Labrador Associate Advisor Aashka Vora walked out of San Francisco’s 2026 Climate Week with several major takeaways for sustainability corporate reporting practitioners.
1. Cross-functional collaboration: sustainability cannot exist in siloes
While this may have been a recurring theme in organizational sustainability over the years, it still carried enough weight to be highlighted in conversations at this year’s climate week. At a panel that emphasized building a sustainability program that actually works, Greenplaces’ VP of Sustainability Corinne Hanson shared their thoughts on what a unified sustainability program should resemble. The conversation highlighted the present gap: “Isolated sustainability in an era of increased regulatory, client, and investor demand leads to a higher risk of audit failure and regulatory fines.” The current market does not allow sustainability to exist in a silo but encourages integration of climate data across organizational functions, from procurement to facilities to finance, reinforcing that “sustainability at its core is an operations exercise.”
2. Taking compliance and turning it into advantage
Panels focused on challenges faced by companies bogged down with an onslaught of regulatory uncertainties and investor expectations. Mid-market companies, which make up the backbone of the global supply chain, struggle with data collection, streamlining internal processes, and responding to transparency demands from major customers and partners. On their end, large cap companies need to provide assurance as well as produce real action roadmaps and strategy.
Ultimately, it is not a question of if but when companies are required to report on how they are addressing climate change, making it a missed opportunity to not start preparing even though they may not be in scope under current regulations. An assurance expert from Sensiba mentioned that companies are asking for multiple frameworks to be covered in their disclosures, addressing voluntary frameworks and pushing for double materiality assessments (DMAs).
It was impossible to ignore the oscillatory nature of the California climate rules, SB253 and SB261, in the past year. Watershed’s Head of Climate Analytics Michael Steffen and Albert Chung, Principal Engineer at GSI Environmental discussed some no regrets actions at a panel on navigating the shifting climate and sustainability legal landscape. They recommended companies be prepared to disclose under both rules by doing an applicability analysis, looking at existing data and determining if they need subject matter expert (SME) review to vet the data, and establishing reliable quality control around the process. Another challenge addressed in conversations was the nuanced differences between jurisdictional requirements, from different climate scenarios suggested to different global warming potential (GWP) factors being used in the proposed NY state climate reporting laws. The consistent thread underlying these questions was the value of getting the fundamentals right early on: stepping back and starting with data gathering, preparing a baseline Scope 1, 2, and 3 greenhouse gas emissions inventory, performing a materiality assessment, establishing clear data owners across functions, and setting up internal processes. They suggested viewing this entire exercise as an opportunity to get your ducks in a row before the storm hits.
3. Step 1 of AI integration is AI governance
In the race to deploy artificial intelligence (AI), companies are skipping some important pieces: conducting AI impact assessments and targeted experimentation while failing to set an end goal. Directionless deployment is the reason why companies might not be seeing business value created yet.
While last year focused on AI innovations around business sustainability, this year the conversations revolved around a lack of AI oversight and companies being exposed to “shadow AI” vulnerabilities. It is incumbent upon companies to equip their employees with tools to enhance their jobs. In the absence of responsible AI incorporation and an established governance structure, management is often left unaware of AI being used, exposing the company to risks associated with self-selection of AI tools and unchecked usage. Companies also tend to confuse Information Security policy with AI policy, but experts from the AI, ESG, and Accountability panel emphasized that this won’t satisfy an AI audit. Transparency and ethics need to be included in an AI policy. Another emerging challenge is AI governance being siloed and not reaching lines of business that actively use AI, whereas real AI governance needs buy-in from various stakeholders and cross collaboration.
4. How companies are approaching climate risk
For companies following International Organization for Standardization (ISO)’s 31000 standard or the Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s enterprise risk management (ERM) framework, they already have a risk framework they can use to incorporate climate risks. Frameworks like the Taskforce on Climate-related Financial Disclosures (TCFD) and International Financial Reporting Standards (IFRS) S2 require climate-related risks to be disclosed separately, but for companies with risk management frameworks already in place, it is a challenge to differentiate climate risk processes from other ERM processes. S&P Global Sustainable1’s panel on financial impacts of climate, nature and environmental risk discussed how companies are identifying climate-related risks through climate risk assessments but not translating those risks into financial effects. Risk is being looked at in a very siloed perspective instead of across business functions like labor, supply chain, logistics, energy availability, etc. Secondly, risk is being looked at as a cost driver and center, whereas it should also be used to understand and create enterprise value across an organization. As the panel emphasized, risk quantification is an important step, followed by return on investment (ROI) identification, which can only be achieved by moving past risk analysis into identification of opportunities.
5. Measurement and reporting: A barrier to or driver of action?
Current standards like the Science-based Targets Initiative (SBTi) and the GHG Protocol focus largely on carbon accounting and target setting for decarbonization, less so on emissions reduction actions. At a panel on robust responses for business carbon emissions reduction, the conversation revolved around forming and owning a broader climate strategy beyond GHG emissions calculations, focusing on reducing emissions within a company’s value chain and financing emissions reduction beyond the value chain. Mondelez International’s Director of Climate, Packaging, and Environment Carolina Leonhardt explained that the value of data measurement and reporting lies in identifying emissions hotspots in which to invest reduction resources, conducting cost benefit analysis to enhance cross-functional decision making, and adding credibility. However, one of the main challenges discussed was striking the right balance between responding to regulations and actual decarbonizing, with companies having to focus their resources on perfecting their data rather than taking actions. Measurement and reporting were always meant to be the first step on a company’s sustainability journey, but the current environment makes it difficult to move beyond them into effective action.
Conclusion
The throughline across this year’s conversations was a shifted approach from seeing climate reporting as a compliance burden to an organizational capability. Whether the topic was regulatory preparedness, AI governance, climate risk, or emissions reporting, the companies finding traction were those treating these challenges as structural opportunities rather than isolated obligations.