Global Carbon Emission Regulations and Reporting Requirements
Corporations worldwide are now required to calculate and report their carbon emissions due to increasing regulatory mandates. Key legislations include:
A. Major Carbon Reporting Regulations by Region
1. European Union
Corporate Sustainability Reporting Directive (CSRD) (Effective: January 1, 2024)
The CSRD mandates large companies operating in the EU to disclose detailed environmental and social impact reports, including greenhouse gas (GHG) emissions. Companies must comply if they meet at least two of the following criteria:
- Balance sheet total exceeding €25 million
- Net turnover over €50 million
- More than 250 employees
This directive aims to enhance corporate transparency and impose strict compliance requirements on affected businesses.
Corporate Sustainability Due Diligence Directive (CSDDD)
This EU regulation requires companies to address actual and potential adverse environmental and human rights impacts in their operations, subsidiaries, and supply chains. Larger corporations are expected to comply first.
2. United States
California Senate Bill 253 (SB 253) (Signed: October 2023, Reporting System: January 1, 2025)
Companies with annual revenues exceeding $1 billion operating in California must disclose:
- Direct emissions (Scope 1)
- Indirect emissions from purchased electricity (Scope 2)
- In many cases, supply chain emissions (Scope 3)
The California Air Resources Board is responsible for implementing the reporting framework.
Securities and Exchange Commission (SEC) Proposed Rule
The SEC has proposed standardized climate-related disclosures for publicly listed companies, requiring them to report:
- Scope 1 and Scope 2 emissions
- Scope 3 emissions in certain cases
This initiative aims to provide investors with consistent and comparable climate-related risk data.
3. United Kingdom
Streamlined Energy and Carbon Reporting (SECR)
This policy mandates large enterprises, publicly listed companies, and Limited Liability Partnerships (LLPs) to include energy usage and carbon emissions data in their annual reports to promote energy efficiency.
4. Other Global Regulations
Africa
- Nigeria: From January 1, 2025, oil license applicants must demonstrate low carbon emissions and have a renewable energy program, aligning with Nigeria’s net-zero target by 2060.
Russia
- Greenhouse Gas Emissions Law (2021):
- Companies emitting over 150,000 tons annually must report emissions from January 1, 2023.
- Companies emitting over 50,000 tons must begin reporting by January 1, 2025.
China
- National Carbon Market (Launched: July 2021): Covers major emitting sectors like power generation, with expansion plans for steel, cement, and aluminum industries by the end of 2024.
- Industry-Specific Guidelines: Draft guidelines for steel industry emissions reporting were introduced in December 2024.
South America
- Brazil: While discussions on low-carbon transitions exist, mandatory carbon emission reporting remains under development, particularly for coal consumption sectors.
