The California Legislature passed Senate Bill (SB) 253, the
Climate Corporate Data Accountability Act, and SB 261,
Climate-Related Financial Risk Act, known collectively as the
Climate Accountability Package. If signed by Governor Newsom, these bills would require major companies doing business in California to publicly disclose their direct and indirect greenhouse gas emissions (under SB 253) and also disclose climate-related financial risk information (under SB 261). The Governor has until October 14 to veto the bills, or they automatically become state law. Governor Newsom has announced his intent to sign both bills.
If enacted, SB 253 would:
- Require about 5,000 companies that do business in California to report the amount of greenhouse gas pollution that is directly emitted by their operations, and also indirect emissions from things like employee travel, waste disposal and supply chains. These new disclosure requirements would include complete corporate supply chains (Scope 3), which can include in excess of 90% of a corporation’s carbon emissions.
- Apply to public and private businesses with more than $1 billion in annual revenue and operate in California.
- Require the California Air Resources Board (CARB) to develop and adopt regulations for subject “reporting entities” by January 1, 2025 such that tracking of required data begins in 2026.
- Require subject companies to disclose all of their GHG emissions by 2027 (Scope 1 and 2 beginning in 2026, Scope 3 in 2027).
- Require CARB to review during 2029, and update as necessary on or before January 1, 2030, these deadlines to evaluate trends in scope 3 emissions reporting and to consider changes to the deadlines, as provided.
- Establish a framework to ensure disclosures are verified by an independent third-party.
In essence, SB 253 would increase GHG reporting obligations from about 400 companies nationally to about 5,000 companies in California alone, with much more detail required for the indirect Scope 3 emissions.
If enacted, SB 261 would:
- Require major companies doing business in California (with at least $500 million in annual revenue) to publicly disclose their climate-related financial risks in accordance with the Task Force on Climate-Related Financial Disclosure (TCFD) framework.
- Require reporting on or before January 1, 2026, and biennially thereafter.
- Require that the report be published on the company’s website. Should a company fail to publish, or publish an insufficient report, the entity would be penalized by the State.
It is estimated Senate Bill 261 would affect roughly 10,000 companies.
If you would like to discuss SB 253 and SB 261 and how it may impact your company, please contact one of Trinity’s California offices or call
800.229.6655.
