We aren’t here bore you with legalese or compliance requirements - if you need more info than figure 1 above, go visit our friends on ERM’s insights page. Instead, we’d like to focus on the indirect impact of these regulations, and how small- and mid-market companies with in-scope value chain partners should prepare for implementation.  

The Ripple Effect

California’s climate disclosure laws will only directly apply to a few thousand companies doing business in the state; a small fraction of the several millions of businesses operating across the U.S. Even so, the laws are likely to have an extended reach outside of both geographical boundaries and immediate scope, and may create cascading demands for climate-related data flowing towards small- and mid-market businesses nationwide.

Many larger companies within scope are already requesting this data from many of their value chain partners, often with minimal reporting burden. But with the increased oversight and requirements, the rigor and formality of these requests may change. This means companies outside of the formal scope should still prepare for increased data requests and elevated expectations for Scope 3 reporting, which is set to begin in 2027 disclosing prior year emissions.

So as a small- or mid-market company, why should you invest precious time and resources now, well before 2027? I’m so glad you asked!

Implementing good data collection, disclosure, and communication practices now won’t just be more resilient themselves; they will be seen as a more attractive, valuable partner in highly uncertain environment. Being ready to ride the regulatory wave with your partners means you become a part of their solution, not an additional problem.