On October 7, 2023, California Governor Gavin Newson signed two landmark bills into law requiring large companies doing business in California to publicly report their annual GHG emissions (Senate Bill (SB) 253) and climate-related financial risks (SB-261).

California’s new Senate Bill (SB) 253, the Climate Corporate Data Accountability Act, requires companies making more than $7 billion in gross revenue to disclose their GHG emissions for their operations (Scope 1 and 2) and supply chains (Scope 3).

SB-253 is the first legal requirement on GHG emissions reporting in the U.S., skipping ahead of the anticipated U.S. Securities and Exchange Commission (SEC) rule. In addition to California’s new rule having the first-in-the-nation distinction, it is unique in that it applies to both publicly traded and privately held companies, while SEC’s forthcoming rule will apply only to public companies.

Governor Newsom also signed SB-261, the Greenhouse Gases: Climate-Related Financial Risk Act, into law which requires every company with more than $500 million in annual revenue to issue a biennial report on its climate-related financial risks.

Despite the significance of signing both SB-253 and SB-261 into law, Gov. Newsom has stated his concerns about the implementation deadlines being infeasible and the protocol specified resulting in inconsistent reporting across companies subject to the laws.

The new California laws have global repercussions and apply to companies both headquartered in California and doing business in California. In addition, the supply chains of these companies are also brought into the GHG emissions reporting legal requirements. Reporting on Scope 1 and 2 GHG emissions is required to start in 2026 (on 2025 data). Scope 3 GHG emissions reporting is not required until 2027 (on 2026 data).

Please contact Dr. Albert Chung, KERAMIDA’s Senior Vice President of Climate & Sustainability Services, for more information.