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Sustainability Reporting Regulation in 2025 3 Copyright © 2025 Tango. All rights reserved. Other states are now developing their own climate disclosure rules, creating a patchwork of mandates that companies must begin to navigate. In New York, two proposed bills, S897C and S5437, signal the state's intent to mirror California's regulatory ambition. If passed, these laws would require large businesses to annually report on their climate-related risks and financial exposures. Though still in early stages, the legislative momentum suggests that compliance obligations could take effect within the next few years. Beyond New York, states such as Washington, Illinois, and Minnesota are also exploring similar measures. Many of these efforts build upon the principles of transparency and long-term resilience, often referencing frameworks like TCFD or incorporating greenhouse gas emissions disclosures. The emergence of state-led regulation reflects a broader decentralization of climate policy in the U.S.—with progressive states filling the vacuum left by federal gridlock. New York and Other Local Legislation Global Regulations: The Impact of the CSRD The European Union's Corporate Sustainability Reporting Directive (CSRD) significantly expands the scope and depth of mandatory sustainability disclosures for companies operating in or connected to the EU. Beginning in 2025, companies listed on EU-regulated markets with over 500 employees must report on their sustainability impacts using 2024 data. In the years that follow, reporting obligations will expand to include other large companies and, eventually, small- and medium-sized enterprises. U.S.-based companies with significant EU operations or subsidiaries will be required to comply if they meet certain thresholds for size, turnover, or activity within the European market. CSRD-aligned disclosures must follow the European Sustainability Reporting Standards (ESRS), which require companies to report on material environmental, social, and governance issues across their full value chains. That includes Scope 1, 2, and 3 emissions, along with climate-related risks, social impacts, and governance policies. Adding complexity is the EU's proposed Omnibus Simplification Package, which aims to streamline overlapping regulatory frameworks such as CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). While this move could eventually reduce administrative burden, the outcome and timeline remain uncertain as of now (May 2025).

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