to understand the nuances of each state.
3. EU Omnibus changes are still in flux. The EU’s Omnibus I proposal, aimed at simplifying sustainability-related reporting in the EU, has created uncertainty for companies operating (or in the supply chains of companies) in the region. A “stop-the-clock” directive is currently in place for CSRD, CSDDD, and EU Taxonomy, delaying reporting deadlines (read more here). With an anticipated reduction in ESRS data points on the horizon, Caitlin and Teresa recommended that companies focus on quantitative metrics, such as carbon emissions, unadjusted gender pay gaps, and biodiversity-related areas, as well as ESRS E1 (Climate Change), S1 (Own Workforce), and G1 (Business Conduct), which are likely to remain.
4. Prepare for upcoming changes. With implementation of many regulations currently on pause, Teresa and Caitlin advised that companies view this period as “prep time, not downtime” to build a strong foundation and refine internally why sustainability metrics matter. Some tips included:
- Focus on materiality and build a carbon inventory using the TCFD framework, which serves as the foundation for proposed US state-level disclosures.
- Monitor relevant global regulations, such as the VSME and IFRS, which many countries are adopting.
- Align sustainability initiatives with long-term goals and prioritize “no-regret” actions such as improving operational efficiency, identifying carbon hotspots, and refining messaging around sustainability and long-term value creation.
Navigating Regulatory Complexity with Novata
To help companies find clarity in complexity, we recently launched the Novata Regulatory Navigator—a free tool that matches company details to global compliance requirements and provides information on regulations for which companies may be in scope. Additionally, the Novata platform and in-house experts can support companies and investors along the sustainability journey. Try the Regulatory Navigator for free, or reach out to learn more about how Novata can support you.
Related Resources
- Watch: Sustainability in 2025: Regulatory Outlook for US Companies
- Read: What Is the VSME? The EU’s Voluntary Reporting Standard Explained
- Act: Jumpstart your carbon inventory with a free trial of Novata’s Carbon Navigator
