With buildings accounting for 36% of the U.S.’ greenhouse gas (GHG) emissions, several states throughout the US are legislating GHG emissions regulations, which poses considerable challenges (and opportunities) for businesses with facilities in those locales. These regulations aim to increase transparency and accountability for GHG emissions, encouraging businesses to adopt more sustainable practices that reduce GHG emissions over time.

Key Takeaways

• Learn which states are developing carbon emissions tracking regulations and why.
• Gain a high-level understanding of each bill and their scope.
• Understand the challenges and opportunities these regulations pose to businesses.

This is the first article in an ongoing series covering state-level greenhouse gas emissions tracking regulations throughout the US. California has set the precedent as the first state to enact legislation and set a timeline for its reporting deadlines. This series will track and share insights into other states GHG regulations as they develop.

What these regulations seek to achieve and why

GHG tracking regulations were developed to curb carbon emissions from complex commercial and industrial real estate portfolios in their respective states. They aim to increase transparency and accountability for greenhouse gas emissions and drive businesses toward action to reduce emissions. By mandating emissions reporting, these bills encourage businesses to adopt sustainable practices and reduce their environmental impact.

California’s SB 253 of 2023 was the initial entry into this space. Since then, other states have looked to SB 253 as a framework for building their bills and processes for reporting commercial emissions. A common thread among them involves reporting required for businesses with specified revenue thresholds (often over $1 billion). 

The new regulations share similarities with established frameworks like the Global Real Estate Sustainability Benchmark (GRESB). GRESB is an industry-leading ESG benchmark that evaluates the sustainability performance of real estate portfolios and infrastructure assets. It provides standardized data on environmental, social, and governance (ESG) performance, helping investors assess risk, resilience, and long-term value.

Some states, like Illinois and Colorado, have introduced bills that have effectively died as of this writing but foreshadow the need for every business to prepare for potential regulations arriving in their states. While they may not continue in their introduced form, the introduction of these bills signals a market shift that indicates their intended impact could arise in other forms of legislation.

States with passed or pending legislation on carbon emissions tracking

Below is an overview of each bill's effects, a description of the entities and their core attributes, the bill's status, and a timeline for its impact. We’ll continue to monitor each piece of legislation over time and provide updates as policy components become more concrete at the state level.

Passed Legislation

California

SB 253

Overview: The Climate Corporate Data Accountability Act mandates companies with annual revenues exceeding $1 billion to disclose their Scope 1, 2, and 3 greenhouse gas emissions. It is the first state-level law requiring comprehensive GHG emissions disclosure, signed into law by Governor Gavin Newsom on October 7, 2023.

Impacted Entities: Approximately 5,300 public and private businesses operating in California with over $1 billion in annual revenues worldwide.  

Timeline:

• Scope 1 and 2 emissions reporting begins in 2026 for 2025 data
• Scope 3 emissions reporting begins in 2027 for 2026 data
• The California Air Resources Board (CARB) originally had to adopt regulations by January 1, 2025, but was granted an extension to July 1, 2025, by SB 219.

Enforcement: CARB will impose monetary penalties for non-compliance at amounts that will be determined in the final regulations. Companies must report even when legally challenging the law. 

Verification: The bill requires "limited assurance" of Scope 1 and Scope 2 emissions in compliance years 2026-2029, transitioning to "reasonable assurance" in 2030. For Scope 3 emissions, "limited assurance" is required beginning with 2030 reports. The law defines verification standards and qualifications for "assurance providers" (independent third-party verification entities), with specific methodologies and protocols to be established through CARB regulations.

Unique Features: Requires emissions intensity metrics and includes provisions for updating methodologies as international standards evolve.

Pending Legislation

New York

SB S897C

Overview: Establishes the Climate Corporate Data Accountability Act, requiring businesses with annual revenues over $1 billion to disclose Scope 1, 2, and 3 emissions. 

Impacted Entities: Businesses with annual revenues exceeding $1 billion that do business in New York.

Status: Is in Senate Committee on Finance as of October 2024. 

Timeline: If passed, reporting would begin in 2026 for Scope 1 and 2, and 2027 for Scope 3 emissions. 

Enforcement: The Department of Environmental Conservation (DEC) would impose civil penalties of up to $100,000 per violation. 

Verification: The bill requires "independent third-party verification" of emissions disclosures to be performed by a "qualified entity" in accordance with internationally or nationally recognized verification standards. Companies must include a "verification statement" with their annual disclosure report, following a similar approach to California's verification framework.

SB 5437

Overview: Corporations must prepare a climate-related financial risk report aligned with Task Force on Climate-related Financial Disclosures (TCFD) recommendations annually. 

Impacted Entities: Corporations authorized to operate in New York with annual gross revenues of at least $500 million. 

Status: In Senate Committee on Insurance as of October 2024.

Timeline: If passed, reporting would begin within one year after the law becomes effective. 

Enforcement: The Attorney General is empowered to bring civil actions against non-compliant corporations with penalties up to $50,000. 

Verification: This bill focuses on climate-related financial risk reporting that is aligned with TCFD recommendations rather than emissions verification. It emphasizes verifying financial risk assessments, requiring corporations to follow the established TCFD framework for their climate risk reports.

Unique Features: Emphasizes financial risk disclosure rather than just emissions data, including physical and transition climate risks.

SB 3456

Overview: An alternative Climate Corporate Data Accountability Act proposal with slightly different provisions than S897C. 

Impacted Entities: Businesses with annual revenues exceeding $1 billion operating in New York. 

Status: Referred to Senate Committee on Environmental Conservation.

Timeline: If passed, reporting would begin in 2027. 

Enforcement: Similar to SB S897C, civil penalties of up to $100,000 per violation. 

Verification: The bill includes requirements for third-party verification of reported emissions, creating a verification framework that differs slightly from S897C but maintains the core requirement for independent verification of emissions data.

Unique Features: Different implementation timelines and specific provisions compared to S897C, creating potential legislative competition.

Washington

SB 6092

Overview: Directed the Washington Department of Ecology to develop policy recommendations for climate-related disclosure requirements, largely in response to SEC's proposed climate disclosure rules. 

Impacted Entities: These would have affected businesses operating in Washington state.

Status: Did not pass in the 2024 legislative session. The last action was returned to the Senate Rules Committee for a third reading. 

Timeline: This would have required a report to the legislature within 18 months of the SEC's final rule adoption. 

Enforcement: It would have recommended enforcement mechanisms aligned with federal standards. 

Verification: The bill would have recommended verification standards aligned with international frameworks. It specifies "verification" of emissions reports by an "independent qualified verifier" who would provide a "verification statement" submitted with reports. Reports would need to be verified "in accordance with standardized methods" established by the department. 

Unique Features: Focused on developing a framework complementary to federal rules to avoid duplication of efforts and emphasized policy recommendations rather than immediate requirements.

Minnesota

SF 2744

Overview: This would establish requirements for businesses to disclose greenhouse gas emissions.

Impacted Entities: Businesses with annual revenues exceeding $1 billion operating in Minnesota. 

Status: Introduced in the 94th Legislature but has not advanced significantly. 

Timeline: If passed, it would likely follow a timeline similar to California's law, with implementation beginning 1-2 years after passage. 

Enforcement: Modeled after California's approach with enforcement through the state's Pollution Control Agency and proposed penalties for non-compliance similar to California's model.

Verification: The bill would require "third-party verification" of greenhouse gas emissions reports by a "qualified independent verifier" in accordance with accepted standards. Reports would need to include a "verification opinion statement," with verification standards to be approved by Minnesota's Pollution Control Agency, following a model similar to California's approach.

New Jersey

Senate Bill 4117

Overview: Requires certain business entities to publicize annual greenhouse gas emissions data covering Scope 1, 2, and 3 emissions. 

Impacted Entities: Businesses with annual revenues exceeding $1 billion operating in New Jersey. 

Status: Introduced in the Senate and referred to the Senate Environment and Energy Committee. 

Timeline: If passed, it would require the Department of Environmental Protection to establish regulations within one year, with reporting likely beginning 1-2 years after passage.

Enforcement: The Department of Environmental Protection would handle enforcement, with civil administrative penalties for non-compliance (the specific amounts are not yet defined).

Verification: The bill proposes "third-party verification" requirements for emissions reporting, to be conducted by an "independent verification entity" approved by the department. Verification must follow "protocols established by the department," and companies must include "verification statements" with their emissions reports. The standards would be established through regulatory processes, building on lessons from early adopter states while maintaining alignment with the GHG Protocol. 

Unique Features: The plan includes provisions for regulatory flexibility and aims to build on lessons from early adopter states while maintaining alignment with the GHG Protocol.

How these regulations pose a challenge

As these regulations expand geographies and cover thousands of publicly traded and privately owned companies, the need for compliance will expand significantly, along with the requisite lengthy data collection processes. 

The most glaring concern for sustainability leaders responsible for compliance will be the fines if their organizations fail to comply with the regulations, potentially risking millions of dollars that could be better spent elsewhere.

Businesses will also need to invest in systems and processes to track and report their emissions accurately, which can be resource-intensive. Without proper systems, companies often struggle to collect, organize, and convert energy data across hundreds of properties—whether landlords gather tenant information or tenants provide data to property owners. Businesses will need to invest in systems and processes to accurately track and report their emissions, which can be resource-intensive.

How they present an opportunity

Proactively addressing these regulations with robust Utility Bill Management (UBM) software positions businesses as leaders while streamlining and simplifying the data collection, verification, and reporting process. Regardless of when processes and deadlines are finalized in each state, implementing an automated utility bill management solution now provides businesses with the critical foundation for emissions reporting compliance.  

Mantis Innovation's UBM solution eliminates this manual burden by centralizing utility data, automating bill processing, and providing accurate consumption metrics to calculate emissions. Beyond mere compliance, this visibility into energy usage uncovers inefficiencies, charts a comprehensive path to reduced consumption, and delivers cost savings of up to 2-3% through invoice auditing.  

Conclusion

At first glance, carbon emissions regulations can appear as another operational challenge for businesses if left unaddressed. However, they also hold an excellent opportunity to begin shaping energy management strategies that are exponentially more beneficial than compliance and far more so than non-compliance.

Mantis Innovation has deep expertise in helping businesses with compliance, sustainability data collection, management, and reporting while augmenting outcomes with our strategic planning and engineering capabilities to develop effective, comprehensive energy management strategies.

Contact us today to start owning your future.

--We’ll continue sharing the latest news and in-depth, actionable insights on navigating these regulations as they develop.