Understanding the Evolving Sustainability Disclosure Landscape: What Business Leaders Need to Know

In late 2025, Trio experts were joined by the California Air Resources Board (CARB) to discuss the evolving climate disclosure landscape, providing insights on California’s climate disclosure laws (SB 261 and SB 253), the European Union Omnibus Directive and revisions to the Greenhouse Gas Protocol’s Scope 2 guidance.  

As highlighted in our webinar, ongoing regulatory activity in California and Brussels has altered climate disclosure deadlines for businesses.  

Our sustainability and policy experts break down what businesses need to understand about these new developments.  

1. California’s law requiring disclosure of climate-related financial risks (Senate Bill 261) is temporarily paused by the Ninth Circuit Court of Appeals 
   
   The Ninth Circuit Court of Appeals issued a preliminary injunction that temporarily halts the enforcement of California’s climate risk disclosure law, SB 261. This action was taken while the court reviews the legal challenge brought by the U.S. Chamber of Commerce. As a result, companies are currently not required to comply with SB 261’s climate risk disclosure requirements until the court reaches a decision.  

   Oral arguments occurred on January 9, 2026, but the timing for a final decision remains uncertain. This pause in enforcement may be only temporary, and the requirements could be reinstated depending on the outcome of the legal proceedings. There is a possibility that the case may be escalated to the Supreme Court, depending on the Ninth Circuit’s decision. The U.S. Chamber of Commerce has already requested emergency action from the Supreme Court and indicated its intent to pursue all available legal avenues. 
   
   Trio’s recommendation: Continue preparing SB 261 reports and use this period to refine draft reports to ensure your organization is ready to publish once the injunction is lifted. 
    

2. CARB provides updates on California's Scope 1-3 greenhouse gas reporting law (SB 253) during the workshop 
   
   The Ninth Circuit ruling resulted in an injunction suspending enforcement of SB 261; however, for SB 253 it is business as usual. At a workshop, CARB presented proposed revisions to definitions and exemptions and addressed the scope of the initial regulation as well as forthcoming reporting deadlines. 
   
   CARB proposes delaying the initial reporting deadline from June to August 10, 2026, providing organizations with additional preparation time. CARB also proposed increased flexibility for first-year reporting requirements. For instance, companies that were not collecting or intending to collect Scope 1 and 2 emissions data as of the Enforcement Notice (December 5, 2024) may submit a statement in lieu of a report. Furthermore, limited assurance for reports will not be required.  
   
   As for next steps, CARB released the Notice of Proposed Rulemaking (NPRM) on December 9, with a Board vote anticipated in late Q1 2026 after the stakeholder comment period and public hearing. 
   
   Trio’s recommendation: Monitor regulatory developments during Q1 2026. Prepare for the August 10 reporting deadline or, if eligible, submit a statement seeking exemption from reporting as permitted under CARB’s proposed regulations.  
    

3. The European Parliament and European Council reach agreement on the EU Omnibus package, simplifying its corporate sustainability and due diligence requirements.  
   
   On December 9, the agreed upon proposal was unveiled, largely finalizing simplifications to the EU’s Corporate Sustainability Reporting Directive (CSRD) and CSDDD (Corporate Sustainability Due Diligence Directive, also referred to as CS3D).  

   CSRD: 

   The agreed proposal significantly narrows the scope of the CSRD, now applying only to EU companies with more than 1,000 employees and over €450 million in turnover, as well as non‑EU companies generating at least €450 million in EU turnover with an EU subsidiary or branch that exceeds €200 million in EU turnover. 

   These revised thresholds mean that far fewer companies globally will be required to report compared with the original scope. 

   The simplification also streamlines reporting requirements by removing duplicative or voluntary datapoints, placing greater emphasis on quantitative disclosures, and improving alignment with global frameworks, including the International Sustainability Standards Board (ISSB). 

   CS3D 

   Revisions to CS3D similarly reduce its scope. The rules now apply only to EU companies with more than 5,000 employees and over €1.5 billion in net turnover, and to non‑EU companies generating more than €1.5 billion in EU turnover, with no employee threshold for non‑EU firms. 

   Additional simplification measures include removing mandatory climate transition plan requirements and adopting a more targeted approach to supply‑chain due diligence across the entities in scope.  

   Trio’s recommendation: Assess your organization’s position under the new framework by reviewing size, revenue, and existing sustainability policies. Adapt your compliance strategy as needed to build data collection and reporting processes ahead of deadlines.  
   
    

It is important to note that these regulatory changes reflect a broader global trend toward both increased accountability and pragmatic flexibility in sustainability reporting. Organizations operating internationally should be prepared to adapt to evolving standards, ensuring that compliance efforts remain comprehensive yet efficient as the regulatory landscape continues to shift.   

Need Support? 

If you require guidance on regulatory tracking or compliance strategy, please contact your Trio representative or use the form below to connect with our team. Our policy and sustainability experts are available to assist you in navigating these complexities.