There was no summer slowdown for climate policy in July. California moved closer to its first Senate Bill 253 (SB 253) reporting deadline, new disclosure proposals emerged across several regions, and global standard setters began work on a shared corporate greenhouse gas accounting standard.
This edition is a little longer than usual, so grab a cup of coffee (or tea) and settle in. We’ve pulled together what changed in July and what sustainability and reporting teams should watch in the months ahead.
Greenhouse Gas Protocol and International Organization for Standardization to develop a single corporate accounting standard
The Greenhouse Gas Protocol (GHG Protocol) and the International Organization for Standardization (ISO) announced that they will combine GHG Protocol’s Scope 1, Scope 2, Scope 3, and Actions and Market Instruments standards with ISO 14064-1 into a single, co-branded corporate greenhouse gas accounting standard. An integrated public consultation is planned for the second quarter of 2027.
The GHG Protocol also published results from its Scope 2 consultation, which received nearly 1,100 responses from 56 countries, and preliminary feedback on the Actions and Market Instruments workstream. Its proposed multi-statement approach would separate physical emissions, emissions tied to market instruments, and the emissions impact of corporate actions and investments. Further proposals will go through GHG Protocol’s technical working group and Independent Standards Board processes.
European Commission adopts revised European Sustainability Reporting Standards and voluntary reporting standard
The European Commission adopted revised European Sustainability Reporting Standards (ESRS) on July 3. The new ESRS reduce mandatory datapoints by more than 60% and total datapoints by more than 70%. The Commission expects the shorter standards, added reporting reliefs, and simplified materiality assessment to lower reporting costs by more than 30% per company. The Commission also adopted a voluntary sustainability reporting standard for smaller companies outside the Corporate Sustainability Reporting Directive (CSRD). This standard creates the reference point for the CSRD’s value chain cap, which prevents companies subject to mandatory reporting from requesting more information from protected value chain partners than the voluntary standard covers.
The two delegated acts are not yet in force. The European Parliament and Council have a two-month scrutiny period, which can be extended by another two months, and the acts must then be published in the Official Journal.
European advisory group opens consultation on reporting standards for certain non-European Union groups
The European Financial Reporting Advisory Group (EFRAG) has published the exposure draft for European Sustainability Reporting Standard 40a (ESRS 40a), the proposed reporting standards for certain non-European Union (EU) parent companies with substantial business in the EU. The draft would apply when a third-country parent generates more than €450 million in EU turnover in each of two consecutive financial years and has an EU subsidiary or branch with more than €200 million in turnover in the preceding year. Reporting is scheduled to begin for financial year 2028, with the first reports due in 2029. The draft focuses on the group’s material impacts on people and the environment rather than the full double-materiality model used by EU companies. It generally sets the reporting boundary at the global parent or group level and would require an assurance opinion. The public consultation closes October 31, and EFRAG expects to submit its technical advice to the European Commission in January 2027.
European Union regulators propose changes to Taxonomy disclosures
The European Securities and Markets Authority (ESMA), European Banking Authority (EBA), and European Insurance and Occupational Pensions Authority (EIOPA) have opened parallel consultations on changes to the EU Taxonomy disclosure framework. The work responds to a European Commission request for technical advice on selected key performance indicators (KPIs) under the Taxonomy Disclosures Delegated Act. The proposals vary by sector. ESMA is considering changes to the operational expenditure KPI and group-level reporting for mixed groups, while EBA is reviewing bank and investment-firm KPIs and EIOPA is reviewing insurance disclosures. All three consultations close August 12. The regulators are due to deliver final technical advice by the end of October 2026.
Parliament committee backs wider Carbon Border Adjustment Mechanism coverage
The European Parliament’s Environment Committee adopted its position on changes to the Carbon Border Adjustment Mechanism (CBAM). The committee backed extending CBAM beyond basic materials to a longer list of downstream steel and aluminium goods. Members also supported tighter anti-circumvention rules covering minor product modifications and arrangements created to avoid CBAM obligations. For sales made through online platforms, the position would aggregate shipments when applying the de minimis threshold. This would prevent importers from avoiding CBAM obligations by splitting shipments. The position also supports a temporary decarbonisation fund for EU producers exposed to carbon leakage in export markets, with support available from 2027 through 2029. Parliament is expected to vote on its negotiating mandate in September. The committee position is not final law and must still be negotiated with the Council.
Commission proposes electrification plan and revised emissions trading system
The European Commission presented an Electrification Action Plan alongside proposed revisions to the European Union Emissions Trading System (EU ETS). The plan sets an indicative objective of raising electricity’s share of EU final energy use from 23% to 46% by 2040. It includes measures to reduce the price gap between electricity and fossil fuels, speed up grid connections, and support electric technologies across industry, transport, and buildings. The EU ETS proposal would set the cap’s linear reduction factor at 3.7% from 2031 through 2035 and 1.7% from 2036 through 2040. It would allow up to 2% of compliance to come from high-quality international credits during 2036 through 2040, add permanent carbon removals to the system, and extend coverage to waste incineration. The Commission also proposes a €100 billion Industrial Decarbonisation Bank and would slow the phaseout of free allocation for CBAM sectors until 2038. These measures require approval by the European Parliament and Council.
European Central Bank expands climate factors across corporate collateral
The European Central Bank (ECB) began applying climate factors to eligible corporate bonds on June 15 and announced on July 24 that it will extend the measure to certain eligible credit claims whose debtor is a non-financial corporation. The factors reduce the collateral value assigned to assets that are more sensitive to transition shocks. For credit claims, the score will reflect a sector-level stressor, the debtor’s exposure to transition uncertainty, and the claim’s remaining maturity. The ECB may use sector-level or other suitable data when more specific data are unavailable. The additional reduction in collateral value will be capped at 5%, and factor values will be updated annually. The extension is expected to take effect no earlier than the end of 2027.
California publishes modified climate disclosure regulation and outlines proposals for 2027
The California Air Resources Board’s (CARB) July 21 workshop and its July 27 modified initial regulation address two stages of California Senate Bill 253 (SB 253) implementation. The modified text covers the first report due in 2026 and is open for comment through August 11. The more detailed requirements for 2027 and later remain staff proposals and have not been adopted.
What applies to the 2026 report
- Who reports. United States-based entities with more than $1 billion in annual revenue that do business in California must disclose Scope 1 and Scope 2 emissions.
- Regulatory status and deadline. CARB approved the Initial Regulation on February 26, then withdrew it from the Office of Administrative Law to make limited clarifying changes. The modified text published July 27 would move the first Scope 1 and Scope 2 reporting deadline from August 10 to November 10, 2026. CARB must complete the comment process and resubmit the package before it can take effect.
- Assurance. Limited assurance is not required for the 2026 report.
- Reporting basis and enforcement. A company may use Scope 1 and Scope 2 data it possessed or was collecting as of December 5, 2024. CARB’s enforcement notice also states that the agency will consider good-faith compliance efforts.
- Reporting support. The draft reporting template is optional. CARB plans to publish guidance, an instructional video, and details for an online intake form by September 1.
What CARB is proposing for 2027 and later
- Annual deadline. Reports would be due each year on November 10.
- Inventory disclosures. Companies would report gross emissions for each required scope and identify their organizational boundary, global warming potential values, emission factor sources, and quantification methods.
- Additional methodology details. Companies would assess measurement uncertainty, explain missing data and substitutions, report biogenic carbon dioxide separately, and recalculate prior years when cumulative changes alter base-year emissions by more than 5%.
- Scope 2. Reports would include both location-based and market-based results.
Proposed Scope 3 requirements
CARB has narrowed the proposed 2027 requirement to five Scope 3 categories:
- Category 1: Purchased goods and services
- Category 3: Fuel- and energy-related activities
- Category 5: Waste generated in operations
- Category 6: Business travel
- Category 7: Employee commuting
The remaining ten categories would be voluntary for now, and staff did not propose a date for requiring all 15. For each required category, companies would disclose the accounting methods and data types used, explain exclusions, and report the percentage calculated with primary data. CARB’s proposed data-exclusion provision would allow an omission only when it could not reasonably be expected to influence a user’s understanding of the inventory, climate risks, or impacts.
Proposed assurance and insurance requirements
- Scope 1 and Scope 2 assurance. Beginning with 2027 reports, companies would obtain limited assurance over quantitative and qualitative disclosures, including separately reported biogenic carbon dioxide. Companies could choose reasonable assurance instead.
- Provider independence. CARB is considering whether assurance providers should disclose other services they provide to the reporting company and whether provider rotation should be required.
- Insurance entities. Insurance entities excluded from the initial regulation would enter the SB 253 program beginning in 2027. An insurer could use the same report for its California Department of Insurance and SB 253 obligations only if the report meets CARB’s requirements.
What happens next
- CARB plans to publish the full staff proposal, regulatory text, economic analysis, and staff report in fall 2026. A 45-day public comment period would follow before the Board considers the regulation by year-end.
- Six sector-based listening sessions begin August 5. Workshop and listening-session materials are available from CARB.
Canada consults on sustainable finance taxonomy methodology
Canada’s independent Taxonomy and Transition Planning Council opened consultation on a draft methodology for the Canadian Sustainable Finance Taxonomy. The voluntary taxonomy would classify investments at the activity level across three categories. Green activities would cover zero- or near-zero-emissions solutions. Transition activities would cover emissions-intensive activities that can achieve deep reductions and retain stable or growing demand in Paris-aligned pathways. A later abatement category would cover selected near-term emissions-reduction investments in activities expected to decline, with safeguards intended to limit carbon lock-in. The first phase focuses on climate mitigation. Technical screening criteria will be developed for three sectors in late 2026 and another three in 2027. The six priority sectors are electricity, buildings, transportation, mining, manufacturing, and agriculture and forestry. The criteria will focus primarily on Scope 1 emissions and address Scope 2 and Scope 3 where feasible or material. Comments are due August 13, 2026.
New Zealand proposes transition to an international climate disclosure standard
New Zealand’s External Reporting Board (XRB) opened consultation on a draft roadmap that would introduce a New Zealand version of International Financial Reporting Standards S2 Climate-related Disclosures (NZ IFRS S2). The proposed standard would adopt International Financial Reporting Standards S2 Climate-related Disclosures (IFRS S2) while considering alignment with Australian Accounting Standards Board S2 Climate-related Disclosures (AASB S2) and any changes needed for New Zealand’s law, reporting practice, and market. The roadmap proposes a long transition. Companies could adopt NZ IFRS S2 from October 1, 2026, but mandatory application would not begin until January 1, 2033. During that period, reporting entities could continue using the existing Aotearoa New Zealand Climate Standards. The XRB has not made a final decision. If it proceeds, it will publish an exposure draft and hold a further consultation before issuing the standard. Comments on the roadmap are due September 30, 2026.
Singapore consults on sustainability disclosure standards
Singapore’s Accounting and Corporate Regulatory Authority (ACRA) opened consultation on draft Singapore Sustainability Disclosure Standards based on International Sustainability Standards Board (ISSB) Standards. Under the climate-first proposal, Singapore Financial Reporting Standards S2 (SFRS S2) would be mandatory and would incorporate the climate-related portions of Singapore Financial Reporting Standards S1 (SFRS S1) so companies could use it as a standalone standard; the broader SFRS S1 would remain voluntary. Climate disclosures would be published at the same time as financial statements, and companies would make an explicit, unreserved statement of compliance with SFRS S2. Scope 3 relief would continue for companies not subject to mandatory Scope 3 reporting under Singapore’s phased roadmap, while references to Sustainability Accounting Standards Board (SASB) materials would be voluntary. The consultation closes October 25, 2026.
South Korea announces phased sustainability disclosure roadmap
South Korea’s Financial Services Commission (FSC) set out a phased roadmap for mandatory sustainability reporting by Korea Composite Stock Price Index (KOSPI)-listed companies. Companies with at least 10 trillion South Korean won (KRW) in total consolidated assets would report financial year 2027 information in 2028. The threshold would fall to KRW 5 trillion in 2029. After reviewing the first two reporting cycles, authorities will consider lowering it to KRW 2 trillion from 2030. The government estimates that 291 companies and affiliates would be in scope in 2028, rising to 3,171 in 2029. Third-party verification would become mandatory in 2030. Scope 3 reporting would start in 2031 for the KRW 10 trillion group, 2032 for the KRW 5 trillion group, and 2033 for companies with at least KRW 2 trillion in assets.
For the first three reporting years, companies would receive broad protection from damages and administrative or criminal penalties, except in cases of intentional greenwashing. The roadmap still requires amendments to the Financial Investment Services and Capital Markets Act. The FSC said it would seek to prepare a revision bill as early as July and form a working group to develop the verification system and supporting rules.
