Photo: Luca Bravo / Unsplash
As the US federal government rolls back its green policies under Donald Trump’s anti-climate agenda, some states are taking the fight against climate change into their own hands.
Two bills reintroduced in New York’s senate would require climate disclosure rules similar to those adopted by California in 2023, while a bill requiring greenhouse gas emissions disclosures was introduced in Colorado in January.
State legislators in Democratic states have been considering climate reporting rules for several years, largely driven by uncertainty around the Securities and Exchange Commission’s (SEC) climate reporting rules. The SEC’s rules took two years to pass and were watered down to exclude scope 3 emissions, and have been frozen since the change in administration.
Introducing these bills at state level was part of a “broader political strategy” said Vanessa Fajans-Turner, executive director of Environmental Advocates New York.
“These bills were sort of seen as both emboldening and providing cover for the SEC by sort of saying, if states are requiring it then companies are going to have to do it”.
New York’s proposed legislation mirrors California’s climate reporting rules, which require large companies to disclose emissions in their operations as well as those in their supply chains, known as scope 3 emissions.
Because both bills target large companies operating in their respective states, there is likely to be some overlap. However some companies in New York that don’t operate in California, such as real estate and regional hedge funds, would be required to disclose, said Fajans-Turner. And having two major states with similar climate reporting rules would also send “strong market signals to companies about what the expected way of doing business is”, she added.
These disclosure rules are part of a global trend to push for more information on climate risk, with many large companies already disclosing their climate risks and emissions, said Frances Sawyer, founder at consulting firm Pleiades Strategy.
“What this is doing is standardising [disclosures] and making it more decision-useful, and it’s pulling up the floor for laggards who have not [disclosed] to meet the rest of their peers,” she said.
State vs federal regulation
This is just the beginning, said Sawyer, as many states and Americans recognise the material impact that climate change has on the economy. State action is likely to increase, as it is up to states to “pick up the slack” from the federal government. The Trump administration has dismantled much of the climate progress made by the previous administration, such as rolling back an executive order that required federal agencies to assess climate-related financial risks to the economy.
But not everyone in the US agrees with the actions of the current administration. Trump’s anti-green stance “is not a statement of where the US as a whole is”, Sawyer added.
“States do have a lot of power in this moment, and they’re seeking to exercise that power,” she said.
There are many approaches states can take to combat climate change without needing to wait for the federal government, such as through utility regulation, investing in transportation systems, cultivating clean energy and manufacturing, as well as climate resilience and adaptation measures, Sawyer said.
Some states are already taking measures. New Mexico, for example, has proposed a bill to put the state on a path to net zero by 2050, while Maryland’s renewable energy programme requires electricity suppliers to meet a minimum portion of retail sales through renewable efforts. And Vermont and New York’s climate superfund laws require polluters to pay for climate damages.
Even states that are traditionally more Republican have made efforts on clean energy, with a production boom in wind, solar and electric vehicles that could be derailed by Trump’s rollbacks.
Ben Cushing, a campaign director at Sierra Club, said there were a lot of things that states can do, not just related to financial disclosures but also areas in the realms of public pensions and insurance regulation. A recent report from Sierra Club found that most US public pensions are not taking into account protecting investors from climate-related financial risks.
Cushing said public pensions play an important role in supporting climate action through proxy voting, although there have been recent efforts to restrict consideration of ESG risks in state pension policies.
“There is a ton of opportunity and need for states to step up and fill the void being stopped by the Trump administration, and to demonstrate that the US can still make climate progress,” he said.
Legal challenges and delays
But these state-led climate measures are not without their challenges. California’s climate reporting rules have already faced lawsuits and any similar bills passed by other states could also be challenged in court. While some of the lawsuits were dismissed, there is still an ongoing legal battle over whether the state’s climate rules violate the first amendment.
Meanwhile, the California regulator in charge of overseeing its climate reporting rules announced it would not seek enforcement action against companies in 2026 when disclosures are required.
Jake Rascoff, a director at climate group Ceres, said the regulator’s decision is largely due to the timeline of when final disclosure rules will be released in the summer, which may not give companies enough time to comply.
“I would not treat that as the agency sort of backing off the intent of the laws, or otherwise signalling [that] over a longer, more durable timeline they are not going to enforce these laws,” he said.
The legal pushback from Republicans on these disclosure rules is one reason why Democratic states are considering introducing similar laws, to “increase the odds that one of them survives, because these have had implications beyond the borders of the states where they’re introduced”, Rascoff added.
“If one state like California succeeds in having its larger legal challenges [dismissed] then that’s an enormous victory and other states may be looking to kind of bolster the legal defensibility by pursuing their own laws.”
There has also been pushback on the corporate side, with an exodus of US banks and asset managers from voluntary climate groups. Meanwhile financial regulators like the Federal Reserve left a group of central bankers aimed at combatting the risks of climate change in the financial sector.
This pushback is from incumbent industries “that don’t want to see that type of transparency and daylight into emissions”, as that information would then require decisions on company’s bottom lines and transition planning, said Sawyer.
However, not all companies have resisted these disclosures, with many large companies already disclosing emissions and climate risk on a voluntary basis. State rules like those in California and potentially other states will help standardise the information, which experts say is needed to help investors and sectors with the interoperability of various disclosure measures.
While some US politicians have criticised state disclosures that go beyond any federal regulations, states have the authority to regulate commerce within their borders and have imposed disclosure requirements on environmental areas for years, such as hazardous wastes, said Michael Gerrard, a professor at Columbia Law School.
California’s cap and trade programme, for example, requires disclosure of greenhouse gas emissions. And while inclusion of scope 3 emissions is new, the recent dismissal of most of the legal challenges to California’s laws are encouraging for other states seeking to pass similar bills.
“It’s not a matter of bypassing federal regulation – instead it’s a state law on top of federal rules. As a general matter, federal standards are a floor not a ceiling, and states may go beyond them. We’ll see if these disclosures become one of the few exceptions to that general rule,” Gerrard said.
Climate disclosures are part of a global trend
There is also a global movement to release more climate disclosure data, although even that is being challenged in jurisdictions like the EU. The EU Commission’s omnibus proposal looking at the bloc’s sustainability reporting requirements vastly waters down disclosure rules that took years to negotiate, with experts arguing it could unravel the EU’s net-zero emissions efforts.
“This is a worldwide trend … Climate disclosure is key for investors and all stakeholders to have good information,” said Steven Rothstein, managing founder at Ceres.
These reporting requirements are about investor transparency and making disclosure mainstream. They do not require companies to necessarily divest from fossil fuels or make decisions about what to invest in, Rothstein said. According to the Word Resources Institute, nearly 40% of the world’s economy at the time of the assessment would be required to disclose information related to climate risks in the near future, if pending legislation passes.
Despite what states can do to push for climate disclosures and action, it may not be enough to replace the rollbacks happening at a federal level. There are things the federal government can do that states are not able to, which “leaves a big gap to be filled, and really also just isolates the US on the global stage in terms of leading on climate change”, said Cushing.
This page was last updated March 7, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
