CSR Reporting Standards and Regulatory Compliance

UPDATE- 6/13/25 The New York legislative session has ended and the climate bills did not pass. They will have to be reintroduced in a future session (as was the case with the California laws). New York is poised to join California in adopting climate disclosure laws. New York has reintroduced two major climate disclosure bills in 2025: Senate Bill 3456 (the Climate Corporate Data Accountability Act) and Senate Bill 3697 (the Climate-Related Financial Risk Reporting Bill). The bills closely follow California's laws SB 253 and SB 261. Climate Corporate Data Accountability Act (CCDAA) - Scope and Applicability: Requires public and private companies with annual revenues exceeding $1 billion and operating in New York to annually disclose their Scopes 1, 2, and 3 greenhouse gas emissions. Reporting Standards: Disclosures must align with the Greenhouse Gas Protocol. Assurance: Emissions data must be verified by independent third parties, with phased assurance requirements increasing over time. Timeline: 2027: Disclosure of Scope 1 and 2 emissions (using 2026 data). 2028: Scope 3 emissions (using 2027 data). The New York Department of Environmental Conservation will oversee implementation. Penalties for non-compliance up to $100,000 per day, capped at $500,000 per reporting year. Legislative Status: The bill passed the Senate Environmental Conservation Committee unanimously and is now pending in the Senate Finance Committee. A companion bill (A4282) is moving through the Assembly. Climate-Related Financial Risk Reporting Bill - Scope:  Applies to business entities formed under U.S. law with annual revenues over $500 million that do business in New York. Requirements:  Reporting companies must publish biennial reports on climate-related financial risks, following the Task Force on Climate-related Financial Disclosures framework or an equivalent standard such as the ISSB standards. Enforcement:  Penalties for non-disclosure or inadequate disclosure of up to $50,000 per reporting year. Implementation Timeline:  First reports would be due by January 1, 2028, and biennially thereafter. Legislative Status: Passed unanimously out of the Environmental Conservation Committee in May and was reported and committed to the Senate Finance Committee. #NewYork #Climatereporting #GHGEmissions

A number of our clients are trying to get their arms around the Corporate Sustainability Due Diligence Directive (CSDDD). Here are some key things to know about it: * Objective: This significant piece of EU legislation aims to ensure that companies operating within the EU market integrate human rights and environmental considerations into their operations and supply chains. * Scope: The CSDDD applies to large EU companies and non-EU companies with significant operations in the EU. Specifically, companies with more than 1000 employees and a net turnover of over €450 million globally. * Due Diligence Requirements: Companies must identify, prevent, mitigate, and account for adverse human rights and environmental impacts in their own operations, their subsidiaries, and their value chains. This includes conducting due diligence on suppliers and subcontractors. * Corporate Responsibility: The directive introduces corporate liability for harms caused by their failure to conduct proper due diligence. Companies can be held accountable for human rights abuses and environmental damages linked to their operations. * Transparency and Reporting: The CSDDD mandates regular public reporting on due diligence processes and outcomes. Companies must disclose information on their policies, procedures, and measures taken to address identified risks. * Governance and Oversight: Companies must implement appropriate governance structures to oversee due diligence processes. This includes designating specific individuals or bodies responsible for ensuring compliance with the directive. * Remediation: The directive requires companies to provide or cooperate in providing remedy for harm caused by their activities. This may involve compensating victims or taking corrective actions. * Enforcement and Penalties: National authorities in EU member states are responsible for enforcing the directive. Non-compliance can result in significant penalties, including fines and other sanctions. * Alignment with International Standards: The CSDDD aligns with international frameworks such as the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises, promoting global standards for responsible business conduct.

𝗘𝗦𝗚𝗶𝗻𝗧𝗵𝗿𝗲𝗲: 𝗖𝗔 𝗦𝗕 𝟮𝟱𝟯: 𝗔 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀 𝗥𝗼𝗮𝗱𝗺𝗮𝗽 (https://lnkd.in/gbxNrA9e) Preparing for multiple and differing sustainability regulations is complex and requires thoughtful planning and strategic investment in governance, resources, and infrastructure. Catherine Atkin and the team at Carbon Accountable recently published a Regulations Roadmap “to demonstrate the feasibility of adopting regulations and implementing SB 253 expeditiously, in line with the statutory mandate established in the law, which provides for first reporting by companies in 2026.” The roadmap highlights some key points related to efficiency, indicating that “[SB253] was purposefully structured to minimize the burden on the California Air Resources Board (CARB) to develop regulations and support ongoing implementation of the Act, ensure streamlined reporting by companies, and provide access to readily available GHG emissions data for stakeholders.” 1. 𝙍𝙚𝙥𝙤𝙧𝙩𝙞𝙣𝙜 𝙨𝙩𝙖𝙣𝙙𝙖𝙧𝙙𝙨: The GHG Protocol standards and guidance are included as the accounting and reporting standard to be used by all companies subject to SB 253. The GHG Protocol is the internationally recognized standard for GHG emissions reporting and the cornerstone of all mandatory and voluntary corporate reporting frameworks worldwide. Following the GHG Protocol can help reduce compliance burdens, while promoting global alignment of reporting standards. 2. 𝙍𝙚𝙥𝙤𝙧𝙩𝙞𝙣𝙜 𝙨𝙪𝙗𝙢𝙞𝙨𝙨𝙞𝙤𝙣: SB253 includes a clear focus on minimizing duplication of effort by reporting companies including allowing reporting companies to submit required GHG emissions information in multiple formats. Reporting entities may submit reports prepared for any purpose, including to comply with other national and international mandatory or voluntary disclosure requirements and frameworks, as long as the reports include the company and GHG emissions information. 3. 𝘼𝙨𝙨𝙪𝙧𝙖𝙣𝙘𝙚: Instead of calling for the accreditation of assurance providers, the Act describes required assurance provider qualifications and states clearly that the assurance process should minimize the need for companies who may be reporting in other jurisdictions to engage multiple assurance providers. The time to act is now, below are key no regrets moves for organizations: 1. 𝘎𝘦𝘵 𝘴𝘵𝘢𝘳𝘵𝘦𝘥! Strengthen governance, materiality assessment, data processes & controls. 2. 𝘐𝘯𝘤𝘳𝘦𝘢𝘴𝘦 𝘤𝘰𝘯𝘧𝘪𝘥𝘦𝘯𝘤𝘦! Engage in an assurance readiness assessment to understand preparedness for assurance & regulatory scrutiny, with a priority focus on GHG emissions reporting. 3. 𝘉𝘶𝘪𝘭𝘥 𝘤𝘢𝘱𝘢𝘤𝘪𝘵𝘺! Educate & develop capabilities internally & with the BoD.  #deloitteesgnow

Major Update: The highly anticipated EU #Omnibus proposal is here. ↩️ 🌿 #GreenDeal U-turn: Contrary to previous official statements that the simplification package would only seek to improve alignment between, and create disclosure efficiencies across, the #CSRD #CSDDD and #EUTaxonomy while not watering down the ambition of the #GreenDeal, it has taken a desperate departure at the expense of our #environment, #climate and #humanrights protections. It is important to note that this is only a proposal, and the text and provisions could drastically change as it heads to the European Parliament Council of the European Union. However, unfortunately, it is indeed very similar to previously leaked documents. Key Proposed Revisions to CSRD ⬇️ 📌 In-scope entities: drastically reduced by ~80% to only companies with greater than 1,000 employees 📌 Voluntary reporting for newly out-of-scope entities and value chain cap: proportionate standard for voluntary use to be based the #VSME standard developed by EFRAG. Link below. 📌 Timeline: disclosure rolled back by 2 years 📌 Materiality: the principle of double materiality appears to be unaffected with statements in the text proposing greater alignment with global sustainability standards. I interpret this to mean alignment with Global Reporting Initiative (GRI) Standards “impact materiality” and IFRS Foundation Sustainability Standards financial materiality = double materiality. Both GRI and IFRS Foundation have publicly stated their support for keeping the #DMA methodology. Additional guidance on how to conduct the materiality assessment to be developed and released. 📌 Assurance: phased-in requirement for reasonable assurance has been removed and only limited assurance will be required 📌 Sector-specific standards: these have been removed ➡️ Given both the Omnibus CSRD in-scope entity and value chain cap voluntary materiality requirements, as well as those imbedded within the almost 30 national jurisdictions adopting IFRS Sustainability Standards and others using/referencing GRI Standards, I would highly recommend companies to continue moving ahead with their double materiality assessments to drive their sustainable business strategies and external disclosures. More guidance to come from Azuri Socialsuite and Environ Energy ISOS Group is Now Environ Energy VSME Standard Link: https://lnkd.in/e_RGjDM8 #sustainability #corporatesustainability #EUpolicy #ESG #disclosure #ESGdisclosure #climateaction #risk #duediligence #SDGs #globalgoals #assurance

Yesterday, the U.S. Securities and Exchange Commission (SEC) published its Final Rule, “The Enhancement and Standardization of Climate-Related Disclosures.” We welcome the Final Rule's provision of a framework for climate-related financial disclosures closely tied to financial statements. This information, encompassing governance, strategy, risk management, targets, and GHG emission data, empowers investors to allocate capital effectively, safeguarding against the build up of climate-related systemic financial risks and promoting transparency and comparability in global markets. It is encouraging to see the U.S. join peer regulators around the world, making climate-related financial disclosures mandatory to support greater transparency and accountability across markets and jurisdictions. WBCSD – World Business Council for Sustainable Development supports the global harmonization of climate-related financial disclosures to drive transparency, accountability, and performance in markets worldwide. A globally consistent approach to climate-related financial disclosures is needed to provide investors with consistent, comparable, and decision-useful risk disclosures. This will also reduce companies' compliance costs and complexity. We commend the SEC for adopting this ruling, which will contribute to a global baseline of climate risk disclosure, help maintain U.S. leadership, and keep U.S. companies competitive in global markets.  However, since a company’s supply chain can account for as much as 90% of its indirect greenhouse gas emissions, we are disappointed that Scope 3 emissions disclosure is not in the final rule. We also regret that the ruling does not require companies to use internationally comparable climate scenario frameworks to inform their management of climate risk. We look forward to future developments of the SEC’s rulings on climate-related disclosures to support greater alignment with California’s climate disclosure laws, and with global frameworks such as the International Sustainability Standards Board (ISSB) S2 Standard for Climate-Related Financial Disclosures, the European Union Corporate Sustainability Reporting Directive (CSRD) reporting framework set out in the European Sustainability Reporting Standards (ESRS), and the disclosures aligned with the widely-accepted Taskforce on Climate-Related Financial Disclosures (TCFD).