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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