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

A month ago, 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 are scheduled for 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 recent 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 intends to release the Notice of Proposed Rulemaking (NPRM) in the coming weeks, with a Board vote anticipated in Q1 2026. 
   
   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 unveiled a significant overhaul of its sustainability reporting framework through the EU Omnibus proposal 
   
   The Omnibus proposal introduces major simplifications to the EU’s Corporate Sustainability Reporting Directive (CSRD) and CSDDD (Corporate Sustainability Due Diligence Directive, also referred to as CS3D). 
   
   Firstly, CSRD's reporting scope is now narrower; only EU companies with over 1,750 employees and annual revenues exceeding €450 million are required to comply. As a result, fewer than 1,000 companies throughout the EU must meet these mandatory reporting rules, although smaller organizations retain the option to report voluntarily.  
   
   Secondly, the requirements themselves are streamlined significantly as climate transition planning is no longer a requirement. 
   
   While these steps indicate direction for future regulation, they are not yet final. The European Commission, European Parliament, and Council of the European Union will continue negotiations into December 2025. So far, the Council has favored a cautious approach consistent with the original proposals, which may lead to further changes or extend negotiations into the new year. 
   
   Trio’s recommendation: Continue monitoring regulatory developments in Q4 2025 and Q1 2026 to assess your organization’s position under the new framework by reviewing size, revenue, and existing sustainability policies. Adapt your compliance strategy as needed. 
    

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.