ESG Regulations in the USA: What Companies Need to Know in 2026

ESG regulations USA landscape shifted dramatically with the SEC's climate disclosure rule proposal in 2022, followed by extended legal challenges and regulatory uncertainty through 2024-2025. Are ESG disclosures mandatory in the US? The answer depends on listing status, company size, legal developments, and state-level requirements that continue evolving independent of federal mandates.

This guide maps the current state of ESG compliance USA requirements, covering SEC rules, state regulations, voluntary frameworks, and implementation strategies for US-based companies navigating sustainability disclosure obligations in 2026.

Current State of ESG Regulations USA

Unlike the EU's Corporate Sustainability Reporting Directive or India's BRSR mandate, the United States lacks comprehensive federal ESG reporting USA requirements. However, multiple regulatory layers create disclosure obligations:

Federal level: SEC climate disclosure rules (under legal review as of 2026)

State level: California climate laws, other state-specific mandates

Stock exchange requirements: Nasdaq and NYSE ESG disclosure expectations

Voluntary frameworks: TCFD, GRI, SASB, CDP adoption driven by investor demand

The regulatory environment remains fragmented, creating compliance complexity for companies operating across multiple jurisdictions.

What Are SEC Climate Rules?

The SEC proposed comprehensive climate disclosure rules in March 2022, finalizing regulations in March 2024. What are SEC climate rules in their final form?

Core Requirements of SEC Climate Disclosure

Greenhouse gas emissions reporting:

Scope 1 and Scope 2 emissions disclosure required for large accelerated and accelerated filers
Scope 3 emissions disclosure removed from final rule after significant industry pushback
Emissions must be reported when material or when company has publicly disclosed reduction targets

Climate risk disclosures:

Material climate-related risks and their actual or likely impact on business strategy
Activities to mitigate or adapt to climate risks
Board oversight and management's role in climate risk assessment
Climate risk integration into risk management processes

Financial statement impacts:

Quantitative and qualitative disclosure of climate-related impacts on financial statements
Capitalized costs and expenditures related to severe weather events and transition activities
Carbon offset and renewable energy credit purchases

Climate targets and transition plans:

Disclose publicly announced climate targets, including interim goals
Describe processes to monitor progress toward targets
Explain if targets differ from absolute reductions

Which Companies Must Comply?

SEC climate disclosure rules apply to:

Large accelerated filers: Public companies with market capitalization above $700 million Accelerated filers: Public companies with market capitalization between $75 million and $700 million Foreign private issuers: Non-US companies listed on US exchanges

Smaller reporting companies and emerging growth companies receive exemptions from certain requirements, particularly GHG emissions disclosure.

Implementation Timeline

The SEC's proposed phased timeline included:

Current SEC Status (2026): Following a voluntary stay in 2024, the SEC officially ended its legal defense of the climate disclosure rules in March 2025. While the rules remain on the books, they are effectively 'on ice' at the federal level due to shifts in regulatory priority. However, the SEC continues to monitor 'material' climate risks under existing 2010 guidance, and the 'EDGAR Next' filing system updates in 2025 have streamlined how any voluntary climate data is submitted.

Legal Challenges and Current Status

Litigation against SEC climate disclosure rules centers on:

Jurisdictional authority: Whether SEC has statutory authority to mandate climate disclosure beyond traditional financial materiality First Amendment concerns: Compelled speech arguments regarding emissions disclosure Administrative procedure: Adequacy of SEC's cost-benefit analysis and public comment consideration

Courts issued stays on implementation pending resolution. The regulatory environment remains uncertain into 2026, with potential outcomes including:

Full implementation after favorable court rulings
Partial implementation with modified requirements
Complete withdrawal or substantial revision of the rule
Congressional intervention to codify or block requirements

Organizations should prepare for eventual climate disclosure requirements despite current uncertainty.

State-Level ESG Regulations USA

While federal ESG compliance USA requirements face legal obstacles, state governments implemented climate disclosure mandates affecting companies operating within their jurisdictions.

California Climate Disclosure Laws

California enacted two groundbreaking climate disclosure laws in October 2023: SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act).

SB 253: Scope 1, 2, and 3 Emissions Disclosure

Who must comply:

Public and private companies with total annual revenues exceeding $1 billion
Doing business in California (defined as organized in California or meeting revenue thresholds from California operations)

What must be disclosed:

Annual disclosure of Scope 1 and Scope 2 greenhouse gas emissions
Scope 3 emissions disclosure starting one year after Scope 1 and 2 requirements
Third-party assurance required (limited assurance initially, reasonable assurance by 2030 for Scope 1 and 2)

Timeline:

SB 253 (Emissions): In-scope companies must report Scope 1 and 2 emissions in 2026 (based on 2025 data). Under the SB 219 amendment, CARB has set the first reporting deadline for August 10, 2026.
SB 261 (Risk): While the statutory deadline was January 1, 2026, the Ninth Circuit Court of Appeals granted a temporary injunction on enforcement in late 2025. Companies should have their reports ready, but 'active enforcement' is currently pending the outcome of the 2026 legal appeals.

California Law Enforcement Uncertainty

California's climate laws face implementation challenges and potential legal action similar to SEC rules. The California Air Resources Board (CARB) received regulatory authority to implement both laws, but budget constraints, administrative capacity, and litigation risk create uncertainty about enforcement timelines.

Companies meeting revenue thresholds should prepare for California climate disclosure despite regulatory ambiguity.

Other State ESG Initiatives

New York: The Climate Corporate Data Accountability Act (S3456) is currently active in the 2025-2026 legislative session. If passed, it will mirror California's requirements but adds a specific focus on Large Emission Sources (facilities over 25,000 metric tons CO2e) which must submit monitoring plans to the NYSDEC by December 31, 2026.

Illinois: Climate disclosure bills under consideration for large corporations

Anti-ESG legislation: Some states passed laws restricting consideration of ESG factors in investment decisions or prohibiting contracts with companies that "boycott" fossil fuel industries, creating conflicting state-level requirements

Stock Exchange ESG Disclosure Expectations

Nasdaq and NYSE implemented ESG-related listing requirements, adding another layer to US sustainability reporting obligations.

Nasdaq Board Diversity Rules

While Nasdaq’s diversity rules were a primary focus for compliance teams in 2023 and 2024, the regulatory landscape shifted following the December 2024 en banc ruling by the Fifth Circuit Court of Appeals in Alliance for Fair Board Recruitment v. SEC. The court vacated the SEC’s approval of the rules, holding that the mandate exceeded the agency’s statutory authority.

Consequently, as of early 2025, the following rules are no longer mandatory listing requirements:

Board Diversity Matrix: Companies are no longer required to provide the standardized demographic data table in their proxy statements.
"Diverse Director" Targets: The "comply or explain" requirement to have at least two diverse directors (one female and one underrepresented minority/LGBTQ+) has been struck down.

The 2026 Reality for Nasdaq-Listed Companies: Although the legal mandate is gone, the "explain" approach has been replaced by "investor-driven voluntary disclosure." Major institutional investors and proxy advisors (such as ISS and Glass Lewis) maintain their own diversity voting policies. Most Nasdaq-listed companies continue to disclose diversity metrics voluntarily to satisfy these stakeholders and avoid negative voting recommendations during director elections.

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Voluntary ESG Reporting Frameworks

ESG reporting USA often follows voluntary frameworks driven by investor demand rather than regulatory mandate.

TCFD (Task Force on Climate-related Financial Disclosures)

IFRS S1 and S2 (The New Global Baseline): As of 2024, the TCFD has been officially disbanded, with its responsibilities transferred to the International Sustainability Standards Board (ISSB).

The new standards - IFRS S1 (General Disclosures) and IFRS S2 (Climate) - now serve as the primary global framework.

Because IFRS S2 fully incorporates TCFD’s four-pillar structure, companies already aligned with TCFD will find the transition to ISSB seamless.

SASB (Sustainability Accounting Standards Board)

SASB standards identify financially material sustainability topics by industry. Covering 77 industries across 11 sectors, SASB focuses on investor-relevant metrics.

The IFRS Foundation absorbed SASB in 2022 under the International Sustainability Standards Board (ISSB). SASB standards now integrate with IFRS S1 and S2 sustainability disclosure standards, creating global baseline for investor-focused ESG compliance USA reporting.

GRI (Global Reporting Initiative)

GRI Standards remain the most widely adopted sustainability reporting framework globally. Unlike SASB's investor focus, GRI emphasizes multi-stakeholder impacts how businesses affect environment, society, and governance.

US companies with international operations or European investors often adopt GRI to align with global reporting expectations.

CDP (Carbon Disclosure Project)

CDP operates disclosure platforms for climate change, water security, and forests. Investors and purchasers use CDP to request environmental data from suppliers and portfolio companies.

CDP reporting carries significant weight in investor ESG ratings and sustainable procurement decisions. Many large US corporations disclose through CDP voluntarily despite lacking regulatory mandate.

Sector-Specific ESG Regulations USA

Beyond cross-sector requirements, specific industries face targeted ESG compliance USA obligations.

Financial Services: Climate Risk Management

Federal banking regulators increased scrutiny of climate-related financial risks:

Federal Reserve: Issued principles for climate-related financial risk management for large banks, emphasizing governance, risk identification, and management frameworks

OCC (Office of the Comptroller of the Currency): Published guidance on climate risk for banks under its supervision

FSOC (Financial Stability Oversight Council): Identified climate change as emerging systemic risk, increasing regulatory attention to financial institution climate exposure

While not explicit disclosure mandates, these regulatory actions pressure financial institutions to develop climate risk assessment capabilities and report findings.

Energy Sector: Methane Emissions Reporting

EPA regulations require oil and gas operators to report methane emissions under the Greenhouse Gas Reporting Program. Methane Waste Emissions Charge (WEC): Finalized in late 2024, the EPA's methane fee is now active. For the 2026 reporting year, facilities exceeding methane intensity thresholds face a charge of $1,500 per metric ton (increasing from $900 in 2024), making accurate methane reporting a direct financial priority.

Public Companies: Conflict Minerals and Supply Chain Disclosure

Existing SEC rules require companies to disclose:

Conflict minerals: Due diligence on tin, tantalum, tungsten, and gold sourcing from conflict-affected regions (Democratic Republic of Congo)

Pay ratio disclosure: Ratio of CEO compensation to median employee compensation

These represent established ESG reporting USA requirements predating recent climate disclosure developments.

Investor-Driven ESG Compliance Pressure

Even absent comprehensive regulatory mandates, investor expectations drive ESG compliance USA for public companies.

Institutional Investor Demands

Major institutional investors including BlackRock, Vanguard, State Street, and CalPERS demand ESG disclosure and performance improvements through:

Proxy voting: Voting in favor of shareholder resolutions requesting climate disclosure, emissions reduction targets, and diversity reporting

Engagement campaigns: Direct dialogue with portfolio companies on ESG risks and performance

Investment criteria: Integrating ESG factors into portfolio construction and manager selection

Exclusion policies: Divesting from companies failing to meet minimum ESG standards

Shareholder Proposals

ESG-related shareholder proposals increased significantly over the past decade. Common topics include:

GHG emissions reduction targets
Climate lobbying and trade association alignment
Board diversity
Human rights due diligence
Political spending transparency

While most proposals historically failed to achieve majority votes, support levels rose substantially. Companies increasingly negotiate withdrawal agreements by committing to voluntary disclosure improvements.

ESG Ratings and Rankings

Third-party ESG rating agencies (MSCI, Sustainalytics, ISS ESG) assess corporate sustainability performance, influencing investor decisions and capital allocation. Poor ratings can:

Exclude companies from ESG-focused funds
Increase cost of capital
Damage reputation with stakeholders
Trigger divestment campaigns

Companies invest in US sustainability reporting to maintain favorable ESG ratings despite lacking regulatory requirements.

ESG Compliance USA: Implementation Best Practices

Organizations navigating fragmented ESG regulations USA landscape should adopt structured approaches preparing for multiple compliance scenarios.

Conduct Materiality Assessments

Identify which ESG topics materially affect business performance and stakeholder expectations:

Financial materiality: ESG factors impacting financial condition, operating performance, or cash flows (SASB approach)

Impact materiality: Business impacts on environment, society, and governance (GRI approach)

Double materiality: Assess both financial and impact materiality (CSRD/ESRS approach)

Document materiality determinations through stakeholder engagement, peer benchmarking, and risk assessments. Regulatory frameworks increasingly require disclosure of materiality process.

Establish Data Collection Infrastructure

ESG reporting USA quality depends on systematic data management:

Centralize data sources: Consolidate information from facilities, business units, HR systems, procurement platforms, and utility providers

Automate calculations: Deploy platforms handling emissions calculations, intensity metrics, and aggregations

Implement controls: Establish validation processes, approval workflows, and audit trails supporting assurance requirements

Track metrics consistently: Maintain year-over-year comparability through consistent methodologies and boundary definitions

Organizations starting ESG data collection should prioritize metrics appearing across multiple frameworks: GHG emissions (Scope 1, 2, 3), energy consumption, water usage, waste generation, employee demographics, safety incidents, and board composition.

Calculate GHG Emissions Following GHG Protocol

Whether facing SEC, California, or voluntary disclosure expectations, ESG compliance USA requires credible emissions data:

Scope 1: Quantify direct emissions from owned or controlled sources (facilities, fleet, processes)

Scope 2: Calculate indirect emissions from purchased electricity, steam, heating, and cooling

Scope 3: Assess value chain emissions across 15 categories, prioritizing material sources

Follow GHG Protocol Corporate Accounting and Reporting Standard to ensure consistency with regulatory expectations and investor frameworks. Document calculation methodologies, emission factors, and data sources for assurance providers.

Prepare for Assurance Requirements

California's SB 253 and potential SEC requirements mandate third-party verification of emissions data:

Limited assurance: Lower confidence level, similar to review of financial statements. Examines plausibility rather than proving accuracy.

Reasonable assurance: Higher confidence level, similar to audit of financial statements. Requires rigorous testing and evidence.

Build assurance-ready processes:

Maintain source documentation (utility bills, fuel receipts, vendor invoices)
Document calculation methodologies and assumptions
Establish internal controls over data collection
Conduct pre-assurance internal audits identifying gaps

Engage assurance providers early to understand evidence requirements and timeline expectations.

Map to Multiple Reporting Frameworks

US companies often face disclosure expectations from multiple sources simultaneously. Efficient US sustainability reporting maps data collection to satisfy:

SEC climate rules (if implemented): Scope 1, 2 emissions and climate risk disclosures
California SB 253/261: Scope 1, 2, 3 emissions and TCFD-aligned risk reporting
TCFD recommendations: Governance, strategy, risk management, metrics across climate-related risks
SASB standards: Industry-specific financially material metrics
GRI Standards: Comprehensive stakeholder-focused sustainability disclosures
CDP questionnaires: Detailed climate, water, and forest responses for investor/purchaser requests

Purpose-built ESG platforms enable single data collection feeding multiple framework outputs, reducing redundant effort.

Engage Boards on ESG Governance

Effective ESG compliance USA requires board-level oversight:

Assign committee responsibility: Designate audit committee, risk committee, or dedicated sustainability committee for ESG oversight

Establish reporting cadence: Schedule regular updates on ESG risks, performance, and regulatory developments

Review disclosure approval: Board should review and approve ESG-related disclosures in proxy statements, sustainability reports, and regulatory filings

Director education: Provide training on climate risks, ESG frameworks, and fiduciary duties related to sustainability

Strong governance structures signal credible commitment to investors and prepare organizations for regulatory disclosure requirements.

Monitor Regulatory Developments

The ESG regulations USA landscape evolves rapidly. Establish processes monitoring:

SEC rulemaking updates and legal proceedings
State legislative developments beyond California
Stock exchange rule changes
Federal agency guidance (EPA, banking regulators)
Voluntary framework updates (ISSB standards, GRI revisions)

Assign responsibility to legal, compliance, or sustainability teams for regulatory tracking. Participate in industry associations providing regulatory interpretation and advocacy.

Common ESG Compliance USA Challenges

Regulatory Uncertainty

The fragmented, evolving nature of ESG regulations USA creates strategic planning challenges. Companies struggle determining appropriate investment levels in disclosure infrastructure when regulatory requirements remain unclear.

Approach: Build foundational capabilities satisfying multiple scenarios. Emissions data collection, climate risk assessments, and governance structures apply across voluntary frameworks, SEC rules, and state mandates.

Scope 3 Emissions Data Availability

Scope 3 represents 70-90% of corporate carbon footprints but requires supplier collaboration. US companies face:

Limited supplier willingness to share emissions data
Small suppliers lacking measurement capabilities
Spend-based estimates providing only rough approximations
15 Scope 3 categories creating prioritization challenges

Approach: Focus on material categories (typically purchased goods/services, business travel, transportation). Use spend-based estimates initially while building supplier engagement programs requesting primary data from top vendors.

Multi-Jurisdiction Compliance

Companies operating across US states face conflicting requirements. California mandates comprehensive disclosure while other states restrict ESG considerations in certain contexts.

Approach: Adopt highest common denominator approach, meeting California and potential SEC requirements generally satisfies other disclosure expectations. For anti-ESG state concerns, separate investment policies from corporate disclosure obligations.

Assurance Cost and Availability

Third-party assurance for emissions data adds significant cost and timeline complexity. The assurance provider market struggles meeting demand as California and potential SEC rules expand assured disclosure requirements.

Approach: Engage assurance providers early. Request proposals 12-18 months before disclosure deadlines. Build internal controls and documentation reducing assurance scope and cost.

Balancing Stakeholder Expectations

Different stakeholders demand different ESG reporting USA approaches:

Investors want financially material metrics aligned with SASB/ISSB
Employees expect social impact disclosure and DEI data
Customers demand supply chain transparency and product lifecycle impacts
NGOs push comprehensive GRI-style reporting
Regulators require specific compliance frameworks

Approach: Publish tiered disclosures - financial filings focused on material risks (SASB/TCFD), comprehensive sustainability reports covering broader impacts (GRI), and targeted communications for specific stakeholder groups.

Technology Solutions for ESG Compliance USA

Scalable ESG reporting USA requires centralized platforms managing data complexity and framework alignment.

Essential Platform Capabilities

Multi-framework mapping: Tag collected data to SEC, California, TCFD, SASB, GRI, CDP requirements simultaneously

GHG emissions automation: Calculate Scope 1, 2, and 3 emissions following GHG Protocol with validated emission factors

Assurance management: Maintain audit trails, source documentation, and evidence repositories for third-party verification

Regulatory tracking: Monitor compliance deadlines across federal, state, and voluntary framework requirements

Collaboration workflows: Enable distributed data collection from facilities, business units, and suppliers with role-based access

Scenario planning: Model disclosure outputs under different regulatory scenarios (full SEC implementation vs. California-only compliance)

BreatheESG for US ESG Compliance

BreatheESG supports ESG compliance USA through:

SEC-ready disclosures: Pre-configured templates aligning with proposed SEC climate rule requirements, adaptable as regulations finalize

California SB 253/261 compliance: Automated Scope 1, 2, 3 calculations and TCFD-aligned reporting satisfying California mandates

Multi-framework reporting: Simultaneous disclosure generation for TCFD, SASB, GRI, and CDP from centralized data

Assurance-ready outputs: Audit trail documentation, methodology records, and evidence management supporting limited and reasonable assurance engagements

Real-time regulatory updates: Platform adjusts to changing requirements as ESG regulations USA evolve

Organizations using BreatheESG navigate regulatory uncertainty while maintaining compliance flexibility across multiple disclosure frameworks.

The Future of ESG Regulations USA

ESG compliance USA requirements will intensify regardless of near-term regulatory outcomes.

Potential Federal Developments

SEC rule implementation: Courts may uphold climate disclosure requirements with modifications, requiring public company compliance

Legislation: Congress could pass bipartisan ESG disclosure bills establishing baseline standards

Agency expansion: EPA, DOL, and other federal agencies may issue sector-specific ESG requirements through existing statutory authority

State-Level Expansion

California's climate laws create template for other states. New York, Illinois, and other jurisdictions consider similar mandates. Companies may face patchwork state requirements absent federal preemption.

Global Alignment Pressures

International developments affect US companies:

ISSB standards: IFRS Foundation's sustainability disclosure standards create global baseline. US companies with international investors face pressure adopting ISSB even without domestic regulatory mandate.

EU regulations: CSRD requires ESG disclosure from non-EU companies with significant European operations. US multinationals must comply for EU subsidiaries, creating incentives for global policy harmonization.

Supply chain requirements: European and other international regulations demand supply chain due diligence, affecting US exporters.

Investor Expectations Evolution

Regardless of regulatory mandates, investor-driven ESG reporting USA continues expanding. Asset managers face their own disclosure requirements and client demands for ESG integration, cascading expectations to portfolio companies.

Getting Started with ESG Compliance USA

Organizations beginning US sustainability reporting should prioritize:

Assess current state: Inventory existing ESG data collection, disclosure practices, and governance structures. Identify gaps against SEC, California, and voluntary framework requirements.

Define materiality: Conduct assessments determining which ESG topics materially affect financial performance and stakeholder relationships. Document process and conclusions.

Establish governance: Assign board committee oversight, management accountability, and cross-functional coordination for ESG data and disclosure.

Build data infrastructure: Deploy centralized platforms collecting emissions data, social metrics, and governance indicators from multiple sources. Prioritize GHG emissions (Scope 1, 2, 3) given prevalence across frameworks.

Calculate carbon footprint: Quantify emissions following GHG Protocol methodology. Start with Scope 1 and 2, expand to material Scope 3 categories.

Engage stakeholders: Communicate with investors about disclosure plans. Collaborate with suppliers on Scope 3 data collection. Train employees on data quality importance.

Prepare for assurance: Build documentation practices supporting third-party verification. Conduct internal audits identifying control weaknesses.

Monitor regulations: Track SEC proceedings, California implementation, and other state developments. Adjust compliance strategies as requirements clarify.

Are ESG disclosures mandatory in the US? The answer remains complex - partial mandates exist through SEC, California, and stock exchange requirements, while investor pressure creates de facto obligations for most public companies. Organizations treating ESG compliance USA as inevitable regardless of regulatory timing position themselves for competitive advantage through transparent, verified sustainability performance data.

What are SEC climate rules in 2026 continues evolving through legal proceedings and political changes. Companies establishing robust ESG reporting USA capabilities now gain operational resilience across multiple regulatory scenarios while building stakeholder trust through proactive transparency.