New climate regulation and TNFD guidelines are here: Don’t just comply—transform | Deloitte US has been saved
By Kristen Sullivan, Global Audit & Assurance Sustainability and Climate Services Leader, Deloitte & Touche LLP
Talking points
- From new laws in California to Climate Week in New York, September was a busy month for climate and environmental, social, and governance (ESG) developments.
- The Taskforce on Nature-related Financial Disclosures (TNFD) released its framework for managing and disclosing nature-related risks, while California’s governor signed into law two bills requiring large companies to disclose their greenhouse gas (GHG) emissions and climate-related financial risk.
- Organizations may consider these new developments, combined with those over the past few months, not as compliance exercises but as potential catalysts for business transformation.
The energy in New York during Climate Week, which concluded on September 22, was palpable. This year’s theme, “We can. We will.,” underscored the urgency for many companies of moving from commitment to action. And the business delegation was all in, to an inspiring degree.
Climate Week followed on the heels of important climate news out of California. The news is especially significant because California is the most populous US state, not to mention the world’s fifth-largest economy—and the first US state to take this action. Similar legislation is pending in the New York State Senate.
It all made for an exceptionally busy couple of weeks for those charting a path to a more sustainable future. Here are some of the highlights.
Final TNFD reporting guidelines
Climate Week kicked off with the much-anticipated release of final guidelines from the TNFD. In a bid to close gaps among different reporting standards, the TNFD clearly mapped how its guidelines fit into the International Sustainability Standards Board (ISSB) standards and the European Sustainability Reporting Standards.
With final guidelines in place, companies now have access to a robust, consistent approach to quantify their financial exposure to natural capital loss. They also have an important management tool to help drive a deeper understanding of the climate and nature intersection while supporting a shift toward nature-positive outcomes.
And make no mistake—there can likely be no climate progress without progress around natural capital and biodiversity. According to the World Economic Forum, 50% of the global economy is under threat from biodiversity loss. At the organizational level, issues like water shortages, deforestation, and pollution can impact the bottom line. That’s why many businesses are paying attention and embracing the opportunity to drive meaningful impact for the natural world while building long-term value.
California governor Gavin Newsom signed two bills—both part of the state legislature's landmark Climate Accountability Package—into law.
California climate disclosure regulations
California Governor Gavin Newsom signed two bills—both part of the state legislature’s landmark Climate Accountability Package—into law.
One bill, SB 253, requires large companies to disclose their Scopes 1, 2, and 3 GHG emissions in line with the Greenhouse Gas Protocol, and obtain assurance, starting January 1, 2026.
Under the other bill, SB 261, companies will need to publicly release a biennial report disclosing their climate-related financial risk according to the Task Force on Climate Related Financial Disclosures or its successor organization, the ISSB. Companies will also need to report on the measures they’re taking to reduce and adapt to climate-related financial risk. Implementation of SB 261 is slated for January 1, 2026.
Together, the bills go further than the proposed climate disclosure rule from the Securities and Exchange Commission (SEC). They apply to US-based public and private companies headquartered in the US that do business in California. Applicability starts at global annual revenue of $500 million for SB 261 (excluding companies in the insurance business) and $1 billion for SB 253. That means an estimated 15,000 companies will be required to comply with both laws.
A time for action
Even as we await the SEC’s final climate disclosure rule, policy and regulation are here. Requirements extend beyond compliance and can serve as catalysts for business transformation. These developments around Scope 3 GHG emissions have important implications for transition risk and business resilience. They are also an opportunity to set your organization up for a sustainable future and potentially set you apart in the eyes of investors, talent, customers, and communities.
Deloitte can advise you on ways to understand, identify, and quantify climate-related risks and opportunities—including measuring GHG emissions – in line with TCFD, ISSB, and Greenhouse Gas Protocol—in a manner that can put you on a path to be prepared for assurance. Please visit our sustainability regulation page to learn more, register now to attend our ESG readiness Dbriefs webinar on October 31, and let us know what questions you have.
Get in touch
Kristen Sullivan
Audit & Assurance Partner | Sustainability and ESG Services | Deloitte & Touche LLP
Kristen B. Sullivan is an Audit & Assurance partner with Deloitte & Touche LLP and leads Sustainability and ESG Services. She also serves as the Deloitte Touche Tohmatsu Limited’s Global Audit & Assurance Sustainability and Climate Services Leader and the Integrated Reporting Community of Practice Leader. Kristen brings extensive experience in delivering sustainability risk assessment, governance, strategy alignment, measurement, reporting, and assurance services. Given the growing market emphasis on the importance of ESG standards and frameworks, Kristen serves as a member of the Global Reporting Initiative (GRI) Community, she chairs the AICPA Sustainability Advisory and Assurance Task Force and the International Sustainability Standards Board (ISSB)/AICPA Task Force. She previously served on the International Integrated Reporting Council (IIRC) Working Group. Kristen has authored a number of publications around the importance of sustainability and ESG disclosure and assurance. She was named a 2024 Women in Sustainability Leadership Award winner, #23 on the 2023 Onalytica top 50 ESG influencers list, recognized as an ESG, Diversity, and Climate Trailblazer as part of Diligent’s 2023 Modern Governance 100 nominees, and #10 on the 2020 Top 100 Corporate Social Responsibility Influence Leaders list. Kristen has more than 25 years of experience with Deloitte, beginning her career in Deloitte’s Audit and Advisory Services, working in Deloitte’s National Office in several capacities, and working with the deputy CEO of Deloitte LLP focused on regulatory and public policy matters. Kristen is a CPA (CT, MO) and CGMA and earned SASB’s Fundamentals of Sustainability Accounting (FSA) Credential. Kristen completed the Berkeley Law Executive Education Certification: ESG: Navigating the Board’s Role and the Diligent Institute Climate Leadership Certification. Kristen is a member of the Financial Women’s Association and lives in Greenwich, CT, with her five-year-old daughter.
