Regulations Are Rising: What SMB Leaders Should Know

Welcome to Teaching Sustainability, the 20-week series from Aclymate created to help small and mid-sized business leaders understand what sustainability means, why it matters, and what to do next. Each week, we cover one practical topic, from carbon accounting and reporting to certifications and climate action, in clear, simple language designed to help you build a more resilient, credible, and competitive business.

Last chapter, we covered science-based targets and what it means to set a reduction goal that holds up under scrutiny. This chapter shifts from what you commit to internally to what the outside world may require—or increasingly expect—from your business.

Climate and sustainability reporting requirements are expanding in many markets, even as some rules are being narrowed, delayed, or challenged. For small and mid-sized businesses, the most important point is not simply whether your company is directly regulated. It is whether your customers, suppliers, lenders, investors, or business partners are—and what information they may eventually need from you.

The Regulatory Landscape Is Changing Fast

For most of the past two decades, corporate climate disclosure was largely voluntary. Companies measured and reported emissions because investors, customers, employees, or leadership teams wanted the information.

That has changed.

Governments in California, the European Union, Australia, the United Kingdom, and elsewhere have introduced climate and sustainability reporting frameworks. At the same time, some requirements have been scaled back or challenged. The U.S. Securities and Exchange Commission's climate disclosure rule is a good example: it was adopted in 2024, stayed during litigation, and in May 2026 the SEC proposed rescinding it entirely.

So the story isn't simply that every regulation is becoming stricter. The more important trend is that measuring emissions, understanding climate risk, and producing credible sustainability information are becoming normal parts of doing business with large organizations.

And because large organizations rely on thousands of smaller suppliers, those expectations can travel down the supply chain.

The Rules That Matter Most Right Now

• California's Climate Laws. California's SB 253 requires U.S.-based companies doing business in California with more than $1 billion in annual revenue to report greenhouse gas emissions. Scope 1 and Scope 2 reporting begins in 2026, with Scope 3 reporting scheduled to begin in 2027. That matters to suppliers because Scope 3 includes emissions throughout a company's value chain. You can follow the latest requirements directly through the California Air Resources Board's corporate climate reporting program.
  California's SB 261 is different. It applies to U.S. companies doing business in California with more than $500 million in annual revenue and calls for biennial reporting of climate-related financial risks. However, enforcement is currently blocked by a court injunction, and the California Air Resources Board is accepting reports voluntarily while the litigation continues.
• The SEC Climate Disclosure Rule. The SEC adopted a climate disclosure rule in 2024 that would have required certain publicly traded companies to disclose climate-related risks and, for some filers, greenhouse gas emissions. But the rule was stayed shortly after adoption. The SEC stopped defending it in court in 2025 and, on May 29, 2026, proposed rescinding the climate disclosure requirements in their entirety. As a result, businesses should not treat the SEC rule as a current federal emissions-reporting requirement. State and international requirements may still apply independently.
• The EU Corporate Sustainability Reporting Directive (CSRD). The European Union continues to require sustainability reporting from large companies, but the scope was significantly narrowed in 2026. Under the revised rules, mandatory reporting generally applies to EU companies with more than 1,000 employees and more than €450 million in annual net turnover. Requirements for non-EU companies operating in Europe were also narrowed.
  Importantly for SMBs, the revised CSRD also limits how much information regulated companies can require from smaller companies in their value chains for purposes of CSRD reporting. That reduces some of the regulatory trickle-down originally expected from CSRD. But it does not eliminate commercial sustainability requests from major customers, procurement teams, EcoVadis assessments, CDP programs, supplier scorecards, or voluntary climate commitments.
• Australia and the UK. Australia's mandatory climate-related financial reporting regime began in 2025 and is being phased in across additional groups of companies, with another group entering the system for financial years beginning on or after July 1, 2026.
  The UK finalized its Sustainability Reporting Standards, UK SRS S1 and S2, in February 2026. They are currently available for voluntary use, while the government and Financial Conduct Authority consider where mandatory reporting requirements should apply. The standards are based on the International Sustainability Standards Board's IFRS S1 and S2 frameworks.

The result is a global reporting landscape increasingly built around common ideas: understanding climate risk, measuring greenhouse gas emissions, reporting credible data, and using recognized frameworks such as the GHG Protocol and ISSB standards.

SBTi Isn't a Regulation—But It Can Still Reach Your Business

There is another important force SMB leaders should understand: the Science Based Targets initiative, or SBTi.

SBTi is not a government regulator. Companies voluntarily use it to set emissions-reduction and Net Zero targets aligned with climate science.

But a voluntary commitment made by your customer can still create a requirement for you.

For many companies with significant Scope 3 emissions, SBTi requires targets that address the value chain. Under the current framework, supplier-engagement targets and emissions-reduction targets can be used to cover significant portions of Scope 3 emissions. That gives large companies a strong reason to engage their suppliers, request emissions information, and encourage them to measure and reduce their own footprints.

SBTi published Version 2.0 of its Corporate Net-Zero Standard in June 2026. Target validation using Version 2.0 begins in 2027, with a transition period before it becomes the required standard for new submissions. The framework puts greater emphasis on implementation, value-chain action, and demonstrating progress.

For an SMB, the practical question is simple:

Do any of your largest customers have an SBTi target?

If they do, you may eventually become part of how they achieve it.

Why This Matters If You're Not Directly Regulated

This is the part many small and mid-sized business leaders miss.

If your company falls below the revenue or employee thresholds in these regulations, you may assume none of this applies to you.

Directly, that may be true.

Commercially, it may not be.

First, Scope 3.

As we've covered throughout this series, Scope 3 captures emissions across a company's value chain—including purchased products, materials, transportation, business travel, and suppliers.

When a large company is required to understand or disclose Scope 3 emissions—or has voluntarily committed to reducing them—it needs better information about its supply chain.

That can create requests for information from suppliers.

Those requests may appear as:

• A supplier sustainability questionnaire
• A request for your corporate carbon footprint
• Product-level emissions data
• An EcoVadis assessment
• A CDP supply-chain disclosure
• An SBTi supplier-engagement program
• Sustainability requirements in an RFP
• A request to document emissions-reduction initiatives

The regulation or climate commitment may technically belong to your customer, but part of the work can still land on your desk.

That's why having a repeatable approach to carbon accounting and Scope 1, 2, and 3 emissions measurement is becoming increasingly valuable even for companies that aren't directly subject to climate disclosure laws.

Second, financial relationships.

Banks, insurers, investors, and other financial institutions are also paying greater attention to climate-related risks and sustainability performance.

In some markets this is regulatory. In others it is simply part of risk management.

Over time, lenders may ask more questions about energy use, climate exposure, supply-chain risks, emissions, or environmental practices as part of financing decisions.

The important lesson is the same: you don't need to be directly regulated for sustainability information to become relevant to your business relationships.

Greenwashing Risk Is Also Rising

Reporting isn't the only area changing. Governments are also paying closer attention to what companies say about sustainability.

The European Union has already adopted its Directive on Empowering Consumers for the Green Transition. The new rules begin applying on September 27, 2026, and strengthen protections against misleading environmental claims. Among other things, they restrict vague environmental claims such as calling something "green" or "environmentally friendly" without adequate substantiation and impose new restrictions on certain claims based on carbon offsetting.

The separate EU Green Claims Directive, which would establish additional requirements for substantiating explicit environmental claims, remains a legislative proposal and should not yet be described as an enacted requirement.

In the United States, the Federal Trade Commission's Green Guides for environmental marketing claims warn companies against broad, unqualified claims such as "green" and "eco-friendly" because they can be difficult or impossible to substantiate. Environmental claims should be supported by competent and reliable evidence and clearly explain the specific environmental benefit being claimed.

The practical implication is straightforward:

If you make a sustainability claim, you should be able to show the data behind it.

Claims such as "sustainable," "carbon neutral," "climate friendly," "Net Zero," or "eco-friendly" should not exist only in marketing copy. They should connect to documented methodology, measurable actions, and credible evidence.

What to Do This Week

• Identify your largest customers and understand their sustainability obligations and commitments. Check whether they are subject to California SB 253, CSRD, Australian climate disclosure requirements, or another reporting regime. Also check whether they have an SBTi target, CDP program, EcoVadis requirement, or published supplier sustainability goals. Those are often better indicators of future supplier requests than your own regulatory status.
• Make sure you can answer the basic sustainability questions a customer is likely to ask. Do you know your Scope 1 and 2 emissions? Can you estimate your major Scope 3 categories? Do you have documentation explaining how those numbers were calculated? If you received a supplier questionnaire tomorrow, could you respond confidently?
• Review environmental claims in your current marketing materials. For each claim, ask whether it is specific, measurable, and supported by documented evidence. Pay particular attention to broad terms such as "green," "sustainable," "carbon neutral," and "eco-friendly."
• Talk to your bank, insurer, or primary lender about climate risk. Ask whether sustainability information or climate-related risk is currently part of their underwriting, credit, or risk-review process. Knowing where they stand today helps you anticipate what information they may request tomorrow.

How Aclymate Helps

Aclymate is built to help companies create the organized emissions data and sustainability information increasingly requested by customers, reporting frameworks, certifications, and other stakeholders.

The platform helps companies calculate and manage Scope 1, Scope 2, and Scope 3 emissions, maintain supporting data and methodology, prepare sustainability reporting, respond to customer requests, and manage certifications and sustainability programs.

And because most small and mid-sized companies don't have a large sustainability department, Aclymate combines software with expert support.

With Aclymate One, Carbon Bookkeepers and Sustainability Consultants can help collect and organize data, maintain your carbon accounting, prepare reports, respond to sustainability requests, support certifications, and help determine which requirements actually matter to your business.

In other words, you don't need to become an expert in SB 253, CSRD, SBTi, CDP, EcoVadis, the GHG Protocol, and every new sustainability acronym.

You need a system—and a team—that helps you stay ready.

The Takeaway

Climate regulation is no longer simply a large-company issue.

Some rules have expanded. Others have been narrowed, delayed, challenged, or reconsidered. But underneath those regulatory changes, something bigger is happening: sustainability information is becoming part of how companies evaluate suppliers, manage risk, set climate targets, report to stakeholders, and protect their brands.

For SMBs, that's the real issue.

The requirement may come from California. It may come from Europe. It may come from an SBTi commitment, an EcoVadis assessment, a CDP questionnaire, an RFP, a lender, or simply one of your biggest customers.

The businesses that already know their numbers, maintain good documentation, and can respond with credible information will handle those requests much more easily.

The ones that don't may find themselves scrambling to meet someone else's deadline.

You may not be regulated today. But being sustainability-ready is increasingly becoming part of being business-ready.

Want to understand where your company stands? Start with Aclymate or talk with a sustainability expert about your carbon accounting, reporting, certification, and customer requirements.