Trend watch: corporate climate disclosures in 2026 – gaps, gains and the path ahead

Executive summary

Climate‑related disclosure has become a mainstream practice among large U.S. companies. Research by the Governance & Accountability Institute shows that 98.6 % of S&P 500 companies and 93 % of Russell 1000 firms published a sustainability report in 2023, up from 98.2 % and 90 % the year before. Alignment with the Task Force on Climate‑Related Financial Disclosures (TCFD) has also accelerated—60 % of Russell 1000 reporters in 2023 followed TCFD recommendations, compared with just 4 % in 2019. Yet disclosure quality varies widely. An EY survey of more than 850 companies found that while 92 % assess physical climate risks, only 44 % have put adaptation measures in place, and a mere 17 % disclose the financial impacts of those risks. This gap between risk assessment and action underscores the need for more robust, forward‑looking reporting.

This article synthesises key trends shaping corporate climate disclosures in 2026. It explores U.S. regulatory crosscurrents—from the stalled federal disclosure rule to emerging state mandates like California’s SB 261, which will require large public and private companies to report climate‑related financial risks and mitigation plans in line with TCFD. It also examines how global frameworks such as the EU Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) standards will influence U.S. multinationals operating abroad. We contrast these developments with lessons from the UK Financial Reporting Council’s review of first‑year climate disclosures and highlight best practices from leading companies. Finally, we provide a practical framework and checklist to help executives close the gap between disclosure and action.

Why it matters

Investors and regulators demand more than box‑ticking

What began as voluntary sustainability reporting is rapidly becoming mandatory. U.S. companies with significant operations in Europe must already comply with the CSRD, which mandates climate and nature disclosures and applies double‑materiality assessments, scenario analysis and transition plans. California’s SB 261 will oblige companies with annual revenues over US$500 million to file climate‑risk reports starting in 2026. These regulations layer on top of sector‑specific rules such as the Department of Labor’s fiduciary obligations for retirement plan sponsors and state insurance regulators’ climate risk surveys.

Gap between awareness and adaptation

The EY Climate Action Barometer reveals a troubling disconnect: 92 % of companies assess physical and transition risks, yet only 44 % have adaptation measures and just 17 % disclose financial impacts. Most companies report Scopes 1 and 2 emissions and have decarbonisation levers in place—78 % disclose actions across all three scopes and 91 % for Scopes 1 & 2—but fewer than 53 % set Scope 3 reduction targets. These statistics show that corporate disclosures often lag behind the actions needed to build resilience.

Sustainability reporting is near‑universal—but TCFD adoption and data quality vary

G&A’s research shows near‑universal sustainability reporting among large U.S. companies, yet the depth and comparability of disclosures differ. The Conference Board’s analysis of Russell 3000 and S&P 500 disclosures found that 42 % of Russell 3000 companies and 84 % of S&P 500 companies aligned with TCFD in 2024, up from 17 % and 62 % respectively in 2021. Energy, utility, real‑estate and materials sectors were most likely to provide climate‑risk disclosures. Nonetheless, many disclosures remain qualitative; only 68 % of companies have completed quantitative risk assessments, and 8 % disclose how capital is allocated to climate action.

Key trends and concepts

1. Regulatory crosscurrents

Federal rulemaking slowdown. The U.S. Securities and Exchange Commission’s long‑awaited climate disclosure rule has stalled amid political and legal challenges. However, companies cannot ignore climate reporting; they must still disclose material climate risks under existing securities laws, and many will fall under global regimes (CSRD, ISSB) and state laws like SB 261. The EY Barometer notes that regulatory uncertainty is one reason transition plans are stalling.

State and sectoral mandates. California’s SB 261 and SB 253 require large companies to disclose climate‑related financial risks and greenhouse‑gas emissions. New York and Vermont have authorised insurance regulators to consider climate risk in solvency assessments, and other states are developing their own disclosure frameworks. Industry regulators—such as the Federal Reserve, National Association of Insurance Commissioners and Federal Acquisition Regulation Council—have also issued climate risk guidance. Together, these crosscurrents mean that even without a national rule, corporate climate reporting obligations are increasing.

International harmonisation. The CSRD took effect for large EU companies in 2024 and will extend to many U.S. multinationals by 2026. It requires detailed scenario analysis, transition plans and double‑materiality assessments; thousands of U.S. companies must gather data across global operations. The ISSB issued its first sustainability disclosure standards (IFRS S1 and S2), and dozens of jurisdictions—including Canada, Australia, Hong Kong and the UK—have committed to adopt them. Firms must prepare to report consistently across multiple frameworks.

2. Gap between risk assessment and adaptation

The EY survey found that 92 % of companies assess climate risks, but only 44 % have adaptation measures in place. Companies may underestimate physical risks or struggle with modelling and scenario analysis. Moreover, just 17 % disclose the financial impacts of climate risks, hampering investors’ ability to price risk. Similarly, only 53 % of companies have set Scope 3 targets, even though value‑chain emissions often represent the majority of corporate footprints.

3. Rapid adoption of sustainability reporting and TCFD alignment

The G&A Institute’s research shows that sustainability reporting is now nearly universal among large U.S. companies, with 98.6 % of S&P 500 companies and 93 % of the broader Russell 1000 publishing reports in 2023. TCFD adoption continues to grow—60 % of Russell 1000 reporters followed TCFD recommendations in 2023, and a separate analysis found 84 % of S&P 500 companies and 42 % of Russell 3000 companies aligned with TCFD in 2024. This trend reflects investor pressure and the expectation that ISSB standards will embed TCFD principles into global accounting norms.

4. Sector‑specific exposure and best practices

Sectors with high physical or transition risk—utilities, energy, materials, consumer staples and real estate—are more likely to provide detailed climate disclosures. Leading companies in these sectors integrate climate considerations into risk management and capital allocation, quantify exposures and opportunities, and align incentives with decarbonisation goals. For example, UK insurer Aviva reports a 51 % reduction in absolute Scope 1 and 2 emissions since 2019 and uses scenario analysis to limit flood‑risk exposure in its mortgage portfolio. Aviva’s board‑level governance and science‑based targets illustrate how firms can go beyond compliance.

5. Emergence of nature‑related and social disclosures

Nature‑related risks have become material. By late 2025, over 620 organisations managing US$20 trillion in assets committed to the Task Force on Nature‑related Financial Disclosures (TNFD). The CSRD includes biodiversity (ESRS E4), meaning companies must report nature dependencies and impacts. Social disclosure frameworks, such as the proposed CSRD social standards and US SEC human capital reporting, will further expand reporting obligations. Companies should prepare to integrate climate, nature and social metrics into a unified strategy.

What’s working

Near‑universal reporting and growing TCFD alignment

Large U.S. companies have embraced sustainability reporting. Almost every S&P 500 firm publishes a report, and TCFD alignment is rising across indices. Many organisations now provide scenario analysis, board‑level governance, and metrics and targets in line with best practices. Some early adopters have integrated climate into enterprise risk management and capital planning, set science‑aligned targets and established executive compensation tied to climate performance.

Investor and customer demand for credible data

Investors increasingly reward companies that provide robust, decision‑useful climate information. Capital markets use disclosure data to price risk, allocate capital and engage on strategy; rating agencies integrate climate metrics into credit analyses. Customers and procurement teams also prefer suppliers with verified climate targets, incentivising supply‑chain disclosure. These market forces drive companies to improve data quality and transparency beyond regulatory minimums.

Digital tools and data platforms

Emerging digital platforms standardise data collection and help companies track emissions, physical risk exposures and transition readiness. For example, new tools built on the Carbon Footprint Project and PCAF methodologies allow companies to calculate financed emissions with sector‑specific factors and integrate scenario analysis into risk models. Automated data pipelines reduce the manual burden of reporting and enable real‑time monitoring.

What isn’t working

Adaptation and resilience lag behind risk assessments

The EY survey shows a significant implementation gap: most companies assess climate risks but few adopt adaptation measures or disclose financial impacts. Many transition plans are still vague or incomplete, and scenario analysis often remains qualitative. Companies struggle to quantify climate impacts over longer horizons, limiting investors’ ability to assess resilience.

Scope 3 emissions and value‑chain data gaps

Although most companies report Scope 1 and 2 emissions and have decarbonisation levers, only about half set Scope 3 targets. Collecting value‑chain data is difficult, especially for suppliers in emerging markets; the EY report notes that only 60–90 % of companies report upstream Scope 3 emissions and just 10–40 % report downstream emissions. This limits the completeness of disclosure and undermines comparability.

Regulatory fragmentation and uncertainty

U.S. companies face a patchwork of disclosure regimes. The stalled SEC rule, divergent state laws, sector‑specific regulations and global standards create complexity. Inconsistent requirements can increase compliance costs and hinder comparability. At the same time, the CSRD and other international standards raise the bar for disclosures, creating cross‑border obligations.

A quick framework for executives

To prepare for 2026 and beyond, executives should adopt a structured approach:

1. Map applicable requirements and stakeholders. Identify which regulations apply to your company (SB 261, CSRD, ISSB, sector rules) and engage legal and investor relations teams to align disclosures.
2. Assess current disclosure maturity. Benchmark your reporting against peers using metrics like TCFD alignment, Scope coverage, scenario analysis detail and adaptation measures. Identify gaps relative to investor expectations and emerging standards.
3. Integrate climate risks into enterprise risk management (ERM). Assign board or committee oversight; incorporate physical and transition risks into ERM frameworks; quantify exposures using scenario modelling; and link findings to capital allocation and insurance strategies.
4. Develop a robust transition plan. Create a clear roadmap with science‑aligned targets (including Scope 3), decarbonisation levers, timelines, capital allocation and accountability mechanisms. Disclose assumptions and sensitivities.
5. Embed adaptation and resilience. Move beyond assessment by implementing adaptation measures—e.g., site‑level resilience projects, supply‑chain diversification and climate‑resilient product portfolios—and disclose these actions and financial impacts.
6. Strengthen data quality and digital infrastructure. Leverage digital platforms, open data standards and automated pipelines to collect, verify and report emissions and risk data. Engage suppliers to improve Scope 3 data and consider third‑party assurance.
7. Align climate, nature and social reporting. Prepare for integrated disclosures by harmonising climate, nature and social metrics, aligning with TNFD and upcoming social standards. Use double‑materiality assessments to prioritise topics.

Fast‑moving segments to watch

• State‑level climate disclosure laws. California’s SB 261 and SB 253 are likely to influence other states; watch for new legislation in New York, Massachusetts and the Pacific Northwest.
• Nature‑related and social standards. TNFD uptake is accelerating; new social disclosure requirements may follow. Companies will need to integrate biodiversity and workforce metrics with climate reporting.
• Digital assurance and AI‑driven reporting. AI tools for automated data collection, scenario analysis and external assurance are emerging, enabling real‑time risk management and reducing reporting costs.
• Scope 3 collaboration platforms. New platforms allow companies and suppliers to share emissions data securely, addressing value‑chain data gaps and facilitating joint target‑setting.
• Transparency in carbon credit use. Regulators are scrutinising carbon credit claims. Companies should prioritise high‑integrity credits and clearly disclose credit usage alongside internal reductions.

Action checklist

1. Register relevant reporting obligations. Determine if your company must comply with SB 261, CSRD, ISSB or other rules; set up internal governance to track evolving regulations.
2. Benchmark current disclosure quality. Use metrics such as TCFD alignment, Scope coverage, adaptation measures and board oversight to gauge maturity.
3. Develop or update a robust transition plan. Ensure the plan includes science‑based targets, capital allocation, scenario analysis and accountability.
4. Quantify and disclose financial impacts of climate risks. Engage finance teams to evaluate potential revenue and asset impacts under different climate scenarios.
5. Implement adaptation projects. Invest in resilience for critical assets and supply chains; report progress and financial impacts.
6. Enhance Scope 3 data collection. Work with suppliers to collect accurate emissions data; consider digital platforms and collaborative programmes.
7. Prepare for nature‑related and social disclosures. Conduct a double‑materiality assessment to identify nature and social risks; align reporting with TNFD and emerging social standards.
8. Educate board and management. Provide training on climate and nature‑related risks, regulatory requirements and investor expectations; ensure climate expertise on the board.
9. Engage investors and stakeholders. Communicate progress transparently, invite feedback and integrate stakeholder expectations into disclosure planning.
10. Monitor emerging technologies and standards. Stay informed about AI‑driven reporting tools, digital MRV, blockchain‑based assurance and new reporting frameworks.

FAQ

Q: Will the SEC’s stalled rule eliminate the need to disclose climate risks?
No. Even without a federal rule, U.S. securities laws require disclosure of material risks, and investors expect climate information. Additionally, state laws like California’s SB 261 and international regimes such as the CSRD and ISSB standards will impose disclosure obligations on many U.S. firms.

Q: Why is adaptation lagging behind risk assessment?
Companies often focus on identifying risks but hesitate to invest in adaptation due to uncertainty, cost and lack of clear regulatory incentives. The EY survey shows that while 92 % of companies assess physical risks, only 44 % have adaptation measures and 17 % disclose financial impacts. Integrating adaptation into business strategy requires dedicated funding, cross‑functional collaboration and clear accountability.

Q: How can companies improve Scope 3 reporting?
Collecting value‑chain data is challenging, especially for suppliers in emerging markets. Companies can improve by engaging key suppliers, using standardised questionnaires (such as CDP Supply Chain), adopting digital platforms that facilitate data sharing and partnering with industry initiatives (e.g., the Carbon Footprint Project). Setting clear Scope 3 targets and offering incentives for supplier participation also help.

Q: What is double materiality?
Double materiality, required under the CSRD, means reporting on how sustainability issues affect the company’s financial performance (financial materiality) and how the company’s activities impact people and the environment (impact materiality). This expands the focus beyond financial risk to include the company’s external impacts on society and nature.

Q: How do nature and social disclosures relate to climate reporting?
Climate, nature and social issues are interconnected. Deforestation drives climate change, while climate change accelerates biodiversity loss. Similarly, climate risks disproportionately affect vulnerable communities. Integrating nature and social metrics into climate reporting helps companies identify systemic risks and opportunities and develop holistic strategies.

Sources

• Governance & Accountability Institute. (2024). Sustainability Reporting Among S&P 500 and Russell 1000 Companies. G&A Institute.
• EY. (2024). Global Climate Action Barometer: Risk Assessment, Adaptation Measures and Disclosure Gaps. EY.
• G&A Institute. (2024). TCFD Adoption Among Russell 1000 Reporters. G&A Institute.
• The Conference Board. (2024). Russell 3000 and S&P 500 Climate Disclosures Analysis. The Conference Board.
• California Legislature. (2024). SB 261 and CSRD Requirements: Regulatory Analysis. California State Legislature.
• Financial Reporting Council. (2024). Climate Disclosure Quality Review Findings. FRC.
• Aviva plc. (2024). Climate Disclosure Metrics and Risk Management Examples. Aviva Annual Report.