2023 California Climate Accountability Package

During its 2023 session, the California State Legislature passed several laws, collectively known as the California Climate Accountability Package. Notably, SB 253 and SB 261 will impact how companies calculate and report their emissions.

• The Climate Corporate Data Accountability Act (SB 253): Signed into law in October 2023, SB 253 requires companies “doing business in California” with an annual revenue greater than US$1 billion to disclose their greenhouse gas (GHG) emissions annually. The bill also requires that a third-party provider conduct an assurance engagement on the public disclosure of a reporting entity. Starting in 2026, this law will require a “limited” assurance level for Scope 1 and 2 emissions, escalating to a “reasonable” assurance by 2030. Scope 3 reporting will begin in 2027, with “limited” assurance required by 2030. ”Limited” assurance indicates that reviewers are unaware of any material errors, while “reasonable” assurance is a higher standard affirming material accuracy. In 2024, SB 219 extended the deadline for the California Air Resources Board (CARB) to issue the detailed regulations by six months, shifting SB 253’s implementation timeline.

• Greenhouse gases: climate-related financial risk (SB 261): Signed into law in October 2023, SB 261 mandates that companies operating in California with annual revenues exceeding US$500 million publicly disclose a report detailing their climate-related financial risks and the strategies they have implemented to mitigate and adapt to these risks. A copy of this report must be accessible on the company's website. The disclosures and published report are to be updated on a biennial basis. Aside from the penalty fees for non-compliance, all covered entities are required to pay an annual fee to the CARB, which will be used to cover the costs of the administration and implementation of this policy.