Sustainability Regulations and Their Impact on U.S. Business

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Sustainability-related compliance requirements are challenging U.S. organizations to collect and disclose reliable sustainability information and establish formal sustainability programs.

As business becomes more global, U.S. organizations must take a comprehensive approach to their compliance strategies to fulfill sustainability requirements in the many cities, states, and countries where they do business. Often broad in scope, these laws and regulations may take into account an organization’s industry, size, or sourcing practices to determine applicability.

Implementing sustainability requirements can create cost savings and enhance operational alignment with a company’s key strategic objectives — going far beyond compliance. For example, gathering additional information about sustainability performance can identify value-driven opportunities for efficiencies, and assessing sustainability-related risks can help build resilience. 

Read on for more information about key sustainability laws and regulations that have the potential to impact U.S. businesses and for information on how organizations can leverage compliance to help enhance performance.

Key Regulations

U.S. businesses may be required to comply with sustainability requirements in multiple jurisdictions, including: 

Why it Matters

Organizations may need to disclose new sustainability information or evolve their processes to embed sustainability into their operations, procurement, or other business decisions. Even organizations that are not directly in scope of sustainability regulations may need to act, as many larger businesses working toward compliance or implementing a sustainability strategy are imposing new expectations on their suppliers.

Sustainability-related actions often focus on the following areas, and an overarching sustainability strategy is increasingly necessary to guide an organization’s efforts. Whether or not these activities are compliance-driven or stakeholder-driven, embedding sustainability can have profound positive effects on a business’s operational efficiencies and commercial viability.      

Reporting 

Risk and data disclosure mandates require organizations to track and share detailed sustainability information with their stakeholders. Emissions data, climate risk assessments, and reports on the risk of forced and child labor in the supply chain are common disclosures that may require organizations to dedicate additional resources for compliance.

Assurance

Obtaining third-party assurance over sustainability information requires significant planning, time, and resources. Among other activities, the rigorous process includes assembling source documentation and forming an internal team with deep, subject-matter knowledge to support an independent assurance engagement.

Product Design 

Organizations may need to modify their product design and development processes to align with sustainability expectations. This could include redesigning products to enhance durability and use more sustainable materials. It could also mean reducing costs through waste reduction associated with Extended Producer Responsibility (EPR) programs.

Sourcing

Establishing human rights due diligence and product traceability systems may be necessary to help ensure that raw materials and products avoid negative impacts throughout the value chain. To fulfill requirements, organizations may need to obtain emissions or other sustainability data from their suppliers. 

Drive Value Beyond Compliance

Organizations can transform obligatory tasks into strategic opportunities by leveraging data collected in compliance efforts to address business challenges and gain additional insights. For example:

  • Sustainability-related data can be used to inform internal decision-making and identify operational efficiencies that can lead to cost savings, new revenue streams, and reduced resource use. 
  • Climate risk assessments can be integrated into an organization’s overall risk management and used to inform and align with disaster planning for business continuity.
  • Obtaining third-party assurance can enhance brand credibility in addition to helping organizations better prepare for obtaining finance or undergoing M&A due diligence. 
  • Assessing supply chains for human rights violations and negative environmental impacts can help mitigate potential business disruptions and protect against reputational harm.

Sustainability Regulatory Compliance Timeline

Building a strategy to streamline compliance with sustainability requirements across multiple jurisdictions can help organizations effectively respond to varying mandates across markets. A key aspect of planning involves understanding the regulations that are currently in effect and identifying overlapping, emerging requirements.

To help support efficient compliance, BDO’s Sustainability Regulatory Compliance Timeline highlights important dates for key regulations impacting U.S. businesses. Note that many regulations take a phased-in approach, staggering deadlines for organizations that meet different criteria, or outlining action that builds over time. 


*Of note: This page focuses only on legislation that has been enacted, and examples are not all-encompassing of compliance that organizations may need to consider. Contact BDO for more detailed information tailored to your organization’s specific circumstances, including proposed legislation relevant to your company.

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