Alice Roberts, Amy Malick
October 2, 2024
California amends their Climate Corporate Data Accountability Package: SB 219
Governor Gavin Newsom signed SB 2191 into law on September 27, 2024. 2026 remains the reporting start date (for reporting year 2025) for affected US companies operating in California, requiring them to report scope 1 and 2 greenhouse gas emissions (GHGs) with limited assurance, and to report on climate-related financial risks. Scope 3 reporting will be required starting in 2027.
The passage of SB 219 represents a significant step in California’s climate leadership. Consolidating and amending the landmark climate disclosure laws SB 2532 and SB 2613 – which mandate climate-related disclosures for all US companies doing business in California that meet certain annual revenue thresholds, SB 219 retains the original reporting timelines starting in 2026. Additionally, SB219 introduces key amendments:
- Retains the original reporting timelines: The reporting start date is 2026, consistent with SB 253 and 261.
- Consolidated reporting: Covered companies can now consolidate both SB 253 and SB 261 reporting at the parent company level. Subsidiaries of a parent company that also qualify as a covered entity are not required to prepare a separate report.
- Extended implementation guidance timeline: SB 253 requires the California Air Resources Board (CARB) to adopt regulations for the disclosures by January 1, 2025. SB 219 will grant CARB an additional six months or until July 1, 2025.
- Flexible timing for Scope 3 disclosures: Scope 3 reporting will start in 2027; however, CARB has the flexibility to set the timing for Scope 3 emissions disclosures rather than adhering to the previous 180 days deadline after Scope 1 and 2 emissions are reported under SB 253.
- Public emissions reporting: CARB will now have the option, rather than be required, to contract with a third party in order to ensure greenhouse gas emissions disclosures are made public.
- Change to the timing of fees: Annual fee due dates are now separate from the disclosure filing dates; the fee amount itself remains unchanged.
While SB 219 provides greater certainty on disclosure timelines, the extended timeline for implementation guidance introduces a layer of complexity that companies must navigate. The additional six months for implementation guidance means that companies may need to prepare without complete clarity on regulatory requirements, which may complicate reporting strategies.
California became the first state in the US to pass climate-related disclosure regulations in September 2023 under the California Climate Corporate Data Accountability Package. The package included a series of laws, two of which are:
SB 253 Climate Corporate Data Accountability Act: SB 253 requires both public and private US4 entities that do business in California and have more than $1 billion in annual global revenue to report annually on their global Scope 1 and 2 GHG emissions starting in 2026 (for 2025 data) and Scope 3 emissions in 2027 (for 2026 data).
The disclosures will need to be verified by a third-party assurance provider as follows:
- 2026: Limited assurance of Scope 1 and 2 GHG emissions
- 2030: Reasonable assurance of Scope 1 and 2 GHG emissions and limited assurance of Scope 3 GHG emissions
The bill does not define “doing business” in California. Existing California Revenue & Tax Code § 23101 defines “doing business” in California as:
- Engaging in any transaction for the purpose of financial gain within California
- Being organized or commercially domiciled in California
- Or having California sales, property, or payroll exceed specified amounts5
Penalties can reach $500,000 per year. Penalties for 2027-2030 Scope 3 reporting are only based on non-filing and will not be administered for Scope 3 misstatements that are made on a reasonable basis and disclosed in good faith1.
SB 261 Greenhouse Gases: Climate-Related Financial Risk: SB 261 mandates companies that do business in California and have more than $500 million in annual global revenue to report on their physical climate risks, transition risks, and opportunities biennially beginning January 1, 2026 (for 2025 data). Climate disclosures will align with the Task Force on Climate-Related Financial Disclosures. Penalties for failures to publish or publishing insufficient/inaccurate climate-related financial risk reports can reach up to $50,000 per year.
Additional information on the California climate laws is here.
The landscape of mandatory climate-related regulations is expanding globally. US federal regulations include the Securities and Exchange Commission's (SEC’s) Climate Disclosure Rule, which has been voluntarily stayed by the SEC, and the Supplier Climate Risks and Resilience Rule.
Additional information on the SEC Climate Disclosure Rules can be found here.
- In addition to California, Illinois, Minnesota, New York, and Washington are advancing their own climate disclosure requirements. Preparing for California’s upcoming regulations will serve as a critical foundation for companies, positioning them for compliance with similar requirements in other regions, including the European Union (EU), UK, India, New Zealand, Australia, Singapore, Hong Kong, and Japan.
Larger companies are already subject to or will be subject to emerging climate-related legislation from the EU, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These regulations extend obligations to their value chain. Companies within the value chain of those that are directly affected will likely be asked to disclose certain information, including the use of procured products or services and end-of-life climate impacts.
Additional information on comparisons between the California climate laws, SEC climate-related disclosure rule, and CSRD can be found here.
Our team of decarbonization experts can support clients in navigating the complexities of climate-related regulations. We provide clear guidance on your specific reporting requirements, identify gaps in your current reporting, and create roadmaps for compliance with climate regulations. Beyond reporting obligations, we can help you leverage your climate strategy to position your company for long-term success in a low-carbon economy.
To learn more about how we can help you prepare climate-related disclosures and navigate the rapidly evolving regulatory landscape in California, please reach out to Alice Roberts and Amy Malick.
1 CaliforniaSB 219: 2023-2024: Regular Session. LegiScan. (2024, September 30). https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB219
2 California SB 253: 2023-2024: Regular Session. LegiScan. (2023, October 9). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB253
3 California SB 261: 2023-2024: Regular Session. LegiScan. (2023, October 9). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB261
4 US companies include partnerships, corporations, limited liability companies or other US business entities, defined as formed under the laws of the state of California, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States. California SB 253: 2023-2024: Regular Session. LegiScan. (2023, October 9). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB253
5California Revenue & Taxation Codes Section 23101. California.Public.Law. (2012, November https://california.public.law/codes/ca_rev_and_tax_code_section_23101
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Alice Roberts
Managing Consultant
Amy Malick
Principal
+1 415-796-1940