(US MEDIA GROUP) – California Governor Gavin Newsom has taken a bold step in addressing climate change by signing two pieces of legislation into law. Senate Bill 253 and Senate Bill 261 will mandate corporate climate and climate-related financial risk disclosures, going beyond the proposed rules from the Securities and Exchange Commission.
SB 253, which applies to both public and private companies with annual revenues above certain thresholds, will require reporting of Scope 1, 2, and 3 greenhouse gas emissions. This includes companies with more than $1 billion in annual revenues, with reporting of Scope 1 and 2 emissions starting in 2026 and Scope 3 emissions in 2027. The California Air Resources Board (CARB) will provide guidance for these requirements by 2025.
In addition to the reporting requirements, SB 253 also goes beyond the SEC’s proposed rules by requiring reporting based on the internationally recognized GHG Protocol standards and third-party assurance of disclosures. This added level of transparency and accountability has received support from Democratic members of Congress from California who are also urging the SEC to include Scope 3 reporting requirements in their final rules.
Meanwhile, SB 261 targets larger companies with annual revenues over $500 million, requiring them to provide a publicly available report on climate-related financial risks. This will allow shareholders and the public to have a better understanding of a company’s exposure to climate change risks, and make informed investment decisions.
While the SEC will consider feedback before issuing the final rule, legal challenges to the legislation are likely. However, Governor Newsom remains optimistic that these measures will ultimately benefit both the environment and the economy. By addressing climate change and promoting transparency, California is setting an example for other states and countries to follow.