2026 Climate Reporting Look Ahead: Navigating the Regulatory Divergence

2026 might be a year that has the most complex compliance crossroads in the history of environmental regulation, especially in regard to climate regulations. As ALL4 predicted in 2025, the regulatory environment has fractured into two distinct, competing trajectories for climate reporting. On one hand, we are seeing the Federal government’s desire to deregulate greenhouse gas (GHG) emissions and withdraw from climate organizations; on the other, states like California and New York have moved to the enforcement phase of their own 2025 proposed climate-related regulations. International regulations such as the European Union (EU) Corporate Sustainability Reporting Directive (CSRD) continue to change and significantly simplify sustainability reporting requirements in the EU. The incongruity across all these regulatory bodies makes 2026 a difficult landscape to navigate for companies, potentially adding to the reporting burden.

Climate regulations encompass a wide range of categories from GHG emissions reporting, climate risk reporting, and circular economy regulations. This Look Ahead will outline some of the items that your company should watch out for in 2026.

1. Federal Rollbacks

The Federal deregulation of GHG emissions is rooted in the proposed rescission of the 2009 Endangerment Finding. The 2009 Endangerment Finding is the legal basis for GHG emissions being regulated under the Clean Air Act because it determined that GHG emissions are a threat to public health and welfare. If the United States Environmental Protection Agency (U.S. EPA) successfully revokes the 2009 Endangerment Finding in 2026, the legal floor falls out from under almost every Federal climate regulation. It would mean that GHGs do not meet the Clean Air Act’s definition of air pollutant, effectively blocking U.S. EPA’s authority to demand GHG data or set emissions standards. The repeal of the 2009 Endangerment Finding is currently at the Office of Management and Budget for review. At this time, U.S. EPA has two other proposed GHG rule reconsiderations that include the Federal GHG Reporting Program under 40 CFR Part 98 and the GHG Standards for Fossil Fuel-Fired Power Plants under the 40 CFR Part 60 Standards of Performance for New Stationary Sources (NSPS) and Emission Guidelines.

On September 16, 2025, U.S. EPA published a proposed rule to reconsider the GHG Reporting Program (GHGRP) under 40 CFR Part 98. This rule currently requires certain facilities that emit over 25,000 metric tons of carbon dioxide equivalent (MT CO₂e) annually to report their direct GHG emissions on an annual basis. While the 8,000 facilities that report under the GHGRP represent over 50% of U.S. emissions, this proposed deregulatory action risks obscuring national data trends and triggering a wave of non-uniform state mandates. Some of these states refer to 40 CFR Part 98 requirements but are sometimes more stringent. Consequently, multi-state organizations must prepare for a more fragmented compliance environment characterized by redundant recordkeeping and varying jurisdictional requirements based on each state in which they operate. It will be important for companies to continue to track their GHG emissions to prepare for emerging state regulations; this will be outlined in more detail in the next section.

On June 11, 2025, U.S. EPA proposed to repeal or significantly revise all GHG emissions standards for fossil fuel-fired power plants. This will affect facilities that are currently or have planned projects subject to 40 CFR Part 60, Subparts TTTT, TTTTa, or UUUUb. The proposed repeal or revision of the GHG standards creates a high level of uncertainty for power plants in particular, especially with the growing demand for electricity and new generation due to the surging baseload requirements coming from Artificial Intelligence (AI) and datacenter industries.

2. Emerging State REporting

While Federal GHG requirements face potential rescission, New York and California have stepped in as the nation’s climate regulatory leaders at the state level. In 2025, California passed two climate transparency regulations that continue to move forward despite legal hurdles. Senate Bill (SB) 253 (The Climate Corporate Data Accountability Act) remains in full effect, requiring companies with over $1 billion in annual revenue to disclose their Scope 1 and Scope 2 emissions by August 10, 2026, while Scope 3 reporting is not mandated until 2027. It is important for companies to start gathering this data at the beginning of 2026 to ensure ample time to collect all the necessary information.

Simultaneously, SB 261 (The Climate-Related Financial Risk Act), which targets companies with over $500 million in revenue, is navigating a complex legal landscape. The first reports for SB 261 were due January 1, 2026, but on November 18, 2025, the Ninth Circuit Court of Appeals granted a preliminary injunction that temporarily halted the enforcement of this rule. Legal arguments took place on January 9, 2026, and ALL4 will continue to follow the litigation of this rule throughout 2026. Currently, about 50 companies have voluntarily reported their climate risk assessments while the ongoing litigation occurs. While many companies are continuing to report voluntarily to maintain investor confidence, ALL4 advises all applicable entities to keep their climate risk assessments shelf-ready. A favorable ruling for the State could result in a reinstated deadline with a very short compliance window. Regardless of the regulatory drivers, having a climate risk assessment can help with business resilience over the coming years.

In 2025, New York State proposed similar Senate Bills to California SB 253 and SB 261, but these did not end up passing through the New York legislature last year. It is possible that similar Senate Bills will be brought to the New York State legislature again in 2026, especially if the California Climate Disclosure rules become final. In late 2025, the New York State Department of Environmental Conversation (NYSDEC) finalized 6 NYCRR Part 253 (Mandatory GHG Reporting Rule). While this rule mirrors the Federal GHGRP’s focus on facility-level, direct emissions (only Scope 1), California’s Climate Disclosures requires corporate inventories that encompass both direct (Scope 1) and indirect (Scope 2 and 3) emissions reporting. The New York Mandatory GHG Reporting Rule introduces heightened stringency for specific sectors. Most notably, the reporting threshold is 10,000 MTCO₂e annually, which is lower than the Federal 25,000 MTCO₂e threshold, capturing a significantly larger pool of mid-tier emitters previously exempt from Federal reporting. 2026 will be the first reporting year for the NY Mandatory GHG Reporting Rule, so we recommend facilities start collecting the extensive records required by the rule and determine your applicability. To ensure compliance, it is important for facilities to confirm applicability early in the year and finalize a comprehensive GHG Monitoring Plan (GHGMP) for submission by the December 31, 2026 deadline.

The emergence of these independent state frameworks signals a shift in the United States environmental regulatory climate, but it also creates a significant compliance issue for multi-state operators. While New York and California currently lead the charge with finalized rules, they are the first of many states to do so and have inspired others. ALL4 is closely monitoring the progression of Illinois HB 3673 (Climate Corporate Accountability Act) and New Jersey SB 4117 (Climate Corporate Data Accountability Act), both of which seek to impose their own $1 billion revenue thresholds and mandatory Scope 1, 2, and 3 disclosures.

3. International Reporting

There are also changes to climate regulations occurring internationally in 2025 which will affect 2026 reporting. These regulations will affect global companies and companies that export to the EU. The EU’s CSRD remains a dominant force for companies with European operations and 2026 will allow for less regulatory burden for U.S.-based parent companies in regard to the CSRD. Recent legislative shifts, including the Stop-the-Clock Directive and the 2025 Omnibus simplification package, have effectively delayed consolidated global reporting for most non-EU corporations until 2029. This delay reflects a broader EU effort to balance sustainability goals with economic competitiveness.

However, this simplification is offset by the entry of the Carbon Border Adjustment Mechanism (CBAM) into its final phase on January 1, 2026. For U.S. exporters in carbon-intensive sectors, specifically steel, aluminum, cement, fertilizers, and hydrogen, 2026 marks the end of the reporting only transition period. Starting this year, importers of these goods into the EU must now be registered as “Authorized CBAM Declarants” and will begin to have financial liabilities associated with the embedded carbon of their products. As the EU begins to phase out free emissions allowances for its own domestic producers, the cost of CBAM certificates will become a permanent factor in international trade.

The primary strategic challenge for 2026 is managing the tension between these EU requirements and the evolving U.S. requirements. As companies navigate a fragmented landscape of California disclosure mandates, New York facility-level rules, and Europe’s carbon-tax, the risk of non-uniform disclosures has never been higher. For forward-looking organizations, 2026 is less about meeting a single standard and more about building a unified data structure that can satisfy a patchwork of international/national requirements and carbon taxes without redundant administrative costs.

4. Circular Economy ─ Extended Producer Responsibility

Extended Producer Responsibility (EPR) laws are gaining traction throughout the United States. These laws vary in what products they apply to ─ ranging from batteries to single-use products. The regulations that are impacting the circular economy most are consumer packaging regulations. These EPR regulations cover a wide range of industries and will need ample stakeholder engagement as they emerge in more states. The goal of the regulations is to have the producer pay for the end use of the packaging, which will then help fund recycling programs and municipal waste handling infrastructure to manage the waste packaging. Currently in the U.S., the central EPR system is the Producer Responsibility Organization (PRO), which is a nonprofit entity that manages compliance, data reporting, and fee collection on behalf of all member producers. In most states, the Circular Action Alliance (CAA) has been appointed as the single approved PRO to harmonize these requirements across different jurisdictions. The goal is to have one organization unify the regulations, but there are already some differences in Oregon, Colorado, and California reporting requirements.

If your company sells consumer products in any of the following states, it will be important to start contacting stakeholders and gathering the necessary information to stay in compliance with these new regulations:

• Oregon: The first program to go live (July 2025), with 2026 marking the first full year of operational fee payments.
• Colorado: Program officially launched on January 1, 2026, with producer dues now being remitted to the CAA.
• California: While reporting began in late 2025, 2026 is a critical year for rulemaking and verifying your data ahead of the 2027 reporting and fee requirements.
• Maine and Minnesota: Programs still in the proposed rule phase, with 2026 deadlines for PRO registration and the initial reporting of packaging volumes occurring in 2027.
• Maryland and Washington: Both states have enacted laws and are currently conducting “Needs Assessments” to define the specific fee structures that will take effect in coming years.
• Connecticut, Hawaii, Illinois, Massachusetts, Michigan, Nebraska, New Jersey, New York, North Carolina, Rhode Island, and Tennessee: Introduced EPR bills in 2025 and ALL4 will continue to follow any updates that occur throughout 2026.

It is crucial to develop a robust data management framework for these EPR rules, as they will soon carry associated fees. This helps ensure your company does not pay more than necessary.

5. STRATEGIC Recommendations for 2026

Is your company built to withstand the constant changes in the climate and sustainability realm? There is a lot to follow going into 2026 and a lot of uncertainty for any organization. Here are some key considerations for 2026:

• Don’t Completely Roll Back Corporate Climate Programs Due to Federal Rollbacks: State (CA/NY) rules have lower thresholds and more in-depth reporting requirements (Scope 3, climate risk assessments) than the Federal GHGRP and more are emerging. Your customers and potential customers could also be interested in your GHG data. Use 2026 as the year to review and improve your data collection, not abandon it.
• Audit-Ready Data is Becoming Mandatory: Both New York and California require third-party verification. Make sure your 2026 data collection is robust enough to withstand a formal third-party assurance process.
• Monitor the Courts: With SB 261 and the U.S. EPA 2009 Endangerment Finding under legal scrutiny, it is important for your company to stay agile. It is a good idea to have a plan for how you will respond to outcomes of litigation this year.
• Supply Chain Pressure: Even if your company is not legally “in scope” for SB 253, CBAM, or CSRD, your customers potentially are. Expect an influx of Scope 3 data requests in 2026 as larger entities scramble to meet their first reporting deadlines. This is another reason to review your data collection because if you don’t need the data, your customers might.

The Bottom Line: 2026 is the year climate reporting moves from a compliance exercise to a strategic data management challenge. The companies that prosper in this regulatory landscape will be the companies with the best data management and stakeholder relationships. It is important for companies to build robust climate and sustainability data structures as regulations are changing frequently and the data will likely be needed for various different programs and requirements. Please reach out to your ALL4 project manager or Louise Shaffer (lshaffer@all4inc.com) if you have any questions or if you need support on navigating the emerging climate change regulations or evaluating upgrades to data management systems.