Back chevron
All posts

Sustainability Reporting Requirements in the United States

Keslio Team
 minute read  
May 10, 2024
An illustration of national parks in the United States
Download our checklist for sustainability reporting in the United States:
download icon
Looking to effectively report your sustainability performance?
Schedule a call
blue redirect arrow

Sustainability reporting is gaining momentum across countries, with governments mandating large companies to report a range of ESG factors, from climate disclosures to social impact. Through sustainability reporting, organizations hold themselves accountable through transparent reporting of ESG metrics. By addressing their sustainability performance, organizations can improve their brand reputation and their future initiatives.

In March 2024, the United States Securities Exchange Commission (SEC) laid out the final rules requiring issuers or domestic public companies and foreign private issuers to disclose their climate-related risks and impact. This is a significant step for sustainability reporting in the United States. Prior to these new developments, sustainability reporting in the United States was done on a voluntary basis or mandated on a state level. By taking sustainability reporting into a federal level, this holds large companies accountable for their actions and impact towards the environment, marking a milestone in sustainability in the United States.


Before the finalization of climate disclosures in the United States by the SEC, here are details domestic public companies and foreign private issuers should be aware of before preparing their sustainability reports.

Climate-related Disclosures

Beyond financial disclosures, the new policy asks companies to report climate-related disclosures, including sustainability governance, targets and goals, strategy and risk management, and materiality.

For ESG governance, this covers any involvement the board of directors has over assessing and managing climate-related risks. This includes names and subcommittees and how they oversee progress towards their disclosed targets and plans. Additionally, for material risks, the company must disclose the managing teams or individuals and steps taken to assess, manage, and report the risks they are responsible for. 

Materiality assessments and climate risk management is also included in the requirements. The SEC reporting requirements include climate risk management processes such as the likelihood of a material risk to occur, the prioritization of material risks, and the company’s response, which can range from mitigation to adaptation. In addition to explaining the processes the business took to determine material risks, the company is also asked to disclose the impact of these risks on the business model, strategies, finances, and operations.

Carbon prices, scenario analysis, and transition plans are also included in the sustainability report if the company uses these in their sustainability initiatives. For internal carbon prices material to climate-risk evaluation, the company is to disclose its price and any difference between operations addressed by the internal carbon pricing and organizational boundaries in greenhouse gas emissions accounting. In the case a company conducts a scenario analysis, the scenarios, parameters, assumptions, and its financial impact is also added in the report. As for transition plans, the company is to explain their plans and progress.

Lastly, targets and goals are to be disclosed if they have a material impact on the business. Details for the targets include the scope, how it’s measured, the timeframe to achieve the goal, baselines, and assessment tools. Progress and current performance in achieving these goals are also listed in the report. Additionally, companies are to report their material expenditures and impact on financial estimates and assumptions.

Scope 1, 2, 3 Emissions

Carbon accounting is gaining more importance and presence in sustainability reporting, with governing bodies starting to require businesses to report their scope 1, 2, 3 emissions. However, for sustainability reporting in the United States, not all companies have to report their emissions and reporting scope 3 emissions are no longer mandatory.

Emerging growth companies (EGCs) and smaller reporting companies are not required to report their emissions. Only large accelerated and accelerated filers are mandated to disclose scope 1 and 2 emissions. In addition to their emissions report, the company should also elaborate the methods and assumptions used in measuring their greenhouse gas emissions. 

If material, other constituent gases are also included in the report. Companies are also to discuss organizational boundaries and the method used to determine these. Any differences from financial statements are also listed in the report. 

Financial Statement Disclosures

The new rules require the disclosure of the effects of material climate-related impacts on financial statements. These financial statement effects are to be disclosed in footnotes of the financial statements. Included as well in the footnotes are any carbon offsets or renewable energy certificates acquired by the business.

Additionally, a separate disclosure on the financial statement effects brought by severe weather and other natural conditions are included in the report, detailing expenditures expensed as incurred and losses, and capitalized costs and charges. Expenditures expensed as incurred and losses are only required if the absolute value of the aggregated amount is greater than 1% of the absolute value of income (loss) before taxes or $100,000. On the other hand, capitalized costs and charges are only to be disclosed if the absolute value of the aggregated amount is greater than 1% of the absolute value of stockholders’ equity or deficit or $500,000.

If estimates and assumptions in the financial statements have been materially impacted by severe weather and other natural conditions, the company has to disclose the impact and their targets and transition plans.

Reporting and Framework

Mandatory sustainability reporting is effective as early as 2025, with greenhouse gas emissions reporting for large accelerated filers and accelerated filers starting in 2026 and 2027, respectively. When it comes to utilizing an internationally recognized sustainability reporting standard or framework, the SEC’s climate-related disclosures take reference to the Task Force for Climate-Related Financial Disclosures (TCFD) yet is still open and considering the adoption of other international standards such as the emerging CSRD and ISSB, which require scope 3 emissions, scenario analysis, climate-related opportunities. Failure to comply with the SEC’s rule may result in penalties from the SEC Division of Enforcement.


The world is being steered towards sustainability as climate change continues to impact the way we live and the way businesses operate. This stepping stone towards sustainable development can push businesses in the U.S. to hold themselves accountable for their sustainability performance and steer them into integrating sustainability across their operations. 

As regulatory landscapes evolve, businesses must adapt to meet legal requirements and stakeholder expectations, improving their brand reputation and fostering a culture of sustainability. Sustainability reporting in the U.S. will eventually head towards improved sustainability standards aligned with international frameworks. This movement towards the integration of sustainability into key financial decision making ensures that businesses in the United States can continue leading economically and sustainably.

At Keslio, we are deeply passionate about sustainability, equipping us with the expertise and extensive network needed to guide clients through their sustainability journey effectively and efficiently. Our expertise is particularly valuable for companies looking to embed sustainability practices into their businesses and investors looking to integrate ESG and impact into investment portfolios. To learn more about how Keslio can assist your organization on its sustainability journey, please don't hesitate to get in touch with us.

Similar articles

Our unique approach can help you activate sustainability in a rapidly evolving landscape.

For Companies


Ongoing End-to-End Support

We work closely with you across all aspects of your sustainability journey.
Learn more
white redirect arrow

Strategy Development

We take care of your sustainability strategy development.
Learn more
white redirect arrow

Sustainability Training

We deliver comprehensive sustainability trainings across topics.
Learn more
white redirect arrow

Reporting and Disclosures

We craft your sustainability reports and disclosures.
Learn more
white redirect arrow

Sustainability Communications

We develop effective sustainability communications.
Learn more
white redirect arrow

Ratings and Certifications

We help you secure your desired rating or certification.
Learn more
white redirect arrow

For Investors


Portfolio Management

We help you effectively manage sustainability for your portfolio.
Learn more
white redirect arrow

Strategy Development

We help you integrate sustainability into your investment process.
Learn more
white redirect arrow

Reach out to us.

By using this website, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.