California’s climate disclosure laws (SB-253, SB-261, and AB-1305) have reshaped the regulatory landscape for corporate sustainability, and the ripple effect is already being felt far beyond the Golden State. While the federal U.S. Securities and Exchange Commission (SEC) climate disclosure rules have been rescinded, at least five other states (Illinois, New York, Colorado, New Jersey, Washington) have proposed their own climate reporting legislation modeled directly after California’s framework. This state-led momentum reflects growing public and investor pressure for transparency, signaling that climate disclosure is becoming a baseline expectation for responsible corporate governance regardless of federal action. When including California, these six states collectively represent 34% of 2025 gross domestic product (GDP) in the United States, according to data from the U.S. Bureau of Economic Analysis (BEA). In 2026, the State of California reported (Opens a new window) that the state’s economy ranked fourth internationally by 2025 GDP.

For companies that have avoided California’s laws due to limited operations in the state, this expanding regulatory footprint means they may soon be in scope regardless, and any ambitiously growing business near the $500 million or $1 billion revenue thresholds should begin preparing now. While California’s implementation has faced some minor delays due to administration setup, other states now have a clear roadmap to follow, making future regulatory rollouts faster, more consistent, and less likely to be challenged.

The ripple effect: States following California’s lead

Across these states, the $1 billion revenue threshold is emerging as a consistent benchmark for greenhouse gas (GHG) emissions reporting, indicating a growing consensus on which companies should be held accountable. New York stands out as the only state to introduce climate risk assessment reporting requirements similar to California’s SB-261, further aligning with global trends in financial risk transparency. The state’s broader climate disclosure efforts have also gained momentum, with its corporate GHG emissions reporting bill passing the State Senate and advancing to committee consideration in the State Assembly. Meanwhile, New Jersey reintroduced its Climate Corporate Data Accountability Act in 2026, signaling continued legislative interest in California-style emissions disclosure requirements.

While assurance requirements and Scope 3 timelines vary, the overall direction is toward comprehensive, verified reporting, a shift that will require companies to invest in robust data systems and third-party validation. As of September 2026, the New York and New Jersey bills remain under legislative consideration, while Colorado’s bill was postponed indefinitely. Illinois HB 3673 was re-referred to the House Rules Committee in March 2025 and has not advanced since, and; its proposed July 2026 rulemaking deadline passed without enactment. Colorado’s HB 25-1119 was postponed indefinitely in February 2025, while Washington SB-6092 passed the Senate in 2024 but did not pass the legislature. Its amended version of the bill would have directed the Washington Department of Ecology to study the SEC’s proposed climate disclosure requirements and recommend how Washington could align its reporting requirements with them.

If all proposed laws were enacted with penalties like California’s, a company operating across these states and failing to comply could face up to $3 million annually in fines for GHG emissions reporting, and $100,000 biannually for climate risk assessment disclosures, a significant financial risk that underscores the need for early action.

Why businesses should act now

Even if your company isn’t currently in scope for California’s climate disclosure laws, the national trend is unmistakable: Climate reporting is becoming a standard business expectation, not just a regulatory requirement. Companies that wait to act risk falling behind in compliance, investor trust, operational readiness, and competitive positioning.

Preparing for climate disclosure is not a quick task. A climate risk assessment can take up to four months, while a Scope 1 and 2 GHG emissions inventory with limited assurance may require six months or more to complete. These timelines reflect the complexity of data collection, validation, and assurance, and demonstrate that last-minute compliance can be both costly and risky. For multinational businesses, the urgency is even greater. The convergence of global standards, including the EU’s Corporate Sustainability Reporting Directive (CSRD), the UK’s Sustainability Reporting Standards (SRS), Australia’s Sustainability Reporting Standard (ASRS), and the Canadian Sustainability Disclosure Standards (CSDS), means that climate transparency is quickly becoming embedded in financial and operational reporting worldwide.

The benefits of proactive management of regulatory risks include:

• • Avoiding future penalties by preparing early
  • Building investor confidence through transparency
  • Strengthening operational resilience against climate risks
  • Streamlining overlapping state mandates that may emerge

How CohnReznick can help

Navigating climate disclosure regulations requires more than just awareness. It demands a strategic, well-resourced response. CohnReznick’s Sustainability Advisory practice is here to support companies at every stage of their compliance journey.

Our California Compliance Readiness Assessment is a quick, five-minute tool designed to help companies:

• • Determine if they’re in scope for California’s climate laws
  • Identify gaps in current reporting capabilities
  • Receive tailored recommendations for next steps

Our support doesn’t stop there. We offer:

• • Scope 1, Scope 2, and Scope 3 GHG emissions inventory development built in-house or through partnerships with carbon accounting platforms
  • Climate risk assessment and scenario analysis aligned with SB-261 and global frameworks like TCFD and IFRS
  • Pre-assurance readiness and limited assurance services for GHG emissions disclosures and broader sustainability metrics
  • Cross-state compliance strategy to prepare for overlapping mandates
  • Stakeholder engagement and reporting advisory to align disclosures with investors and public expectations

Whether your company is already in scope or approaching the thresholds, our team can help you build a roadmap that turns compliance into a competitive advantage.

Readiness is key

California may have led the way, but the momentum is building elsewhere too. Climate disclosure laws are expanding across the U.S., and the regulatory landscape is evolving quickly. Whether your company is in scope today or nearing the thresholds, the time to act is now.