ESG compliance guide for U.S. states in 2025

State-level regulations are becoming the driving force behind corporate accountability and emissions transparency. In particular, states with global market influence, like California, are leading the charge, setting stricter disclosure and compliance standards that are prompting other states to follow suit.

Today’s investors, consumers, and regulators are demanding greater visibility into a company’s full emissions footprint, not just the direct emissions from owned operations, but also indirect emissions from supply chains, raw materials sourcing, and third-party vendors.

With new state-level environmental, social, and governance (ESG) regulations taking effect in 2025, businesses are adapting to meet compliance requirements. This guide outlines the latest ESG mandates across key states, what businesses need to do to stay compliant, and strategies to integrate sustainability into business planning.

The table below provides a state-by-state comparison of ESG compliance regulations, including revenue thresholds and reporting deadlines to help businesses assess their exposure, prepare for upcoming obligations, and align their sustainability strategy with new state laws.

Links to bills:

SB 253, SB 261, SB 219, SB 3456, SB 3697, HB 25-1119, HB 3673, SB S4117

Preparing for U.S. Climate Regulations

To meet state-level climate regulations, businesses can benefit from a 2025 ESG goal-setting roadmap to develop a proactive compliance strategy.

Key Steps for Compliance

1. Identify Reporting Requirements: Determine whether your company falls under state-mandated climate reporting rules. Even if direct compliance is not required, customers may request emissions data for supply chain reporting.
2. Prioritize Scope 1 & 2 Data Collection: Since most state-level climate regulations start with these emissions categories, companies should establish reliable data collection methods before tackling Scope 3 emissions.
3. Follow Established ESG Frameworks: State laws align with global standards like the Taskforce on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB).
4. Engage Supply Chain Partners Early: The growing demand for sustainable supply chains makes supplier collaboration more essential, especially as Scope 3 reporting requires accurate data from vendors.
5. Prepare for Third-Party Assurance: Independent verification of emissions data is mandated by all state regulations. Establishing examination-ready documentation will support compliance.

Businesses already complying with California’s rules will face minimal adjustments for other states.

Additional ESG Regulations to Watch

• Minnesota’s Climate Risk Disclosure for Financial Institutions: Senate File 2744 requires banks and credit unions with assets over $1 billion to submit annual climate risk disclosure surveys by July 30 of each year.
• Polystyrene Foam Bans: California and 10 other states have banned or significantly limited polystyrene foam packaging, requiring food businesses to transition to alternative materials.
• Zero-Emission Vehicle (ZEV) Mandates: More than a dozen states have adopted ZEV initiatives modeled after California’s, requiring automakers to increase electric vehicle (EV) production and adjust supply chains.

We Can Help

To maintain compliance with expanding ESG regulations, companies can:

Assess Regulatory Exposure

• Determine whether your company meets revenue or operational thresholds for climate reporting.
• Identify state-specific rules that apply to your industry.
• Map out operations to understand multi-state compliance obligations.

Strengthen Internal Compliance Capabilities

• Designate a compliance lead or ESG team to monitor regulatory developments.
• Work with Elliott Davis to develop customized compliance programs for complex state-level rules.
• Use digital tools to track data collection, reporting requirements, and examination preparation.

Federal sustainability policies may be slowing but state regulations are expanding rapidly. Companies should remain aware and ready as state governments introduce measures to advance corporate transparency and accountability on climate and sustainability.

Elliott Davis provides guidance to help businesses manage complex state-level ESG requirements. Our team advises clients on staying compliant while integrating ESG considerations into long-term sustainability strategies.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.