ESG regulatory requirements in the United States don’t come from one law or one agency. They come from a shifting mix of federal rules, state mandates, and international frameworks, and as of 2026 the pieces are pulling in different directions. The SEC’s climate disclosure rule was adopted but never enforced and is now being unwound. California has passed the country’s most ambitious disclosure laws, but the implementing regulations aren’t final. More than 20 states have moved the opposite way, restricting ESG considerations in public contracts and pension investments. What you actually have to do depends on where you operate, how much revenue you generate, and whether you’re a public company, an investment fund, or a supplier to someone larger.
Federal Requirements Currently in Force
The SEC Climate Rule Is Stayed
The Securities and Exchange Commission adopted the Enhancement and Standardization of Climate-Related Disclosures for Investors rule in March 2024.1U.S. Securities and Exchange Commission. SEC Adopts Rules to Enhance and Standardize Climate-Related Disclosures for Investors It would have required public companies to disclose material climate-related risks in registration statements and annual reports, and would have required larger filers to report material Scope 1 and Scope 2 emissions with third-party assurance.2U.S. Securities and Exchange Commission. The Enhancement and Standardization of Climate-Related Disclosures for Investors
It never took effect. Industry groups and state attorneys general challenged it, the SEC stayed the rule, and in March 2025 the Commission voted to stop defending it in court.3U.S. Securities and Exchange Commission. SEC Votes to End Defense of Climate Disclosure Rules The Eighth Circuit put the case in abeyance, and the SEC has said it will move through notice-and-comment rulemaking to rescind the rule. As of mid-2026, no company has ever been required to comply with it.
That said, general securities law still applies. If a public company makes sustainability claims in its filings that turn out to be materially misleading, the SEC’s anti-fraud authority still reaches that conduct. The collapse of the dedicated climate rule removes the standardized mandate, not the underlying duty of accuracy.
Investment Fund Names Rule
One federal ESG requirement is actively going live in 2026. In September 2023, the SEC extended its Names Rule to funds whose names suggest particular investment characteristics, including ESG themes. A fund calling itself “sustainable,” “green,” or “ESG-focused” must invest at least 80 percent of its assets consistent with what that name suggests, and must publish documented criteria for what qualifies. Compliance is required by June 11, 2026, for fund groups with more than $1 billion in net assets, and by December 11, 2026, for smaller fund groups. Greenwashing at the fund level now carries real regulatory exposure even with the broader climate rule dormant.
FTC Green Marketing Claims
The Federal Trade Commission polices environmental marketing under its Green Guides, which describe what the agency treats as deceptive when companies use terms like “recyclable,” “biodegradable,” or “carbon neutral.”4Federal Trade Commission. Green Guides The Guides were last updated in 2012 and a revision has been under review since 2022, but the FTC continues to enforce against unsubstantiated claims under its deceptive-practices authority. Enforcement usually ends in a consent order barring the challenged claims, and repeat violators face civil penalties, including a $450,000 penalty against one company that kept making unsupported green claims after a prior order.5Federal Trade Commission. FTC Cracks Down on Misleading and Unsubstantiated Environmental Marketing Claims Treat the Green Guides as the baseline for what the FTC will tolerate.
ERISA Fiduciary Standards
The Department of Labor regulates how retirement plan fiduciaries select investments under ERISA. A 2022 rule allowed fiduciaries to consider ESG factors relevant to risk and return. In 2025, the DOL announced it would no longer apply that rule and started new rulemaking to replace it.6Federal Register. Fiduciary Duties in Selecting Designated Investment Alternatives In the meantime, fiduciaries fall back on the core ERISA duties: prudence, diversification, and acting solely in the interest of participants. Plan sponsors that offer ESG-themed funds should be able to defend that selection on financial grounds and keep the documentation to prove it.
Uyghur Forced Labor Prevention Act
The UFLPA creates a rebuttable presumption that goods mined, produced, or manufactured in the Xinjiang Uyghur Autonomous Region of China, or by entities on a government-maintained list, are made with forced labor and are barred from entering the United States.7U.S. Customs and Border Protection. Uyghur Forced Labor Prevention Act The importer bears the burden of proving otherwise. Customs and Border Protection can detain shipments, and the importer pays storage during detention.8U.S. Customs and Border Protection. FAQs: UFLPA Enforcement If CBP grants an exception, it must report that decision to Congress and disclose it publicly. Companies sourcing cotton, polysilicon, tomato products, or other flagged inputs need documentation tracing goods through every stage of production.
California’s Disclosure Laws
California has enacted the most demanding state-level climate disclosure regime in the country. Two 2023 laws reach large companies doing business in California regardless of where they’re headquartered, though implementing regulations aren’t final.
SB 253: Emissions Disclosure
The Climate Corporate Data Accountability Act requires companies with more than $1 billion in annual revenue that do business in California to disclose greenhouse gas emissions annually across all three scopes: direct emissions, indirect emissions from purchased energy, and value-chain emissions including suppliers and product use.9California Legislative Information. Senate Bill 253 – Climate Corporate Data Accountability Act Scope 1 and 2 reporting was originally scheduled for 2026, with Scope 3 starting in 2027.10LegiScan. California SB219 – Climate Disclosure Amendments
A 2024 amendment (SB 219) pushed the California Air Resources Board’s deadline for finalizing implementing regulations to July 1, 2025. CARB has proposed bringing the initial rulemaking to the board in early 2026, so the first actual reporting deadline hasn’t been fixed yet. Once rules are final, penalties for noncompliance can reach $500,000 per reporting year.11LegiScan. California SB253 – Climate Corporate Data Accountability Act Companies in scope should be building emissions data infrastructure now even without a firm filing date.
SB 261: Climate Financial Risk
SB 261 lowers the revenue threshold to $500 million and asks a different question. Covered companies must prepare biennial reports on their climate-related financial risks and the measures they’re taking to address them, and those reports must be made public.12California Legislative Information. Senate Bill 261 – Greenhouse Gases: Climate-Related Financial Risk The law applies to partnerships, corporations, and LLCs alike, so entity structure doesn’t affect coverage if the revenue threshold is met.
Anti-ESG State Laws
More than 20 states have moved the opposite direction, restricting ESG considerations in public pension investments, government contracts, or both. These laws generally require pension managers to consider only financial factors, prohibit government contracts with companies that “boycott” fossil fuel or firearms industries, or ban the use of ESG criteria in denying financial services.
Their legal durability is being tested. In February 2026, a federal district court struck down one of the earliest and most aggressive anti-ESG boycott statutes, finding its broad definition of “boycott” unconstitutionally vague and sweeping in protected speech such as advocating for sustainable energy or associating with environmental organizations. The ruling is on appeal and may shape how similar laws in other states are enforced. Nationally operating companies now sit between mandates to disclose more in some states and penalties for ESG-related policies in others.
International Rules That Reach U.S. Companies
EU Corporate Sustainability Reporting Directive
The CSRD requires companies to report both how sustainability issues affect their business and how their business affects people and the environment.13European Commission. Corporate Sustainability Reporting For non-EU companies, it applies beginning January 1, 2028, if the company generates at least €150 million in annual EU revenue for two consecutive years and has either a large EU subsidiary or an EU branch generating more than €40 million. Reporting is at the consolidated group level, so affected U.S. multinationals need sustainability data from their entire global operations, not just the EU footprint.
EU Sustainable Finance Disclosure Regulation
The SFDR targets financial market participants, including asset managers, insurers, and pension providers, who market products to investors within the EU.14European Commission. Sustainability-Related Disclosure in the Financial Services Sector U.S. asset managers selling funds to European clients must disclose how sustainability risks factor into their decisions and whether their products produce negative environmental or social impacts. The rule doesn’t dictate investment strategy; it forces managers to substantiate whatever sustainability claims they attach to products.
Who Is Actually on the Hook
Which requirements apply depends on the company. Public companies remain subject to existing securities law and must disclose any climate or social risk that meets the materiality threshold, even without the stayed SEC rule. Registered investment funds using ESG-related names must meet the 80 percent alignment test under the amended Names Rule. Any entity, public or private, with more than $1 billion in annual revenue doing business in California is within scope of SB 253; SB 261 drops that threshold to $500 million.9California Legislative Information. Senate Bill 253 – Climate Corporate Data Accountability Act The CSRD reaches non-EU companies with €150 million or more in EU revenue starting in 2028. Anti-ESG state laws mainly affect companies seeking government contracts or managing public pension assets. And any importer bringing goods into the United States can be pulled into UFLPA enforcement at the border.
Smaller companies usually sit below these revenue thresholds, but that doesn’t insulate them. A mid-size manufacturer supplying a company covered by SB 253 or the CSRD will get data requests for supply-chain emissions, because the covered customer needs Scope 3 figures. The compliance burden flows downstream even when the legal obligation formally rests with the larger buyer. Investing early in emissions tracking and supply-chain documentation tends to pay off regardless of how the top-line rules move.