ESG Regulations: Global Update October 2023
As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need to know updates across the globe.
Carbon Caps
Climate-Related Financial Risk Reporting
Emissions Reporting
As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need-to-know updates from around the globe. This month we cover Brazil’s pending carbon caps and California passing legislation on emissions reporting and climate-related risk reporting. Read more on our ESG regulations page.
1. Brazilian Greenhouse Gas Emissions Trading System (SBCE)
What do I need to know?
Brazil’s Senate approved a bill to create a cap-and-trade carbon market, similar to the one operating in the EU. While the bill makes a concession for Brazilian agribusiness, the country’s main source of emissions, other industries will be regulated to operate under a certain emissions threshold, with the opportunity to buy and sell emissions if they go over or under the cap.
What’s next:
- Brazil’s House will vote on the bill in the coming weeks.
- Should the bill pass, companies would be required to find a means of reducing their carbon emissions below the specified threshold or face potential fines and loss of permission to operate.
2. California Climate Corporate Data Accountability Act & Climate-Related Financial Risk Act
What do I need to know?
The California governor signed into law two landmark climate bills on part of a “Climate Accountability Package”. The first bill requires all large corporations (firmwide revenues greater than $1 billion) that do business in CA to report their Scope 1, 2, and 3 emissions on an annual basis starting in 2026. The second bill requires covered entities (<$500 million in revenue and doing business in CA) to prepare a climate-related financial risk report in accordance with the recommended framework of the Task Force on Climate-Related Financial Disclosures (TFCD). The bill is expected to affect over 5,500 public and private companies.
What’s next?
- Companies will need to report on their 2025 scope 1 and 2 emissions in accordance with the Greenhouse Gas Protocol and obtain limited 3rd party assurance on this data starting in 2026, transitioning to reasonable assurance by 2030.
- Companies will need to report on their 2026 scope 3 emissions by 2027 and obtain limited third-party assurance on Scope 3 data by 2030.
- Companies doing business in CA will need to prepare a climate-related financial risk report on or before January 1, 2026, and biennially thereafter.
Contact us: For further information on how your business can better navigate emerging ESG regulations, please contact Ben Herskowitz, Senior Managing Director, U.S. at [email protected]
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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