California adopts two laws requiring climate disclosures

California adopts two laws requiring climate disclosures

On 7 October 2023, California Governor signed SB 253 - Climate Corporate Data Accountability Act and SB 261 - Greenhouse gases: climate-related financial risk.
SB 253 requires companies with revenues greater than $1 billion that do business in California to report annually on their Scope 1, Scope 2, and Scope 3 emissions based on the GHG Protocol.
The law provides for:
  • Disclosure obligations that would begin in 2026 for Scope 1 and 2 emissions, and in 2027 for Scope 3 emissions.
  • Third party assurance for companies’ emissions reporting, with a limited assurance beginning in 2026 for Scope 1 and 2 emissions, and reasonable assurance in 2030.
  • A limited assurance level for Scope 3 beginning in 2030.
SB 261 applies to companies that do business in California and with revenues greater than $500 million to prepare a climate-related report in accordance with the TCFD framework, beginning 1January 2026, and biennially thereafter.
The laws will now be implemented by the California Air Resources Board, which needs to pass regulations by 1 January 2025, before companies start filing disclosures in 2026.