What Might a Second Trump Administration Mean for Corporate Climate-Related Disclosures?

Background

After the results of the 2024 presidential election in the U.S., the climate community is expressing trepidation around a second Trump presidency, weighing what it could mean for climate action in the U.S. at the federal and state level, as well as corporate action and transparency on climate change. 

While the U.S. has not been a global leader on climate action, the Biden administration made progress through the Inflation Reduction Act and additional policies at the state and local levels. California, for example, passed two landmark climate laws – SB 253 and SB 261 – in October 2023 that require companies doing business in California to disclose information on their greenhouse gas (GHG) emissions and climate-related financial risks. 

Also, in March 2024, the U.S. Securities and Exchange Commission (SEC) adopted its final rule on climate-related disclosures, which would require companies to disclose information on how they contribute to and are affected by climate change within their SEC filings. Together, the SEC climate rule and the California laws would require thousands of U.S. companies to enhance their disclosure of climate-related information, representing a substantial step forward for U.S. progress for climate crisis solutions. 

However, the incoming Trump administration poses serious threats to both regulations. Trump has historically not supported climate action at the federal level, and his first administration had a combative, litigious relationship with the State of California. 

Laws and SEC Rule under a Second Trump Administration?

The State of California anticipates a challenging four years ahead in defending environmental rights and policies. California Senator Scott Weiner, author of SB 253, has repeatedly emphasized his intent to the push back against any attempts from the Trump administration to roll back the California climate laws, which is a sentiment shared throughout the branches of California’s government. 

The State government has begun taking proactive steps to ensure adequate resources for the fight. Following the election, Governor Gavin Newsom called the state legislature into a special session on bolstering legal resources for the climate laws and other at-risk laws, in anticipation of increased litigation. The session aims to provide additional funding to the California Department of Justice and the attorney general to ensure they have the necessary resources for litigation against the Trump administration. To date, legal experts anticipate that the California climate disclosure laws will survive the incoming administration.

However, the same optimism does not seem to apply to the SEC rule. With current SEC Chairman Gary Gensler stepping down in January, it is likely that a Trump appointee as SEC Chair will rescind the final rule, eliminating the federal- level mandate for climate-related disclosures.

Looking Ahead: 2025-2029

Without federal support, the majority of meaningful climate-related laws that may be enacted over the next four years will likely occur at the state level — such as in California. Elsewhere, New York and Illinois have introduced similar climate disclosure bills into their legislatures. 

In November 2024, Oregon’s Environmental Quality Commission unanimously adopted the Climate Protection Program, which will establish and enforce greenhouse gas emissions levels in the state. Governor of Oregon Tina Kotek stated after the election that “Oregon is committed to acting boldly and consistently to do our part to protect our climate.” We will wait to see if more states follow California’s lead in pursuing climate regulation.

Optimism During a Time of Uncertainty

While it’s expected that the Trump administration will roll back climate initiatives at the federal level, the global momentum toward corporate climate accountability remains strong. The EU’s Corporate Sustainability Reporting Directive (CSRD), one of the most sweeping climate regulations in the world, will require thousands of companies, including many U.S. companies, to report on their sustainability activities beginning with 2025 data. 

Also, over twenty countries mandate companies to report on International Financial Reporting Standards (IFRS) International Sustainability Standards Board (ISSB) disclosures. These include the United Kingdom, Japan, Canada, Australia, Brazil, and China. Given the ISSB’s wide reach, multinational U.S. companies likely will also need to provide climate reporting in alignment with ISSB. These international standards will set a high bar for climate reporting, regardless of domestic climate policy.

 G&A Institute has tracked trends in voluntary corporate sustainability and climate reporting for more than a decade, beginning in 2011. Our research shows that corporate sustainability and climate reporting rose considerably throughout the first Trump administration, even reaching record levels. While another Trump presidency may bring some measure of chaos and challenges to the progress of climate change solutions, G&A expects that many companies will continue to drive forward climate initiatives to comply with international reporting regulations and to meet demand from investors and other corporate actors. 

Supplementary Info

The California climate laws and the SEC’s climate disclosure rule apply differently to different companies, so it’s important to know whether and how your business falls under their jurisdiction. G&A’s experts stand ready to help your business navigate the complex landscape of climate-related reporting and identify specific reporting needs. Contact our team for more information. 

What is California SB 253 (Climate Corporate Data Accountability Act)?

SB 253 requires public and private U.S. companies doing business in California with gross revenue over $1B to report their Scope 1 and Scope 2 emissions starting in 2026 based on 2025 data. Companies will need to report Scope 3 emissions starting in 2027 based on 2026 data. Companies must engage a third-party to provide independent assurance of their Scopes 1 and 2 emissions to verify that the data is accurate and high quality. Companies who do not comply with SB 253 may face up to $500,000 in penalties per year.

What is California SB 261 (Climate-Related Risk Act)?

SB 261’s scope is broader than SB 253. It requires public and private U.S. companies doing business in California with annual revenue over $500M to complete and publish biannual climate-related risk assessments beginning in 2026. The risk assessments should be produced in line with the disclosure recommendations from the Task Force on Climate-related Financial Disclosures (TCFD). They must examine physical and transition risks, as well as offering commentary on measures taken to mitigate identified risks. The risk assessment report must be published on a company website every two years. Companies who do not comply with SB 261 may face up to $50,000 in penalties per reporting year.

Read G&A’s resource paper for more information on SB 253 and SB 261. 

What is California SB 219?

SB 219 amends and consolidates aspects of SB 253 and SB 261. For SB 253, the new law simplifies the reporting process for large corporate groups by allowing consolidated reporting. Also, SB 219 extended the date for the California Air Resources Board (CARB) adopt the implementation regulations from January 1, 2025, to June 1, 2025, and gave CARB the ability to receive GHG emissions data directly, rather than requiring them to outsource the role to a third-party organization. 

Importantly the reporting deadlines for corporations remain the same. Companies still must start reporting Scopes 1 and 2 GHG emissions data in 2026. For both SB 253 and SB 261, filing fees are no longer required at the time of filing; they are now due by January 1, 2026.

What is the SEC Climate Rule? 

The SEC’s climate disclosure rule, if adopted, would mandate all U.S. companies listed on U.S. stock exchanges to disclose climate-related information in their annual reports and registration statements. The rule as approved requires companies to disclose information on material Scopes 1 and Scope 2 GHG emissions, climate-related risks, and climate-related governance, as well as supporting information for climate-related goals. 

The rule aims to provide investors with standardized and comparable information on the financial effects of climate-related risks on companies and how these risks are managed and mitigated. The rule mandates reporting for large, accelerated filers starting in 2026 for 2025 data and would phase in smaller companies at later dates depending on their filing status. Currently, the rule is held up in consolidated litigation in the Federal Appeals Court. 

Read G&A’s resource paper for more information on the SEC rule.