ESG Regulations in the US: What Businesses Need to Know in 2026

ESG regulations in the United States vary by state, industry, and business activity. There is no single ESG reporting law covering every company. California has climate disclosure requirements for qualifying businesses, while federal securities and environmental reporting rules may also apply. Businesses must check their legal coverage, reporting deadlines, and current enforcement status before taking action.

For business owners, the hardest part is often knowing where to start.

Some ESG regulations require companies to report greenhouse gas emissions. Others address financial risks, environmental claims, or specific business activities. Some rules are also facing court challenges or proposed changes.

This guide explains the main U.S. ESG regulations in 2026, which businesses may be covered, what information they may need to report, and how to prepare.

What Are ESG Regulations in the United States?

ESG regulations are laws and enforceable requirements related to environmental, social, and governance matters.

ESG stands for three areas:

• Environmental: Greenhouse gas emissions, pollution, energy use, and environmental risks.

• Social: Worker safety, employment practices, and responsibilities affecting people.

• Governance: Business ethics, oversight, risk management, and accountability.

These topics are not all governed by one law.

For example, an employer may have workplace safety duties under federal law. A manufacturing facility may have environmental reporting duties. A public company may need to disclose certain financial risks.

Each obligation has its own rules.

ESG regulations also differ from voluntary business goals. A company may choose to reduce emissions, improve workplace practices, or publish sustainability information without being legally required to do so.

The important question is whether a specific law applies to the business.

Organizations can incorporate ESG responsibilities into their existing risk and compliance management processes rather than creating a separate system for every ESG topic.

A broader guide to ESG compliance can help explain how these activities fit into an organization-wide program. 

Which Businesses Must Follow ESG Regulations?

Not every U.S. business must meet the same ESG reporting requirements.

Whether a company is covered depends on the wording of the applicable law.

Several factors matter.

Business location and legal structure. Some state laws cover businesses formed elsewhere if they do business in that state and meet other legal conditions.

Annual revenue. Certain climate disclosure laws use revenue thresholds to determine which businesses may be covered.

Public or private status. Public companies have securities disclosure responsibilities. Private companies may also face specific state or environmental reporting requirements.

Business activities. A power plant, manufacturer, or fuel supplier may have environmental obligations that do not apply to an ordinary office business.

Reporting period. A law may require information from a particular fiscal year, even when the filing deadline falls in the following year.

These details must be checked together.

A company with high revenue does not automatically fall under every climate law. Likewise, a small company is not automatically exempt from every environmental requirement.

Businesses should also separate direct legal obligations from customer requests.

For example, a large company preparing an emissions report may ask its suppliers for information about materials, transportation, or energy use.

A supplier receiving that request is not automatically covered by the same reporting law. However, the supplier may still need to respond under its commercial agreement.

This difference matters because mandatory ESG reporting and voluntary or contract-based disclosures are not the same thing.

California ESG Regulations: SB 253 and SB 261

California has introduced two major climate disclosure laws affecting certain large businesses.

They are commonly discussed together, but they address different reporting needs.

SB 253 focuses on greenhouse gas emissions. SB 261 focuses on climate-related financial risks.

California SB 253: Greenhouse Gas Emissions Reporting

California's Climate Corporate Data Accountability Act, known as SB 253, requires qualifying businesses to disclose greenhouse gas emissions.

The law generally applies to specified U.S.-formed business entities with more than $1 billion in total annual revenue that do business in California.

Businesses must still check the law's exact definitions, reporting boundaries, and applicable exceptions.

SB 253 covers three emissions categories.

Scope 1 emissions come directly from sources a company owns or controls. Examples include fuel burned in company vehicles or equipment.

Scope 2 emissions come from the production of purchased electricity, steam, heating, or cooling used by the company.

Scope 3 emissions are other indirect emissions across the company's value chain, including certain supplier, transportation, product-use, and disposal activities.

Under CARB's SB 253 reporting guidance, the first Scope 1 and Scope 2 reporting deadline is November 10, 2026. The initial filing concerns the prior fiscal year's emissions.

California Air Resources Board

Scope 3 reporting is part of the law, but its requirements begin in later reporting years. CARB is developing further rules for 2027 and beyond.

This means businesses should not assume that all three scopes have the same first reporting deadline.

CARB has also provided first-year enforcement guidance that addresses good-faith reporting efforts. Companies should review that guidance rather than assume all errors will be excused.

Another point often causes confusion.

CARB provides an optional reporting intake platform. Businesses may use that platform or follow other permitted submission instructions.

The platform is voluntary, but the underlying SB 253 reporting requirement is not automatically voluntary.

A business that believes SB 253 applies should confirm its coverage, gather the required records, and follow current CARB instructions.

California SB 261: Climate-Related Financial Risk Reporting

California's SB 261 focuses on the financial risks a business may face because of climate change.

The law generally covers specified U.S.-formed business entities with more than $500 million in total annual revenue that do business in California, subject to applicable exclusions.

It calls for biennial reports on climate-related financial risks and measures taken to reduce or adapt to them.

These risks may include physical events, such as flooding or extreme heat, and business changes, such as higher energy costs or new technology.

However, SB 261's legal status is important.

On November 18, 2025, the Ninth Circuit Court of Appeals issued an injunction against enforcement of the law while an appeal proceeds.

According to CARB's SB 261 enforcement guidance, CARB will not enforce the original January 1, 2026, reporting deadline during the injunction. Businesses may submit reports voluntarily while the legal proceedings continue.

California Air Resources Board

The injunction does not mean the law has been repealed.

Businesses that may be covered should monitor the court proceedings and CARB's future instructions.

Federal ESG Regulations and Disclosure Requirements

The United States does not have one federal law requiring every company to file a complete ESG report.

However, federal securities, environmental, and consumer protection rules may create separate responsibilities.

SEC Climate Disclosure Rules and Existing Securities Requirements

The Securities and Exchange Commission (SEC) oversees disclosures by public companies.

In March 2024, the SEC adopted climate-related disclosure rules covering certain climate risks, governance matters, and emissions information.

Those rules did not become effective as planned.

The SEC stayed them in April 2024 while legal challenges proceeded. In March 2025, the agency stopped defending them in court.

On May 29, 2026, the SEC issued a proposal to rescind the climate disclosure rules. The agency's official rulemaking record continues to identify the action as proposed rather than a completed final rescission.

Rescission of Climate-Related Disclosure Rules

Businesses should therefore avoid two incorrect conclusions.

First, they should not treat the stayed 2024 climate rules as currently effective reporting requirements.

Second, they should not claim that the rules have already been formally rescinded unless a final action confirms it.

Existing securities disclosure rules still matter.

Regulation S-K Item 303 addresses management's discussion and analysis of financial condition and results. Item 105 covers material risk factors.

Climate-related information may need to be disclosed under existing requirements when it meets the applicable legal standard.

This involves financial materiality.

In simple terms, information may be material when a reasonable investor would consider it important when making an investment decision.

A business should not assume that every environmental issue is financially material. The facts, risks, and applicable disclosure rules must be considered.

Public companies should work with qualified legal and financial professionals when making these decisions.

EPA Emissions Reporting and FTC Environmental Claims Guidance

Federal environmental reporting is another part of the U.S. ESG regulatory landscape.

The EPA's Greenhouse Gas Reporting Program requires certain facilities and businesses to report greenhouse gas information.

The program covers specified large emissions sources, fuel and industrial gas suppliers, and carbon dioxide injection sites.

For many source categories, a threshold of 25,000 metric tons of carbon dioxide equivalent is relevant. However, some categories have different thresholds or coverage rules.

The program does not apply to every business.

Reporting requirements can also change. EPA has issued an interim final rule extending the reporting year 2025 deadline to March 10, 2027, while broader changes to the program have been proposed.

US EPA

Businesses should check the current rules for their particular source category.

Environmental marketing claims raise a different issue.

The Federal Trade Commission's Green Guides explain how businesses can avoid misleading environmental claims.

For example, a company that calls a product “eco-friendly” without explaining the specific benefit may mislead customers.

The Green Guides are guidance for interpreting environmental marketing claims, not a universal ESG reporting law. However, deceptive claims may violate the FTC Act.

Businesses should support public environmental statements with reliable evidence.

This also helps reduce greenwashing risks, which arise when environmental claims give a misleading picture of a product or company's performance.

ESG Regulations vs. Voluntary Reporting Standards

ESG regulations establish legal duties. Reporting standards help businesses measure and explain information.

The two are connected, but they are not interchangeable.

A company may choose to use a reporting standard even when no law requires it. A law, regulator, or contract may also require information to be prepared using a particular method.

Several frameworks and standards are commonly used.

The IFRS Foundation's IFRS Sustainability Disclosure Standards provide a common approach to sustainability-related financial disclosures.

However, these standards are not automatically mandatory for every U.S. company.

A business should first identify its legal reporting duties. It can then determine which standards, methods, or disclosure formats are required or useful.

This helps avoid unnecessary work.

For example, a company that receives a customer questionnaire may need to provide selected emissions figures rather than prepare a complete public sustainability report.

What ESG Information May Businesses Need to Report?

The information a company needs to report depends on the applicable regulation.

Some requirements focus on emissions. Others concern climate-related financial risks, governance, or supporting records.

Scope 1, 2, and 3 Emissions Data

Greenhouse gas reporting often divides emissions into three categories.

Scope 1 covers direct emissions from sources a company owns or controls.

A delivery business, for example, may produce Scope 1 emissions when its vehicles burn fuel.

Scope 2 covers emissions associated with purchased electricity, heating, steam, or cooling.

A business using electricity in an office or factory may have Scope 2 emissions associated with that energy.

Scope 3 covers other indirect emissions across the value chain.

Examples include purchased goods, shipping services, employee travel, the use of sold products, and product disposal.

Scope 3 includes both upstream and downstream activities. It is not limited to suppliers.

The GHG Protocol's Scope 3 Standard explains how companies can identify and account for these emissions.

Businesses also use carbon dioxide equivalent, or CO2e, to express the combined warming effects of different greenhouse gases in a common unit.

Climate-Related Financial Risks and Governance Information

Climate risks can affect a business in different ways.

Physical risks come from events or conditions such as flooding, severe storms, drought, or extreme heat.

A warehouse in a flood-prone area, for example, may face property damage, higher insurance costs, or delivery delays.

Transition risks arise from changes in markets, technology, energy systems, or government policies.

A company that relies on expensive equipment may need to consider how changes in energy costs or technology could affect future spending.

Businesses may also need to explain how leaders oversee these risks.

Governance information can include who makes decisions, how risks are reviewed, and how reporting responsibilities are assigned.

A clear risk management framework can help organizations identify, assess, and monitor these concerns.

For businesses with climate disclosure responsibilities, the goal is to explain the risks that matter under the applicable reporting rules, not to list every possible environmental concern.

How to Determine Which ESG Regulations Apply to Your Business

The best way to assess ESG compliance requirements is to review your company's legal facts against each relevant law.

Do not start by assuming that every ESG regulation applies. Use the following process to narrow down the requirements.

Step 1: Identify the legal entity.

Record the company's legal name, where it was formed, and how it is organized.

If the business belongs to a larger corporate group, determine which entity may be responsible for reporting. Different laws may use different rules for parent companies and subsidiaries.

Step 2: Check revenue, location, and activities.

Review the coverage conditions in each law.

For California SB 253 and SB 261, consider total annual revenue, whether the business does business in California, and any exclusions.

For EPA reporting, identify the facilities, emissions sources, and regulated activities.

Revenue alone does not settle every question.

Step 3: Match the business to the reporting requirement.

Identify the regulator, required information, reporting period, and submission method.

For example, a manufacturer might need to review California's climate disclosure laws and separate EPA facility reporting requirements.

Those programs serve different purposes. Reporting under one does not automatically satisfy the other.

Step 4: Verify the current legal status.

Check whether a rule is effective, stayed, subject to an injunction, or being revised.

A court order may prevent enforcement without removing the law itself. A proposed rule change does not have the same effect as a final rule.

For California reporting, CARB's reporting resources provide current guidance, reporting materials, and related notices.

Step 5: Assign responsibilities and record the decision.

Choose who will review legal coverage, gather data, prepare disclosures, and approve submissions.

Keep a record of the requirements considered and the reasons for each decision.

If a rule does not apply, document why. Include the facts and legal conditions used to reach that conclusion.

Example: How ESG Requirements Differ Between Two US Businesses

Consider two hypothetical businesses.

Company A is a U.S.-formed manufacturer with $1.2 billion in total annual revenue. It operates in several states and does business in California.

Company B is a smaller supplier with $20 million in annual revenue. It sells materials to Company A.

Company A may fall within California SB 253's coverage because it exceeds the stated revenue threshold and does business in California.

However, the company must still check the law's full coverage conditions, definitions, exclusions, and current reporting instructions.

Company A may also need to assess SB 261 because its revenue exceeds that law's threshold. Any reporting decision must account for the current enforcement injunction.

Company B does not meet either law's stated revenue threshold based on the example's facts.

That does not mean Company B has no environmental responsibilities.

It may have separate obligations based on its operations or facilities.

Company A might also request emissions information from Company B to help measure value-chain emissions.

Company B could provide that information under a customer agreement even without being directly covered by SB 253.

This distinction is important in sustainable supply chain management, where large businesses may request information from smaller suppliers.

The example shows why businesses should assess direct legal obligations and customer reporting requests separately.

Preparing for ESG Reporting and Compliance Responsibilities

Once a company identifies an applicable requirement, it needs a practical plan for meeting it.

Start by assigning responsibility.

Depending on the business, ESG reporting may involve compliance, finance, operations, legal, and sustainability teams.

Each team may hold different information.

For example, operations staff may manage fuel and energy records. Finance staff may hold cost information. Facility managers may understand physical risks affecting buildings and equipment.

Next, identify the records needed for each disclosure.

These could include utility bills, fuel purchases, equipment records, financial documents, supplier information, or risk assessments.

Reliable reporting depends on knowing where the information came from.

If a company uses estimates, it should document the method, assumptions, and data sources.

It should also review unusual results and correct errors before submitting information.

A structured data governance framework can help businesses establish data ownership, review procedures, and accountability.

Businesses should also keep a reporting calendar.

The calendar should identify deadlines, responsible staff, required reviews, and any assurance obligations.

Some laws require independent assurance of reported information. An internal review or employee training program does not replace that requirement.

Finally, monitor regulatory updates. Changes to reporting dates, court decisions, or agency instructions may affect the work already underway.

Employees who are new to ESG responsibilities may benefit from introductory training.

US Compliance Institute offers ESG and Sustainability Compliance Essentials, an online, self-paced course covering ESG principles, sustainability governance, climate risks, reporting frameworks, and compliance concepts.

The course contains five modules and 20 lectures. It also includes learning resources, case studies, and knowledge checks.

Learners who complete the course receive a Professional Certificate of Completion.

The training may suit business owners, compliance coordinators, sustainability staff, risk managers, and employees who need a basic understanding of ESG reporting responsibilities.

It is not intended to replace legal advice, specialist greenhouse gas accounting, or required third-party assurance.

Completing the course does not automatically make a business compliant with any ESG regulation.

Understanding ESG Regulations Is the First Step

ESG regulations in the United States depend on the business, its activities, and the specific legal requirements involved.

California SB 253 requires emissions reporting from qualifying businesses. SB 261 addresses climate-related financial risks but remains affected by an enforcement injunction.

Federal securities, environmental, and consumer protection rules may create separate responsibilities.

The most useful starting point is to identify which requirements may apply, confirm their current legal status, and determine what information the business needs.

From there, assign responsibilities, collect reliable records, and review reporting requirements before each deadline.

Businesses developing a wider ESG program can also use the planned ESG compliance pillar guide once it is published. Pillar article URL pending publication.

For teams that need foundational knowledge, USCI's ESG training course provides an introduction to reporting concepts and governance responsibilities. Businesses with specific legal or technical reporting needs should also seek appropriate professional support.