California’s new climate disclosure laws, SB 253 and SB 261 require corporations to publicly report their greenhouse gas (GHG) emissions and climate-related financial risks, setting a precedent for corporate accountability. These laws, updated by SB 219, aim to provide standardized, actionable data to drive informed decisions by consumers, investors, and policymakers while holding businesses accountable for their environmental impact.
SB 253 requires companies generating more than $1 billion in annual revenue to report their Scope 1, 2, and 3 GHG emissions, covering direct, indirect, and supply chain emissions. Meanwhile, SB 261 mandates biennial reporting of climate-related financial risks for businesses with annual revenues exceeding $500 million.
The legislation intends to provide consistent, actionable data to California’s consumers, investors, and policymakers. State Senator Scott Wiener, author of SB 253, emphasized its transformative potential:
“By requiring comprehensive emissions reporting, we empower consumers and investors to make informed decisions, fostering accountability among corporations.”
The California Air Resources Board (CARB), the agency charged with implementing these laws, is actively gathering feedback from stakeholders to address enforcement and data collection challenges. In a statement, CARB reassured businesses that enforcement actions would not target incomplete reporting in the first year if companies make a good-faith effort to comply.
Corporate Responses:
California’s business community has shown mixed reactions. The California Chamber of Commerce expressed concerns about the tight timelines, with calls to delay the initial 2026 reporting deadline being rejected by the state legislature. In contrast, companies like Apple and Microsoft have endorsed the laws, aligning them with their sustainability initiatives.
Environmental Advocates:
Environmental organizations and investor groups have welcomed the legislation. Michael Cohen, chair of Climate Action 100+, highlighted its significance:
“Enhanced emissions disclosures are crucial for holding companies accountable and enabling informed investment decisions that support the transition to a net-zero economy.”
Legal and Regulatory Hurdles:
Despite its ambitious goals, the legislation has faced legal challenges. The U.S. Chamber of Commerce and other trade groups have raised constitutional concerns over compelled speech and interstate commerce. A federal ruling recently allowed the laws to proceed while First Amendment claims are further reviewed.
CARB is exploring strategies to streamline implementation, such as leveraging third-party verification systems and aligning reporting requirements with global standards like the Greenhouse Gas Protocol and the Task Force on Climate-related Financial Disclosures (TCFD). Stakeholder feedback on minimizing duplication of effort and cost-effective data identification methods will be crucial in shaping the regulations.
As California pioneers these climate disclosure requirements, its actions will likely influence other states and federal policies. The SEC’s proposed climate disclosure rules align with this trend, suggesting that businesses operating across jurisdictions must prepare for a more complex regulatory environment.
California’s climate action extends to transformative clean vehicle regulations recently approved by the U.S. EPA, unlocking $36 billion in public health benefits. The Advanced Clean Cars II (ACC II) rule mandates 100% zero-emission vehicle sales by 2035, reducing harmful pollutants and saving drivers $7,500 in fuel and maintenance costs over ten years. The Heavy-Duty Omnibus regulation targets truck and bus emissions, cutting nitrogen oxide pollution by 90% and delivering $23 billion in health benefits.
Governor Gavin Newsom called the federal waivers to reaffirm California’s leadership in cutting pollution, stating, “Clean cars are here to stay.”
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