This two-part blog post series was co-authored by experts at Stok and Arcadis–two firms working to address climate risk across sectors.
Climate disclosure is no longer optional—it’s a business imperative. A recent string of global climate regulation is driving companies to action, with many wondering how to effectively face the rapidly evolving requirements and spend the money to do so wisely.
But before we dive into action, first, a quick primer on these regulations. Then, in Part 2, a risk-based, future-ready approach to prepare.
REGULATION HAS ARRIVED
Climate-related regulation is accelerating and converging globally around an accepted standard: As of this writing, more than 33 countries are in the process of setting disclosure standards aligned with the International Sustainability Standards Board (ISSB)’s IFRS S1 and S2. This includes 17 countries that have already finalized their approach, and many more jurisdictions such as New York, Canada and Japan, who are well on their way. See here for a quick table summarizing key regulations worldwide.
In the U.S., California leads with the Climate Accountability Package, consisting of:
For those new to this world of acronyms, there are two recent standards from the ISSB (S1 and S2) that set the bar for sustainability related financial disclosures for companies: S1 covers sustainability risks and opportunities broadly; S2 focuses specifically on climate and is the backbone of all corporate-level climate disclosure regulations.
TCFD vs IFRS S2
The Task Force on Climate-Related Financial Disclosures (TCFD) is essentially IFRS S2 “lite.” TCFD was created by the Financial Stability Board (FSB) and in 2017 released recommendations on company climate-related financial disclosures. The International Sustainability Standards Board (ISSB) built upon and expanded these recommendations to develop IFRS S2–a global standard for climate-related disclosures. IFRS S2 includes all TCFD recommendations; therefore, aligning with IFRS S2 equates to aligning with TCFD. Alignment with TCFD, however, does not equate to full alignment with IFRS S2, which is more expansive. For further insight (and more acronyms), see this explanation.
NAVIGATING THROUGH CHANGE AND UNCERTAINTY
General alignment of global standards across jurisdictions would seem to yield clarity on the path forward; however, this isn’t the reality. Clear definitions and guidance lag behind the directional legislation and regulation that precede them. The result is that the companies that are–or may be–impacted must act quickly based on the broad guidance available and manage through uncertainty.
Businesses with voluntary reporting experience following recognized standards have an advantage in this environment. For those who have not yet begun or are very early in their climate journeys, preparing for compliance is both possible and strategically valuable.
WHO NEEDS TO PAY ATTENTION (NOW)
Several regulations are phased, meaning that companies that may not need to comply now may need to comply in the future. We recommend taking action now if you are one of the following:
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- Global company with cross-jurisdictional operations or value chain
- U.S. company doing business in California or New York, or with EU operations
- Private company that meets revenue or asset thresholds (especially California SB 261 and Australia AASB)
- Firm in capital-intensive sector (real estate, transport, manufacturing, energy), which will likely face increased investor scrutiny and/or customer requirements
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If you are not on this list, we recommend taking a proactive step to familiarize yourself with the regulations that impact your customers, investors, and other key players in your industry. Impacts to these players may affect your company in the future.
WHAT NOW?
Now that you’ve been primed on global climate risk regulations, let’s act. Read our Part 2: How to Turn Compliance into Competitive Advantage for a smart, incremental approach to preparing for climate disclosure.
ABOUT THE AUTHORS
Colette Crouse, Director, Carbon Services, Stok
Colette leads Carbon Services for Stok and has over a decade of experience helping organizations develop and communicate their climate action programs. Colette has supported nonprofits, small businesses and Fortune 50s in establishing industry leading GHG accounting and data management practices, designing and operationalizing decarbonization strategies, and evolving internal expertise and programs to keep pace with changing standards and expectations. Colette also teaches Greenhouse Gas Accounting and Management at the University of Colorado, Boulder in the Masters of the Environment Program.
Kaylee Shalett, Global Technical Director, Climate Risk & Reporting, Arcadis
Kaylee is a climate resilience strategist with over a decade of experience helping companies turn climate risk into opportunity. As Global Technical Director for Climate Risk Assessments & Reporting at Arcadis, she has led 60+ cross-sector projects, supporting clients in embedding climate into enterprise risk management, creating decarbonization strategies that reduce risk and enhance cash flows, and aligning with IFRS S2 and emerging regulations. With a foundation in climate science and a focus on practical outcomes, Kaylee delivers data-driven, actionable strategies that build resilience and unlock long-term value.
