New Regulations for Sustainability: Europe and the USA

Everyone wants to save the planet, and with the new push from sustainability regulations, standardised reporting frameworks are getting within reach. These frameworks help companies to quantify, measure, and compare their environmental activities/performance, which is especially critical for meeting targets to reduce carbon emissions.
 
Inter.link was founded to be a sustainable Network as a Service provider; however, ESG is not a box that can be ticked and dismissed with minimal effort. It is not easy to maintain sustainability long-term because certifications need to be renewed, and sometimes it can be challenging to know which mandates apply and which are changing. This makes it even more critical to find the right information to stay on top of regulations.  
 
This article examines how organizations across sizes and industries (not just large companies) are affected on reporting requirements and sustainability initiatives overall due to recent regulations in Europe and the United States. 
 

Updated Sustainability Targets for Europe 

Europe has established itself as a leader in progressive environmental policy through a series of comprehensive frameworks and regulations from the European Union which are aimed at achieving climate neutrality. The foundational strategy behind these efforts is the European Green Deal, launched in December 2019. This ambitious plan sets out a roadmap for making the EU's economy sustainable and achieving climate neutrality by 2050. The European Green Deal serves as the cornerstone influencing all subsequent climate and sustainability policies within the EU. 

Building on the goals of the European Green Deal, the Fit for 55 package was proposed in July 2021. This package comprises a comprehensive set of legislative proposals aimed at reducing net greenhouse gas emissions by at least 55% by 2030. The Fit for 55 package directly implements the objectives of the European Green Deal through specific measures that impact various sectors and regulations. 

Key European Regulations Driving Sustainability 

Within this structured approach, several key regulations are instrumental in driving sustainability and transparency among European companies: 

Corporate Sustainability Reporting Directive (CSRD) 

• Introduction: The Corporate Sustainability Reporting Directive (CSRD), adopted in 2021, is a landmark regulation aimed at enhancing and standardizing sustainability reporting across the EU. 

• Who It Affects: Large EU companies (> 250 employees and/or > €40M Turnover and/or > €20M Total Assets), listed companies, and non-EU companies with significant operations in the EU. 

• Requirements: Companies must provide detailed sustainability reports integrated into their annual management reports, covering environmental, social, and governance (ESG) factors. These reports must be digitally formatted and assured by third parties. 

• Implementation: Larger companies need to comply from fiscal year 2024, with reports due in 2025, while SMEs will need to report from fiscal year 2026, with reports due 2027. 
  
  

European Sustainability Reporting Standards (ESRS) 

• Introduction: Developed by the European Financial Reporting Advisory Group (EFRAG) as part of CSRD. It also considers the global ISSB standards, which work complementary to the reporting framework.  

• Who It Affects: All entities covered by the CSRD. 

• Requirements: Mandatory disclosures on climate change, resource use, social factors, and governance practices. Detailed reporting on Scope 1, 2, and 3 greenhouse gas emissions, assured by independent auditors. 

• Implementation: Phased in from 2024, with increasing coverage over subsequent years. 
  
  

EU Green Claims Directive 

• Introduction: Regulation to prevent greenwashing and make sure claims are verifiable. Proposed in March 2023, and approved in January 2024. 

• Who it affects: All companies making environmental claims in the EU. 

• Requirements: Environmental claims must meet specific criteria and be independently verified. 

• Implementation: EU countries have 2 years to incorporate into national law. 
  
  

Corporate Sustainability Due Diligence Directive (CSDDD) 

• Introduction: Also known as the EU Supply Chain Law, enforces sustainable and responsible business practices across value chains. Approved in April 2024, it aims to address human rights and environmental risks. 

• Who it affects: EU companies with over 1,000 employees and a turnover of €450 million or more, indirectly impacting SMEs as suppliers. 

• Requirements: Companies must identify, mitigate, and report on human rights and environmental risks in their supply chains, incorporating due diligence into their operations and policies. 

• Implementation: Phased in over several years, with member states required to transpose it into national law within two years, achieving full compliance within five years. 

Sustainability Regulations in the USA

When comparing countries in their dedication to sustainability, the US does not have the best reputation, having frequently promoted fossil fuels and formally withdrawn from the Paris agreement in 2020. However, the US rejoined the agreement in 2021 and since then, key stakeholders in American businesses have started to take sustainability seriously, particularly thanks to a push in regulations as shown below. 
 

Securities and Exchange Commission (SEC) Climate Disclosure Rules (2024) 

The Securities and Exchange Commission (SEC) Climate Disclosure Rules, introduced in 2024, require publicly traded companies to disclose their climate-related risks and impacts. These rules mandate reporting on greenhouse gas emissions, climate-related financial risks, and governance processes related to managing these risks. Companies must also detail their transition plans for aligning with a low-carbon economy. Compliance begins with large accelerated filers for fiscal years starting after December 15, 2023, with reports due in 2024. Accelerated filers follow in 2025, and all other registrants must comply by 2026 

California Climate Corporate Data Accountability Act (SB253 & SB261) 

The California Climate Corporate Data Accountability Act (SB253 & SB261) enforces stringent climate disclosure requirements for large corporations operating in California, affecting both public and private companies with annual revenues over $1 billion. SB253 mandates disclosure of Scope 1, 2, and 3 GHG emissions with independent verification starting in 2026 and full assurance by 2030. SB261 requires biennial climate-related financial risk reports beginning January 1, 2026. Companies must adhere to GHG Protocol standards, and non-compliance can result in significant penalties. These regulations align with, but are more comprehensive than, the SEC’s proposed climate disclosure rules, marking a significant step in climate accountability. 

About Inter.link 

Inter.link is a Network as a Service (NaaS) provider which, since the beginning, has had an action plan to offer connectivity which minimises environmental impact. We are already carbon neutral and will reach net zero soon.

We offer a suite of easy to consume and certified carbon-neutral connectivity services across a multi-Terabit network 100G/400G platform. Our services, including IP Transit and IP Access, DDoS Protection,
 and Flex Ethernet, are all backed by a 100% uptime SLA.

 
 
Sustainability issues are greatly important to us, so we strive for energy efficiency in data centers, seek out carbon neutral suppliers, and aim beyond the minimal ESG reporting mandates when keeping track of regulatory requirements. Above all, organisations must not get lost in metrics, but make sure that decision-making includes sustainability early-on, linking it with business strategies.

If you would like to know more about our sustainability journey, click here to read the overview on our approach and goals.