Climate Disclosure Is Evolving:
From Compliance to Strategic Advantage

By: Ignacio Fernandez

 

As climate risks intensify and reporting requirements multiply, 2025 is shaping up to be a pivotal year for carbon disclosure. From California’s landmark climate bills to emerging global standards, the shift from fragmented mandates to an interconnected framework is already underway.

At the center of this shift is a growing recognition that carbon disclosure is no longer just a compliance exercise — it’s a strategic asset. Organizations that lead on transparency, data quality, and accountability are increasingly better positioned to manage risk, gain stakeholder trust, and align with both market and policy expectations.

California: Advancing the Water-Energy Nexus

California continues to lead the charge with forward-looking legislation. Senate Bill 654, in particular, highlights the interconnected relationship between water use and energy consumption. It requires disclosure of water-related GHG emissions from water and wastewater agencies, marking a critical expansion of emissions tracking and reinforcing the state’s push toward integrated resource management.

Meanwhile, the implementation of the Climate Corporate Data Accountability Act (SB 253 and SB 261) continues to evolve. These laws require large businesses to publicly report Scope 1, 2, and material Scope 3 emissions, although important details of implementation are still being developed. On May 29, CARB held a virtual workshop to share initial rulemaking progress under SB 219, which amends SB 253 and 261, and to gather feedback from stakeholders. Final guidance is anticipated by the end of 2025.

North America: A Tale of Contrasts

While California moves forward, the U.S. federal approach remains uncertain. The SEC’s climate disclosure rule is now in legal limbo, and Canadian regulators recently paused their own efforts, citing the need to reassess in light of U.S. developments.

Despite the federal slowdown, state-level proposals are gaining ground. New York (SB 3456, SB 3697), Illinois (HB 3673), and New Jersey (SB 4117) have introduced legislation mirroring California’s scope and ambition, creating a growing mosaic of state-driven requirements. For organizations operating in multiple states, this underscores the need for early investment in standardized data systems and audit-ready inventories to navigate overlapping rules.

Globally: Momentum and Maturation

Internationally, climate policy continues to mature. The EU recently revised its Corporate Sustainability Reporting Directive (CSRD), delaying key compliance deadlines while still pressing ahead on binding ESG disclosure standards. Meanwhile, the IFRS Foundation issued new guidance on emissions reporting under IFRS S2, reinforcing the role of the GHG Protocol but clarifying IFRS’s precedence where overlaps occur.

On the financial side, the Basel Committee on Banking Supervision (BCBS) released a voluntary climate risk disclosure framework for banks — a sign of growing global alignment, even amid varied national approaches. And in Singapore, the rollout of a national ESG training framework highlights how countries are investing in the infrastructure needed to support high-quality, credible disclosures.

From Compliance to Capacity: Strategic Disclosure Emerges

Across jurisdictions, two major trends are emerging:

  1. Regulatory fragmentation is driving flexible, adaptive strategies. Organizations must prepare to navigate a mix of voluntary and binding rules, building internal systems that can flex to different requirements without sacrificing integrity.
  2. Disclosure is becoming a competitive differentiator. Companies that prioritize Scope 3 transparency, invest in ESG data tools, and align with evolving frameworks like IFRS S2 are positioned to turn risk into resilience — and reporting into real-world impact.

At The Climate Registry’s June webinar, industry leaders highlighted the importance of staying ahead of the curve. It’s not merely about reacting to regulations, but also about actively shaping them.

Missed the live discussion? You can watch the full webinar on YouTube here.
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