Understanding California climate laws
As a result of California’s new climate bills, the global companies operating within the state must disclose their environmental impact and climate risks. Learn what it means for your company and how to prepare for this change.
Learn how SB-253 and SB-261 California climate laws may affect your company
Requires certain companies to disclose their direct (Scope 1), indirect (Scope 2), and value chain (Scope 3) greenhouse gas (GHG) emissions.
Requires certain companies to disclose climate-related financial risks under the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and measures adopted to reduce and adapt to such climate-related financial risks.
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1. What is the new climate reporting law in California?
The new California climate laws are the two bills, SB-253 and SB-261, that apply to all companies that operate in the state. All the companies are required to disclose not only Scope 1 and Scope 2 but also Scope 3 greenhouse gas emissions as well as climate-related financial risk information. Both public and private US businesses with revenues that are greater than USD 1B must start reporting at the beginning of 2026, which covers the data from 2025. Another important thing to note is that these bills require reporting companies to get third-party assurance of their reports as the confirmation of the provided data.
2. How to prepare an industry for the new California climate laws?
To better prepare your business for new California’s climate laws, it is important to introduce sustainability compliance to your business. To do that, it is necessary to develop an understanding of the new bills and realize their impact on your company. Additionally, it is imperative to identify pain points and prioritize actions that will help your company reduce its carbon footprint. Later steps include developing a plan that will help us track and report the progress to meet emissions reduction goals and engage with stakeholders as well as investors to communicate the changes and commitment for sustainability compliance to benefit from improved brand reputation, cost savings, and increased competitiveness in the marketplace.