From Climate Reporting to Climate Readiness

A long-awaited deadline is finally approaching. On November 10, large companies doing business in California must disclose their most recent annual greenhouse gas (GHG) emissions. As reported by ESG News, California’s Office of Administrative Law has approved SB 253, a climate disclosure law that applies to U.S. companies with more than $1 billion in annual revenue. First-year reports cover Scopes 1 and 2 emissions and need no third-party assurance. Scope 3 reporting begins in 2027. California’s companion law on climate risk, SB 261, remains paused pending appeal.

Writing in Harvard Business Review, Christos Cabolis and Karl Schmedders argue that strong climate disclosure does not by itself mean a company is prepared for climate risk. They differentiate “surface strategists,” companies that use reporting mainly for external reassurance, from “leading adapters,” which use it to test strategy and strengthen operations.

As the two professors put it, “On paper, the two look identical. Under stress, they diverge.” They cite the IFRS Foundation’s 2024 review of climate-related disclosures, which found that of 3,814 public companies, only 11% disclosed how resilient their strategies are under different climate scenarios, suggesting their strategy has not been tested for operational use – leaving potential gaps in actual readiness for potential hazards. Moving from assessing climate risk to being ready to respond is the subject of Beyond Disclosure: Turning Climate Risk Reporting into Crisis Readiness, our webinar with EcoOnline on November 10 at 1:00 PM EST.

Commitment to sustainability remains strong among supply chain managers, according to the MIT Sustainable Supply Chain Lab’s 2026 “State of Supply Chain Sustainability” report, covered by MIT News. Of 1,810 supply chain and sustainability professionals surveyed worldwide, 83% rated sustainability important or very important to long-term business success. But they face challenges and lags: 68% said tariff uncertainty had forced their organizations to delay, scale back, or abandon sustainability strategies. Governance may also be insufficient: among companies with public sustainability goals, only 51% have a formal cross-functional sustainability team. This makes a big difference, the study finds, because where such a team exists, respondents said sustainability is built into decisions “frequently or always” 57% of the time, compared with 13% where responsibility sits in a single function.

Also in Harvard Business Review, Tensie Whelan, founding director of NYU Stern’s Center for Sustainable Business, argues that the politics of sustainability have changed but the business case has not. Drawing on the Center’s Return on Sustainability Investment (ROSI) case studies, she identifies circularity, decarbonization, sustainable sourcing and employee well-being as the clearest opportunities for return on investment. One automaker in the study netted $100 million a year from reusing and recycling car components. Her advice to businesses is to quantify the value created or costs avoided and “embed the process in ordinary business decision-making.”

Companies navigating investor-facing ESG ratings should review G&A’s new Quick Guide, which explains how MSCI, Morningstar Sustainalytics, S&P Global, ISS STOXX, FTSE Russell, LSEG and Bloomberg source their data, score companies and let companies review or correct their ratings. A companion blog post sets out where companies should focus.

Also for you in this issue: the SEC closed its investigation of Climate Action 100+, bringing no chargers against members over ExxonMobil’s 2021 board vote, while warning investors that coordinated engagement “can create a group” and trigger additional disclosure obligations; JPMorganChase set new sector-specific emissions-intensity targets for its portfolios in oil and gas, electric power, and auto manufacturing; CDP reports that of 8,017 small- and medium-sized enterprises answering its SME questionnaire, 20% have set emissions reduction targets; and the European Banking Authority finalized mandatory ESG disclosures for banks (known as the Pillar 3 ESG disclosures) in an effort to move climate and environmental risk from voluntary reporting into core banking oversight. The rule takes effect on December 31.