Financial regulation for climate tech

The world isn’t ready for what’s coming next in sustainability data. We’re quietly living through the creation of a financial infrastructure for sustainability—and it’s happening faster than most realize. Over 2,000 sustainability regulations have emerged globally in the past decade, with a 155% surge in ESG-related rules since 2018. This isn’t just about compliance—it’s a fundamental shift in how we define value, risk, and performance. What’s driving it? • EU: CSRD & ESRS will impact over 50,000 companies, embedding double materiality. • India: BRSR Core is mandatory for top 1,000 listed firms. • China: CSDS expands carbon reporting in high-impact sectors. • California: SB 253/261 reshape U.S. climate disclosures. • Australia: AASB S2 aligns with IFRS S2, effective in 2025. • Brazil: CVM 193 adopts IFRS-aligned sustainability standards. • And more: Japan, Canada, Singapore, Nigeria, Turkey—all aligning with global standads. We’ve entered a phase where climate, nature, and transition risks are becoming embedded in financial decision-making—from underwriting and M&A to risk pricing and insurance modeling. In the real estate sector, GRESB has made third-party verified performance data (GHG, energy, water, waste) a best practice. ESG metrics are now more embedded in due diligence for loans, equity, and new acquisitions. Yes, today’s data is often backward-looking. And yes, we still need science-based thresholds and stronger assurance. But this foundational work is what allows us to get there. Without reliable, standardized, machine-readable data, we can’t scale action, track progress, or hold anyone accountable. Just as GAAP and IFRS created trust in financial markets, IFRS S1/S2, CSRD, and the GHG Protocol are setting the stage for credible, comparable sustainability data. It will not be a “parallel system.” in the future. We are building the groundwork for full integration into the global financial system. This shift will transform: • How we price risk • How capital is allocated • How resilient companies are rewarded • How we define long-term value creation It’s messy. It’s political. It’s imperfect. But it’s also historic. If you’re in this space, you’re not just reporting data—you’re helping build a new operating system for business and capital markets. One that rewards transparency, resilience, and climate alignment. Let’s keep building—with more rigor, more ambition, and more impact.

📢 SB 261 Injunction and the Future of Climate Risk Disclosure The regulatory path for climate disclosure has seen another turn this week. Yesterday the Ninth Circuit Court of Appeals issued an injunction temporarily halting the enforcement of California's Senate Bill (SB) 261, the Climate-Related Financial Risk Act, pending appeal. This ruling comes in just under the wire, as inaugural reports are due January 1, 2026. Key Takeaways from the Decision: 🏭 SB 261 is Paused, SB 253 Continues: The injunction only applies to SB 261 (Climate-Related Financial Risk). It does not affect SB 253 (Climate Corporate Data Accountability Act), which mandates annual GHG emissions reporting (Scope 1, 2, and 3) for companies with over $1 billion in annual revenue, with initial Scope 1 and 2 reporting still slated for 2026, and scope 3 in 2027 👩⚖️ A Legal Challenge, Not a Definitive End: This ruling is a procedural pause based on an appeal, not a final judgment on the law's constitutionality. The underlying legal challenges, primarily related to the First Amendment, will proceed, with initial arguments scheduled for early January. What this means for your business: This legal pause on one regional mandate does not negate the overwhelming, financially material reality of climate risk. ✅ The market demand for this information is only intensifying: Global Regulatory Convergence: Disclosure requirements like the CSRD (Corporate Sustainability Reporting Directive) in the EU and ISSB standards are setting a high bar globally, impacting multinational companies, regardless of the outcome in California. 💰 Investor and Fiduciary Duty: Investors, lenders, and insurance underwriters are increasingly treating climate risk as material financial risk. They are using this data to make crucial capital allocation decisions, assess creditworthiness, and price risk. Your internal climate data is key to maintaining trust and access to capital. 🈺 Stakeholder Pressure: Customers, employees, and broader business stakeholders are demanding transparency on corporate climate action and resilience. Your climate risk is a risk to your business partners, customers, and suppliers. My Guidance: Use this time not as a delay, but as an opportunity to strengthen your foundation. Continue to to embed TCFD/ISSB-aligned climate risk assessments into your enterprise risk management processes and business planning. The future of business depends on understanding all financially material risks—and climate is undeniably at the top of that list. Let's keep our foot on the gas. 🚀 #ClimateDisclosure #SB261 #ISSB #ESG #FinancialRisk

If you’re a CFO and still think climate regulation is just a compliance headache, I’d encourage you to read SB 253 and SB 261 a bit more closely. These two bills won’t just require you to report climate data. They’ll expose how prepared (or not) your company is to handle climate risk — financially, reputationally, and operationally. That has implications for capital markets. Investor relations. Insurance premiums. And future access to public and private funding. Let me make it tangible: → SB 253 will force companies doing business in California to disclose full Scope 1, 2 and 3 emissions. That means mapping your upstream and downstream value chain. Not estimating. Not modeling. Disclosing. → SB 261 demands public disclosure of climate-related financial risks and how your company plans to manage them. Think TCFD-style reporting — but public and enforced. And yet, many companies are still thinking in terms of ESG checklists and one-off materiality assessments. That’s not going to cut it anymore. What’s coming isn’t “more compliance.” It’s a shift in how financial performance and sustainability are tied together. Regulators are accelerating that shift. If I were in your seat, I’d ask two simple questions: Do we have a clear line of sight from raw supply chain data to our financial disclosures? Can we actually prove what we’re reporting? If the answer is no — that’s not a reporting problem. It’s a business readiness problem. The good news? There’s still time to move. But in Q3 and Q4, as budget conversations start ramping up, the cost of not preparing will start to show up on the balance sheet. Because climate risk is now business risk. And this time, it’s not just your CSO’s responsibility to solve it.

With California Rule SB261 requiring climate-related financial risk disclosures by Jan 1, 2026, many companies are revisiting their #TCFD reports. But compliance is just the beginning. Based on market observations, KPMG US has identified ways to unlock more value from climate risk assessments. For example: ✅ Strengthen the business case for decarbonization ✅ Integrate climate risk into ERM programs ✅ Align one assessment with multiple regulations (ISSB, CSRD, CDP) The opportunity? Go beyond disclosure to drive strategic, operational, and financial impact. Climate risk isn’t just a reporting exercise, it’s a lens for smarter decision-making. How is your organization approaching climate risk assessments? I’d love to hear your insights in the comments below. You can read more about all five of these strategies in our blog post here: https://lnkd.in/e6SksAfG #KPMGSustainability #KPMG #EnvironmentalResilience #SustainabilityStrategy #CaliforniaRule261 #ESG #Decarbonization

The IFRS Foundation has published its 2024 progress report on corporate climate-related disclosures. The 2024 report looks at progress by companies globally in making climate-related disclosures, under both the TCFD framework and through early take-up of the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board. The report slices and dices the data in different ways, enabling companies to benchmark their climate-related disclosures against other companies globally and in their region and industry. In this post, in addition to discussing global trends, we look specifically at climate reporting progress by U.S. companies. This is particularly relevant as a large number of U.S.-organized companies gear up for compliance with California’s Climate‐Related Financial Risk Act. Under the Act, covered entities must, by January 1, 2026, publish their first climate-related financial risk report. That report must disclose climate-related financial risk in accordance with the TCFD framework or an equivalent reporting requirement, which includes the ISSB Standards. Marc Rotter Peter Witschi #ISSB #TCFD #SB261 https://lnkd.in/eaYfyc_y