Carbon Disclosure: The Cornerstone
of Effective Climate Strategy

By: Ignacio Fernandez

At a Crossroads

Climate policy is at an inflection point. Even as the UN Secretary General is calling for increased ambition in the lead up to COP30 in Belem, governments around the world are reevaluating their commitments and frameworks and some regulators are delaying deadlines or softening thresholds. Despite this shift, investor demands and international standards are growing stronger.

Carbon disclosure is the foundation for any meaningful climate action. Companies that prioritize clear, accurate climate data will be better positioned to lead in a low-carbon economy. Disclosure isn’t just a regulatory requirement – it is the key to long-term competitiveness and climate progress.

Practical Progress: Developing a Common Carbon Language

Key jurisdictions are expanding mandatory disclosure rules, and adding flexibility to help companies manage the requirements. For instance, for mid-sized firms the EU has delayed its Corporate Sustainability Reporting Directive (CSRD) requirements, and Switzerland has a similar pause until 2026. Singapore has pushed for SME-friendly regulations. Canada has postponed its own mandates to align with the changing U.S. landscape.

These changes bring clarity and consistency to climate goals. By gradually implementing requirements, adjusting standards based on company size, and streamlining data systems, regulators help firms develop reliable and right-sized reporting methods.

By standardizing and increasing accessibility of disclosure, it becomes the common carbon language for markets and policymakers.

Adapting to Change: The Importance of Action Amid Pullbacks

The changing policy landscape, from the SEC’s cautious stance in the U.S. to the EU’s temporary reduction in disclosure requirements, might prompt some companies to re-evaluate their reporting strategies. However, sustainability leaders recognize that market expectations continue to move forward:

• Global financial standards for carbon risks/impacts are progressing. ISSB’s IFRS S1 and S2 continue to evolve, supported by new e-learning tools and implementation guides.
• Investors and stakeholders stay committed to carbon goals and targets. Surveys indicate that companies are sticking to their disclosure plans despite regulatory delays, aware of the reputational and financial risks of falling behind.
• Innovation simplifies disclosure. Integrated platforms for Scope 3 accounting and voluntary SME standards increase access and lower compliance burdens.

For any organization, maintaining momentum provides a business advantage. Regulatory pullbacks may delay compliance dates, but they do not erase customer expectations, investor scrutiny, or supply chain requirements. Companies that remain transparent will be best positioned when regulations inevitably converge again.

California’s Leadership: Carbon Disclosure as a Catalyst for Climate Action

With California’s climate disclosure laws, SB 253 and SB 261, moving forward despite legal challenges, companies in the world’s fifth-largest economy need to start preparing for Scope 1 and 2 reporting by 2026, and Scope 3 by 2027.

Carbon reporting teams need to:

• Finalize emissions inventories and data pipelines.
• Integrate governance of climate risk into financial and strategic planning.
• Engage with assurance providers early to streamline future verification.

History shows that California’s model will likely influence other states, provinces, and international markets to adopt similar practices. Without clear US federal government policies, California’s new laws are significant to businesses not only for compliance reasons but also for strategic planning.

Under current conditions, companies will need to comply with jurisdictional requirements and meet global ISSB standards to be compliant and have credibility with capital markets.

Building on Disclosure: California’s Cap-and-Invest Extension as a Model for Action

If disclosure is the foundation, California’s new cap-and-invest program extension, AB 1207, shows what can be achieved when that foundation is strong.

This law will extend the program to 2045 and explicitly tie it to California’s climate goals, providing a strong price signal for decarbonization. It tightens offset rules to preserve integrity, revises free permit allocations to prevent carbon leakage, and improves affordability through increased electricity credits.

These mechanisms, expected to influence markets for years, rely on credible emissions data. Cap-and-invest relies on transparent disclosures to monitor progress, enforce caps, and develop fair relief measures.

Leading the Charge: How Our Community Can Elevate Climate Disclosure

Members of The Climate Registry’s (TCR) Carbon Footprint Registry understand that disclosure goes beyond compliance; it is the backbone of all climate strategies. From regulatory flexibility in Europe to California’s ambitious mandates, the consistent message is that strong disclosure systems build the trust and certainty necessary for more extensive climate actions.

Our community has a special chance to lead. By enhancing disclosure practices now, we prepare for future policies, protect market trust, and help transformative tools like AB 1207 succeed.

The choice is between waiting for clarity and creating it. TCR and its community are well placed to show that disclosure is not only a duty but also a strong force for innovation, investment, and resilience.

Ultimately, every credible climate solution starts with transparent disclosure.

Disclosure enables action. Without it, measuring reductions, assigning costs, or building market confidence becomes impossible.

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