Companies Must Disclose Emissions and Sustainability Efforts by 2028
Public firms must meet new sustainability disclosure mandates by 2028.
Why it matters: Non-compliance could lead to financial penalties and increased liability, impacting company valuations and operational budgets.
- California SB 253 mandates emissions disclosures starting in 2026.
- EU's CSDDD extends due diligence to nearly 900 non-EU firms.
- SEC lawsuit challenges updates to shareholder proposal rules.
- EU bans destruction of unsold goods under Ecodesign rules by 2026.
Public companies across the U.S. and EU face enhanced sustainability regulations that could significantly affect their operations and financial health. Notably, California's SB 253 compels companies with revenues over $1 billion to disclose their Scope 1, 2, and 3 emissions — meaning direct emissions, indirect emissions from purchased electricity, and all other indirect emissions.
This disclosure process, set to commence by August 10, 2026, aims to enhance corporate transparency and consumer trust. In Europe, the Corporate Sustainability Due Diligence Directive (CSDDD) will require comprehensive due diligence on environmental and human rights impacts from nearly 900 non-EU companies, including those from the U.S, with significant effects expected on company reporting practices by July 2028.
Legal proceedings are ongoing in the U.S., where two shareholder advocates have filed a lawsuit against the SEC. They claim the SEC's recent changes to Rule 14a-8 — which governs the exclusion of shareholder proposals from proxy statements — do not adhere to procedural requirements under the Administrative Procedure Act.
Additionally, the EU's Ecodesign regulations, effective February 2026, prohibit the destruction of unsold apparel and accessories to minimize waste and promote sustainability.
The regulatory push towards sustainability reporting highlights an urgent need for companies to enhance their compliance strategies or risk severe repercussions, including financial penalties and reputational damage.
By the numbers:
- 1 billion — Revenue threshold for emission disclosures under California's SB 253.
- 900 — Non-EU companies affected by the EU's CSDDD.
Yes, but: Companies have a transitional period to adjust their compliance frameworks until these mandates take full effect.
What's next: The SEC lawsuit's outcome could influence Rule 14a-8's implementation schedule.