The world of sustainability in the U.S. is rapidly evolving, driven by changes in sustainability regulations, shifting industry standards, and increasing stakeholder expectations. In a recent webinar, Isha Varma, Product Marketing Manager at Cority, and Alex Hardwick, Director of Sustainability Planning & Enablement at Cority, shared their insights on the current regulatory landscape in the U.S., emerging trends, and how businesses can prepare for the future. Here’s a breakdown of the key takeaways from their discussion.
The Current Regulatory Landscape
At the state level, California is leading the way with sustainability regulations including the Climate Corporate Data Accountability Act (SB-253) and the Climate-Related Financial Risk Act (SB-261). These require large companies to report on Scopes 1-3 greenhouse gas (GHG) emissions and climate-related financial risks. New York is following close behind with introducing their own climate-related disclosure bills and other states like Washington, Colorado, and Minnesota are expected to follow suit.
On the national level, the U.S. Securities and Exchange Commission (SEC) had introduced climate-related disclosure rules for public companies, requiring them to report Scope 1 and 2 emissions if they materially impact financial performance.
Internationally, the EU’s Corporate Sustainability Reporting Directive (CSRD) is mandating detailed reporting on sustainability metrics, including double materiality and supply chain emissions.
Meanwhile, the Sustainable Finance Disclosure Regulation (SFDR) is pushing financial markets toward greater transparency and sustainable investments.
What’s changing in the sustainability landscape?
The U.S. has withdrawn from the Paris Agreement, stepping back from global efforts to reduce GHG emissions. This move mirrors a similar withdrawal in 2017. At the same time, changes at the Environmental Protection Agency (EPA), including a new administrator, are expected to shift the agency’s priorities and strategies. Federal rollbacks on Diversity, Equity, and Inclusion (DEI) mandates have also reduced requirements for measuring the “S” in ESG, impacting inclusion laws and reporting expectations.
On the investment side, there will be divergence across the landscape. U.S. investors may scale back sustainability disclosure requirements, while international investors may align with their U.S. peers or adhere to local trends.
Predictions for 2025 and Beyond
The Evolving Landscape of Reporting
The EU’s revised CSRD is a game-changer. While the original CSRD introduced around 1,200 potential disclosure points, the updated rules aim to streamline reporting by narrowing the scope to large companies with over 1,000 employees and simplifying standards. Companies subject to the rules must still conduct a materiality assessment to determine what data they need to report.
While the full impact won’t be felt until after implementation for directly affected businesses, the indirect effects are already here. Companies with customers in the EU are being asked for more detailed information, such as granular Scope 3 emissions data and reports on climate impacts, risks, and opportunities. However, the proposed amendments introduce safeguards, such as a voluntary reporting standard for SMEs and limits on value-chain requests, to reduce unnecessary burdens on smaller suppliers.
What’s more, new reporting categories are emerging. Biodiversity impacts, for example, are now a key focus within the CSRD. This is a topic many companies have never considered before. Social and Governance metrics are also becoming more detailed, adding another layer of complexity.
Uncertainties on the Horizon
Two key uncertainties stand out. The first one is the Omnibus Simplification Package. The EU is working to streamline overlapping sustainability reporting frameworks, such as the CSRD and CSDDD (Corporate Sustainability Due Diligence Directive). The goal is to reduce administrative burdens without scaling back sustainability ambitions, but the outcome remains unclear.
Learn more about the CSRD Omnibus Proposal: Market Reactions, Insights & What’s Next in our webinar.
The second one has to do with the potential legal challenges. As these regulations become mandatory, non-EU countries may push back to protect their interests. For example, the CSDDD, which focuses on supply chain due diligence, has already been flagged as a concern for U.S. industries.
The Role of Renewable Projects
While renewable energy adoption is growing, there’s a potential clash on the horizon. New policies aimed at increasing fossil fuel extraction could conflict with state-level goals to achieve 100% clean energy by 2050. For example, 24 U.S. states and territories have set ambitious clean energy targets, but the push for energy independence in some regions may slow progress.
How Companies Can Prepare
First and foremost, investing in a robust data collection and management strategy is critical. With increasing global divergence in reporting requirements, companies should aim to gather data once and report it many times to streamline efforts. Even if not directly affected by international regulations, companies may face demands for more granular data from customers and other stakeholders. Preparing for these requests is essential.
Leveraging technology is another key step. Sustainability reporting solutions can help companies collect, track, and report data efficiently, ensuring compliance and identifying areas of risk and opportunity.
Finally, aligning sustainability efforts with corporate goals is crucial. Reframing these efforts in terms of risk mitigation, cost savings, and efficiency can help secure internal buy-in and budget.
The Role of Technology
Technology is critical for managing sustainability efforts. Centralized platforms can streamline data collection and reporting, enabling companies to “gather once, report many.” This approach ensures accurate, efficient responses to multiple reporting requests like supplier questionnaires with unique requirements.
These platforms also help align data with international frameworks like the CSRD and ISSB, meeting customer expectations and ensuring consistency across reports. Beyond compliance, technology tracks progress, showcasing achievements like emission reductions or energy efficiency improvements.
As regulations move toward reasonable assurance (verifying 80%+ of data), centralized systems ensure traceability and meet auditing standards like ISSA 5000. Additionally, SOC 2-certified systems protect sensitive data, mitigate risks, and ensure compliance with data protection standards.
At Cority, our tailored sustainability software and advisory services assist our customers to effectively navigate the ever-changing sustainability landscape with confidence and ease. Contact us to explore how our solutions and advisory services can support you on your sustainability strategies.
