Climate transition and TCFD compliance

UPDATE- 6/13/25 The New York legislative session has ended and the climate bills did not pass. They will have to be reintroduced in a future session (as was the case with the California laws). New York is poised to join California in adopting climate disclosure laws. New York has reintroduced two major climate disclosure bills in 2025: Senate Bill 3456 (the Climate Corporate Data Accountability Act) and Senate Bill 3697 (the Climate-Related Financial Risk Reporting Bill). The bills closely follow California's laws SB 253 and SB 261. Climate Corporate Data Accountability Act (CCDAA) - Scope and Applicability: Requires public and private companies with annual revenues exceeding $1 billion and operating in New York to annually disclose their Scopes 1, 2, and 3 greenhouse gas emissions. Reporting Standards: Disclosures must align with the Greenhouse Gas Protocol. Assurance: Emissions data must be verified by independent third parties, with phased assurance requirements increasing over time. Timeline: 2027: Disclosure of Scope 1 and 2 emissions (using 2026 data). 2028: Scope 3 emissions (using 2027 data). The New York Department of Environmental Conservation will oversee implementation. Penalties for non-compliance up to $100,000 per day, capped at $500,000 per reporting year. Legislative Status: The bill passed the Senate Environmental Conservation Committee unanimously and is now pending in the Senate Finance Committee. A companion bill (A4282) is moving through the Assembly. Climate-Related Financial Risk Reporting Bill - Scope:  Applies to business entities formed under U.S. law with annual revenues over $500 million that do business in New York. Requirements:  Reporting companies must publish biennial reports on climate-related financial risks, following the Task Force on Climate-related Financial Disclosures framework or an equivalent standard such as the ISSB standards. Enforcement:  Penalties for non-disclosure or inadequate disclosure of up to $50,000 per reporting year. Implementation Timeline:  First reports would be due by January 1, 2028, and biennially thereafter. Legislative Status: Passed unanimously out of the Environmental Conservation Committee in May and was reported and committed to the Senate Finance Committee. #NewYork #Climatereporting #GHGEmissions

Attention, corporate sustainability community. Just a reminder that the world does not revolve around SB 261. New York State has two bills in committee right now. Senate Bill S3697A would require companies with $500m+ in revenue doing business in NY to publish a TCFD-aligned report bi-annually starting January 1, 2028 (sound familiar?) Senate Bill S5132 requires the same, but for banks and insurance companies, starting December 31, 2026. **Here's what compliance teams are missing:** Even if California's SB 261 gets watered down or delayed through legal challenges, NY's bills create the same compliance obligations on nearly identical timelines. And NY has been watching California's rollout closely — they're fixing the implementation gaps that made SB 261 messy. The domino effect is real. Massachusetts, Illinois, Washington State all have similar bills. **The compliance math is brutal:** If you operate in multiple states, you're not choosing between California OR New York rules. You're complying with both. Plus whatever comes from Massachusetts, Illinois, and the other 10 states drafting similar laws. Companies spending millions fighting SB 261 in court, or those arguing that maybe they now have 9 more days to figure things out (or maybe not) are missing the bigger picture. While they're focused on California, NY just created the same reporting requirements with teeth. **My take?** Stop treating state climate laws like isolated compliance exercises. Build one robust climate risk framework that handles all of them. Because by the time you finish fighting one state's requirements, three more states have passed their own. And get back to work on actually managing these natural disaster risks.

Here are 10 elements required to build a credible climate transition plan that goes beyond emissions targets and connects sustainability with ESG strategy, governance, finance, and reporting. A robust transition plan integrates long term climate ambition with strategic positioning, business model evolution, capital allocation, and quantified financial impacts. It defines clear decarbonization and adaptation levers across operations and the value chain, supported by an implementation roadmap with assigned responsibilities and timelines. From an ESG strategy perspective, climate objectives must be embedded into enterprise risk management, capital expenditure planning, M&A screening, and performance management systems. Without that integration, climate remains disconnected from core financial decision making. Governance structures need to clarify board oversight, executive accountability, and incentive alignment. Reporting mechanisms should track interim targets, disclose scenario assumptions, and explain exposure to transition and physical risks in financial terms. The relevance of this structure lies in execution discipline. Many organizations publish climate commitments, but fewer translate them into capital allocation decisions, impairment testing, procurement criteria, and operational KPIs. The gap is not ambition. The gap is integration. As sustainability expectations increase from regulators, investors, and financial institutions, transition planning becomes a test of strategic coherence. Companies that align ESG strategy, governance architecture, and reporting frameworks with real investment decisions will be better positioned to manage transition risk, protect asset value, and maintain access to capital. This visual maps the structural architecture required to operationalize that alignment.

Most companies treat climate risk as a PR problem. It isn't. It's a balance sheet problem. And the ones who don't see that yet are going to be caught off guard. The TCFD framework forces one uncomfortable question: how does climate actually show up in your financials? The answer hits all three statements at once. Your Income Statement. Your Cash Flow Statement. Your Balance Sheet. I have tried breaking this down — using a manufacturing company example showing how a carbon tax and a flood hit a company's financials, and how the same company would look if it had chosen differently. Here's what makes this urgent right now. California's SB 261 requires companies with over $500 million in revenue to disclose climate-related financial risks. Enforcement is paused — but the law hasn't been struck down. And companies aren't waiting. Quest Diagnostics. Schneider Electric. Scotiabank. Bausch & Lomb. Bridgestone Americas. All voluntarily filed. Not because they had to. Because their investors and boards demanded it. The framework is simple. The discipline to apply it is not. Does your organization map climate risks directly to financial statements yet?

Here's what sustainability teams need to know from CARB's second public workshop on California’s climate disclosure laws, SB 253 and SB 261, that took place last week. The takeaway was simple: if your company has operations or revenue tied to California, it's time to start preparing for mandatory climate reporting in 2026. Other key takeaways: 1. Deadlines are locked in. Climate risk reports (SB 261) are due by January 1, 2026. Emissions reports (SB 253) for Scope 1 and 2 are due by June 30, 2026. Scope 3 emissions reporting starts in 2027. 2. You won’t need emissions data for SB 261 in year one. These reports focus on climate-related financial risk. CARB is encouraging companies to follow the TCFD or IFRS S2 frameworks, but they’re allowing flexibility in the first round. If you don’t have emissions data or scenario analysis ready, you can still comply. 3. You will need emissions data and assurance for SB 253. Companies must report Scope 1 and 2 emissions with limited assurance starting in 2026. Scope 3 emissions will need to be assured beginning in 2030. CARB will not provide a list of approved auditors, but they will expect documentation and may review your assurance process. 4. Companies that have to report will also have to pay annual fees. These help fund CARB’s administration of the program. Right now, they’re estimating $3,106 per company for emissions reporting (SB 253) and $1,403 for climate risk (SB 261). If a company meets the criteria for both, it pays both. 5. It may not be immediately obvious which companies are subject to the law. CARB is compiling a public list of companies it believes will be required to report, but it’s not comprehensive. Even if your company isn’t on the list, you’re still responsible if you meet the thresholds. That includes companies with over $1 billion in revenue (for SB 253) or over $500 million (for SB 261) that are “doing business” in California, which includes having sales, employees, or a registered business presence in the state. We’re working with many clients to get ready. That includes emissions data management, climate risk reporting structures, and internal processes for assurance. These laws aren’t just about compliance — they’re about building true operational alignment around the energy transition. If your team is preparing, I’d love to hear how you're approaching 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