Imagine landing a game-changing deal – only to lose it because you can’t produce a carbon emissions report. This is no longer hypothetical. In 2025, carbon reporting is a real make-or-break factor for small businesses.

Carbon reporting has transitioned from a concern primarily for large enterprises to a pressing issue for small and medium-sized businesses (SMBs). Regulatory bodies like the U.S. Securities and Exchange Commission (SEC) have implemented climate disclosure rules that, while directly targeting large public companies, indirectly impact their entire supply chains – including SMBs. State-level mandates in California and New York are also setting precedents that ripple across industries.

Beyond regulatory compliance, there’s a growing market-driven demand for environmental transparency. Large corporations now require their suppliers to disclose greenhouse gas (GHG) emissions data across:

• Scope 1: Direct emissions

• Scope 2: Indirect emissions from purchased energy

• Scope 3: Indirect emissions from a company’s value chain

Let’s demystify carbon reporting for small business leaders, providing clear insights into why it’s essential, what it entails, and how to implement effective carbon accounting practices. By proactively addressing carbon reporting, SMBs can ensure compliance – and unlock new opportunities for growth and sustainability.

The Evolving Regulatory Landscape

In 2025, small business owners and property managers across the U.S. are navigating a complex and expanding landscape of environmental regulations. While many of these laws target larger corporations and buildings, their ripple effects are increasingly impacting smaller enterprises, especially those leasing space or supplying larger firms.

Federal Regulations: SEC’s Climate Disclosure Rule

In March 2024, the SEC finalized its climate disclosure rule, mandating certain public companies to report on their GHG emissions and climate-related risks. The requirements vary based on company size and the materiality of emissions:

• Scope 1: Direct GHG emissions from operations owned or controlled by the company (e.g., company vehicles, on-site fuel combustion).

• Scope 2: Indirect GHG emissions from purchased electricity, steam, heat, or cooling.

• Scope 3: Indirect emissions from the company’s value chain (e.g., purchased goods, business travel, waste disposal, commuting, product use).

While Scope 3 reporting is not mandatory, many companies voluntarily report it due to stakeholder expectations and sustainability goals. It often represents up to 90% of a company’s total emissions.

Impact on SMBs: Even if your business isn’t directly regulated, enterprise partners may ask for emissions data to meet their own compliance obligations.

State Regulations: California

• SB 253: Requires companies with $1B+ in revenue doing business in California to report Scope 1, 2, and 3 emissions.

• SB 261: Requires companies with $500M+ in revenue to disclose climate-related financial risks.

Why it matters: If you work with or sell to these companies, they may need emissions data from you.

Local Regulations: New York City

New York has enacted several local laws targeting building emissions:

• Local Law 97: Caps GHG emissions for buildings over 25,000 sq ft starting 2024 – with stricter caps through 2050.

• Local Laws 84 & 133: Require benchmarking of energy/water use for buildings 25,000-50,000+ sq ft.

• Local Law 87: Requires energy audits and retro-commissioning every 10 years.

• Local Laws 33 & 95: Mandate publicly displayed energy efficiency grades.

Impact on SMBs:

• Landlords may pass on compliance costs through higher rents

• Tenants may be required to participate in energy upgrades

• Buildings with better grades may offer lower operating costs

Tools to Help:

• NYC Accelerator: Free compliance help for building owners and tenants

• Genergy (genergy.com): Provides emissions audits, benchmarking, and local law compliance support

Looking Ahead: Expect similar regulations in more states as climate policy evolves. Getting ahead now is a competitive edge.

What Small Businesses Need to Know About Emissions Reporting

GHG emissions fall into three categories:

Why it matters:

• Upstream: Enterprise clients may ask for your Scope 1 & 2 data

• Downstream: Your vendors may impact your Scope 3 calculations

• Landlords: May tie energy use to lease terms or shared goals

Your next moves:

• Assess: What emissions do you produce?

• Coordinate: Work with partners to collect and share data

• Improve: Simple upgrades like LED lighting or hybrid work reduce emissions

By understanding emissions scopes, SMBs can control costs, improve their reputation, and stay one step ahead of evolving expectations.

Tools and Services to Simplify Emissions Reporting

Navigating emissions reporting doesn’t have to be overwhelming. Here are tools to help:

Free Tools

• SME Climate Hub: Free reporting tool aligned with global standards

• EcoHedge: Carbon accounting software built for small businesses

Comprehensive Platforms

• Normative: Full-scope carbon accounting with Scope 1-3 coverage

• Watershed: Subscription dashboard with peer benchmarking and reduction plans

Specialized Options

• DitchCarbon: AI-powered insights focused on Scope 3

• RETScreen: Government-backed energy analysis tool for project viability and performance

How to choose:

• Match the tool to your reporting needs

• Engage stakeholders to collect quality data

• Document and iterate as regulations shift

Building a Practical Emissions Strategy

Understanding emissions is step one. Acting on that insight is how you create value.

Step 1: Measure What Matters

• Track Scope 1 and 2 with bills and logs

• Estimate Scope 3 where material

• Use tools like SME Climate Hub to get started

Step 2: Prioritize What You Can Control

• Quick wins: LED lighting, HVAC upgrades

• Behavior changes: Remote work, fewer shipments

Step 3: Set Clear, Realistic Goals

• Short-term: Submit first emissions report

• Mid-term: Cut energy use by 15%

• Long-term: Integrate full Scope 3 tracking

Step 4: Engage Your Team and Vendors

• Appoint an internal champion

• Educate staff and customers

• Align vendors to your sustainability goals

Step 5: Monitor, Improve, Repeat

• Review quarterly

• Update goals

• Share progress transparently

Small wins build momentum – and prove you’re a business built for the future.

What Now?

Carbon reporting is no longer optional. It’s your signal that you’re credible, compliant, and future-ready.

Quick Recap:

• Regulations are expanding: From the SEC to California and NYC

• You’re in the chain: Partners want your data

• Scope 1-3 matters: Know your footprint

• Tools exist: Start simple, scale as needed

• A plan is doable: With steps you can take today

You don’t need a Chief Sustainability Officer. You just need a next step. Because in today’s economy, carbon transparency isn’t a checkbox – it’s your business advantage.