Businesses in every corner of the world face increasing scrutiny of their sustainability practices and performances with pressure coming from customers, investors, communities, and other stakeholders. For many years, sustainability disclosures have followed voluntary standards and frameworks and strongly recommended by powerful stakeholders but not mandated by regulatory authorities with threats of fines and other penalties.
While rigorous regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) exist today, global regulations are poised to occupy even more of business managers’ time in 2025. This guide will provide overviews and updates to some of the most impactful and highly anticipated regulations for the upcoming year.
CSRD
We saw the first cohort of companies required to disclose according to the Corporate Sustainability Reporting Directive (CSRD) in 2024; the approximately 11,700 that were previously covered under the Non-Financial Reporting Directive (NFRD). In 2025, EU-based firms that meet two of the following three criteria: have turnover exceeding €50 million, a balance sheet total of more than €25 million, or more than 250 employees averaged over the year.
While CSRD reporting demands were a major leap from NFRD, those companies at least had experience and a foundation for the reporting. This new cohort of impacted companies will likely have a steeper learning curve.
SEC and the United States
The Securities and Exchange Commission (SEC) in the United States passed its climate disclosure rule on March 6, 2024, two years after the initial proposal. This rule requires SEC-registered domestic or foreign companies to disclose material climate-related financial risks, related processes and oversight, and greenhouse gas (GHG) Scope 1 and Scope 2 emissions for most large accelerate filers and accelerated filers.
Legal challenges have mired the rule, however, putting it in limbo more or less since its announcement. With the new presidential administration of Donald Trump entering the executive branch in 2025, the SEC climate disclosure rule has little chance of becoming a mandate.
This doesn’t mean companies operating in the US are in the clear when it comes to sustainability reporting. In fact, the lack of a nation-wide requirement has spurred patchwork regional requirements that can cause worse compliance headaches. Most notably, California has enacted climate disclosure laws for reporting in 2026 based on fiscal year 2025 data (more on this later).
Additionally, a handful of states maintain cap-and-trade programs aimed to minimize GHG emissions across states and regions. These programs tend to focus on the energy sector such as the Regional Greenhouse Gas Initiative (RGGI) that includes states in New England and the Mid-Atlantic regions. Washington state and California have programs that impact their broader economies, and Oregon and Colorado are in phases of exploring and implementing programs too.
California SB 219
California is set to introduce new regulations in 2026, with the California Air Resources Board (CARB) providing final guidance by July 1. Senate Bill 19 essentially consolidates SB 253 and SB 261, which laid out requirements for public and private companies doing business in California with over $1 billion in annual revenue to publicly disclose GHG Scope 1 and Scope 2 emissions (and Scope 3 in 2027) and those with over $500 million in annual revenue to provide biennial reports that disclose climate change-related financial risks and plans to mitigate them, respectively.
With an economy estimated at $3.9 trillion GDP, these climate disclosure rules become de facto laws of the land for the United States. While the thresholds for direct disclosure are reasonably high, the downstream impacts on small businesses – primarily as it relates to Scope 3 emissions along the supply chain – are expected to cause significant burdens.
IFRS Expanding Across the Globe
The International Financial Reporting Standards (IFRS) Foundation has a presence around the world through its accounting standards used by 132 international jurisdictions. This authority made non-financial disclosures a natural expansion for the organization.
Through its subsidiary the International Sustainability Standards Board (ISSB), IFRS issued S1 and S2 in June 2023 for general sustainability-related financial risk disclosures and industry-specific disclosures, respectively.
Countries around the world have begun taking steps to turn these voluntary reporting standards into law; some like Australia and Singapore going into effect in 2025. As of this publishing, the United Kingdom, Canada, and Japan are in late stages of drafting and receiving public consultation on their final standard requirements.
Many IFRS S1 and S2 adoptions by regulators have slight alterations that make them more relevant to their governing jurisdictions. Companies that may need to comply should look to the regulating bodies, specifically, rather than assume uniformity with ISSB.
Greenwashing Crackdowns
Governments around the world have attempted to curb false environmental claims for decades as exemplified by the Federal Trade Commission’s (FTC) Green Guides originally published in 1992. Around the world, businesses and regulators have evolved their approached based on consumer preference trends and urgency of combating global warming.
The EU released a new anti-greenwashing directive in 2024 that demands substantiation of environmental claims companies make about their businesses and products. Greenwashing is not just for consumer goods and services, it also extends to investment finance products such as with the UK’s latest anti-greenwashing guidance from 2024.
While the US is commonly seen today as lagging behind other countries when it comes to sustainability regulations, its agencies are responsible for some of the largest penalties ever levied for environmental misrepresentation.
It is safe to assume most countries have some law that addresses greenwashing whether the practice is specifically mentioned or covered under consumer protections or false corporate claims. The most effective way for organizations to avoid the fines, reputational risks, and legal entanglements greenwashing causes is to track and report their environmental and social impacts and risks.
How Businesses Should Best Prepare
If your company is directly impacted by any of these regulatory changes, good news – you know what you will need to report and can assess your organization’s preparedness according to public guidance. Businesses that do not currently meet criteria for sustainability disclosure regulations should not take this news as a free pass to ignore the rising demand of non-financial disclosures. Customers and investors will continue to drive transparency as part of their own compliance demands and strategies.
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Stay ahead of the curve and ensure your business is prepared for the changing global sustainability regulations in 2025.