A new regulatory climate (pun very much intended) is here – the dial is being turned up on mandatory climate disclosure for businesses.
Already large companies are legally required to submit sustainability reports in several countries across the world.
And it won’t be long before it’s mandatory for all businesses, of all sizes, in all sectors, in all countries to report on the environmental impact of their business, their plans for addressing it, and the climate risks and opportunities facing them.
There are currently many different regulations and rules for companies in different countries and sectors, and new legislation is happening all the time.
It can be hard to keep up.
So, to make climate disclosure easier, we’ve made this guide which gives a short summary of the most common regulations that will impact your business – and links to learn more.
So far, this article covers:
We’ll keep this article updated with the latest climate disclosure legislation across the world – so make sure you bookmark it to find it easily later, and sign up to our newsletter to be the first to know when updates arise.
Various independent bodies are developing guidance and requirements to guide companies on best-practice sustainability reporting – what should be included, in what detail, in what format, and so on.
Currently the two major standards to be aware of are:
The guidance and requirements being developed to govern what companies should include in their sustainability reporting, including the TCFD and ISSB.
The EU is working on the European Green Deal, a a set of proposals which aim to align the EU’s policies with the need to reduce greenhouse gas emissions by at least 55% by 2030 (against 1990 levels). To do this, they’re making a lot of updates and new legislation.
The main piece of legislation to be aware of in the US is the SEC climate disclosure proposal. It’s currently a proposed update, and is expected to be released as a final piece of legislation in April 2023.
The draft rule makes it mandatory for all public companies (i.e. publicly-listed companies registered with the SEC) to report annually on the carbon emissions from company activities across scopes 1,2, and 3 as well as their climate action plans and performance towards those plans. It’s expected to come into force in a phased way, first large companies who will be required to submit their first report in 2024, based on data for 2023.
The main piece of legislation to be aware of in the UK are the proposed Sustainability Disclosure Requirements.
As it stands in the UK there are a few different pieces currently in place which causes confusion, so the SDRs are designed set to replace existing regulations on climate disclosure, including:
The Sustainability Disclosure Requirements aim to unify corporate sustainability reporting into one set of comprehensive rules on climate disclosure.
They’re still under development, but we do know that the recommendations of the Taskforce on Climate-related Financial Disclosures (outlined above) are being used as the basis of the SDRs – so it’s worth getting your head around these as a first step.
Regulations are also coming into force which are specific to different industries, and the supply chain is facing particular scrutiny due to its carbon intensity and its role in the scope 3 emissions of many other businesses.
For ship owners, two new International Maritime Organization (IMO) measures came into force on 1 January 2023: