Analyst Insight: Despite U.S. deregulation on climate policy, growing international and state-level requirements are increasing pressure on businesses to strengthen environmental accountability across supply chains, while sustainability teams grapple with growing reporting demands and constrained resources. To remain competitive and compliant, organizations must strengthen supply chain visibility and invest in trustworthy artificial intelligence-enabled tools.    

The move away from environmental stewardship by the U.S. started with leaving the Paris Agreement, and has continued with measures like the Environmental Protection Agency’s removal of the scientific and legal basis for federal greenhouse gas regulation. Projected green energy funding cuts worth $13 billion further cement this stance.

Despite these indicators, calls for greater environmental accountability coming both from the market and international trade partners have not slowed. Specifically, businesses trading with the EU will have to track compliance with the region’s Corporate Sustainability Reporting Directive, Corporate Sustainability Due Diligence Directive, and Regulation on Deforestation-free Products. 

Yet another key item of legislation businesses working with the EU will need to take into account is the region’s Carbon Border Adjustment Mechanism (CBAM) which ended its transition in 2024. Aimed at slashing carbon emissions, CBAM puts a price tag on the carbon emissions embodied in certain imported products, such as iron, steel, aluminum, cement, fertilizers, electricity and hydrogen.

Companies only trading and producing domestically are no less off the hook, with states taking up the gauntlet and proposing their own environmental policies. California, New York, Colorado, Maryland and New Mexico are among those pushing ahead with their own emissions disclosure laws. 

New York has introduced bills mirroring California's climate reporting requirements, and Colorado introduced a greenhouse gas emissions disclosure bill in January, 2025. The Net Zero Tracker confirms that appetite for transparency has grown among U.S. companies, with 9% more businesses in the Forbes Global 2000 making pledges in 2025 than in 2024. The result is not deregulation, but fragmentation, creating an increasingly complex patchwork of compliance obligations that organizations must navigate simultaneously.

At the same time, sustainability teams remain small and overstretched. In many organizations, only a handful of employees manage ESG reporting, supplier engagement, emissions accounting and regulatory monitoring. Reporting demands often dominate both time and budget, leaving limited capacity for strategic decarbonization initiatives.

What this shows is that while changes can create short-term uncertainty and shifts at the federal level, environmental policymaking tends to be cyclical and increasingly global. Sustainability needs to remain a board-level priority and at the top of the supply chain manager agenda to continue driving a range of benefits that spans far beyond mere compliance. In the end, sustainability can help drive innovation, cost optimization, risk mitigation, brand image and sales.  

One of the key barriers to achieving demonstrable sustainability, however, is transparency, particularly visibility of Tier 2 and 3 suppliers, and Scope 3 emissions. A recent report by Sphera Solutions confirms that 75% of businesses say regulations have specifically accelerated Scope 3 efforts, but 45% lack full confidence in the accuracy of their Scope 3 data. Solutions that guarantee accuracy of data and visibility both up and down the supply chain are therefore becoming critical to realize company objectives. Without defensible, auditable data, organizations risk regulatory exposure, greenwashing accusations, supplier disruptions, and internal paralysis.

Thanks to technology that provides clear dashboards of easy-to-interpret data, it’s possible to enhance transparency and traceability across the supply chain, ensuring that ESG claims are verifiable and trustworthy, while also providing crucial visibility into emissions hot spots. AI-driven insights, automated onboarding templates, and customizable scorecards, help teams uncover opportunity areas, reduce risk, and meet evolving ESG regulations. Seamless integrations and real-time metrics power more sustainable, transparent procurement.

Increasing global regulations also require businesses to calculate and manage embodied emissions in imported goods. This requires accurate baseline measurements, reliable emissions factors, supplier data collection, and verification processes. Organizations that lack centralized visibility will struggle to respond quickly to regulatory changes or shifting supply chain dynamics.

Greater visibility also feeds into better governance practices, ensuring that audits and internal controls are seamless to implement. In fact, automation can help maintain constant monitoring by flagging potential compliance issues, such as an expiring certification, immediately, thus triggering action with the supplier before there is an issue. 

Finally, without transparency across the supply chain, organizations will struggle to meet stakeholder expectations for credible reporting and climate action. Investors, customers, and regulators are increasingly scrutinizing ESG claims. And inconsistent or unverifiable data eventually becomes a strategic liability.

Putting systems in place now to ensure accurate, accessible, and traceable data is essential. The organizations that invest in supply chain visibility today will not only meet compliance requirements- they will build the operational foundation needed to shift from reactive reporting to proactive decarbonization.