On July 15, 2024, Governor Gavin Newsom proposed amendments that would, among other things, delay initial reporting deadlines for two of California’s recently enacted climate-related disclosure laws by two years.
Governor Newsom signed the two bills, Climate Corporate Data Accountability Act (California Senate Bill 253 (SB-253)), relating to greenhouse gas (GHG) emissions disclosures, and the Climate-Related Financial Risk Act (California Senate Bill 261 (SB-261)), relating to climate-related financial risk disclosures, into law in October 2023. See our Legal Update discussing the two bills. The first-of-their-kind state laws apply to all US companies doing business in California that meet certain annual revenue thresholds: more than $1 billion for SB-253 and more than $500 million for SB-261. The California laws go beyond the SEC’s final climate-related disclosure rules, which have been stayed due to legal challenges. See our blog post discussing the SEC’s stay. The California laws are similarly subject to challenge, but have not yet been stayed. See our Legal Update discussing this challenge.
Under Governor Newsom’s proposal, companies subject to SB-253 would not have to disclose Scope 1 and Scope 2 GHG emissions until 2028, and Scope 3 GHG emissions until 2029. The proposal would not require companies subject to SB-261 to report climate-related financial risks until 2028. Like EU climate change disclosure rules, California will require disclosure of Scope 3 GHG emissions, which are defined as emissions that result from activities from assets not owned or controlled by the reporting organization, but that the organization indirectly affects in its value chain, according to the US Environmental Protection Agency. While initially proposed by the SEC, Scope 3 GHG emissions disclosure requirements were removed from the SEC’s final climate-related disclosure rule.
At the time of signing SB-253 into law, Governor Newsom noted, in his Governor’s Message, his concerns about the bill, saying “The implementation deadlines in this bill are likely infeasible, and the reporting protocol specified could result in inconsistent reporting across businesses subject to the measure.”
Learn more about the different climate change-related disclosure requirements across the globe.