A new climate law in California will require companies with annual revenues of $1 billion or more to report both their direct and indirect greenhouse gas emissions starting in 2026 and 2027.
The Climate Corporate Data Accountability Act (SB 253), signed into law by California Gov. Gavin Newsom in October, would require some of the largest public and private companies to track and report almost all of their greenhouse gas emissions (Scope 1) , indirect greenhouse gas emissions from purchased electricity and other forms of energy (Scope 2), and indirect greenhouse gas emissions from the company’s value chain (Scope 3). This is anticipated to directly impact businesses that operate within California. The bill also sweeps in a wide array of entities in California or elsewhere that do business with these larger reporting businesses
Rules for this new law will be drafted in 2024. Under the current timeline, companies will start disclosing their Scope 1 and 2 emissions in 2026, followed by Scope 3 emissions in 2027. Impacted entities will also be required to provide assurance from an independent third-party provider when they report their emissions data to the California Air Resources Board.
In addition, a second new California law, the Climate-Related Financial Risk Act, requires companies generating $500 million or more to report their financial risks related to climate change and their plans for risk mitigation.
Additional information will be shared as it is available.