Two new bills have been passed in California as part of a “Climate Accountability Package” that require US-based companies “doing business”¹ in California to make disclosures about their emissions and climate-related financial risks. These are (a) the Climate Corporate Data Accountability Act (California Senate Bill 253 (SB-253)) and (b) the Climate-Related Financial Risk Act (California Senate Bill 261 (SB-261)). The laws remain subject to approval by the California Governor (who has until October 14, 2023, to sign or veto them).

To assist companies in preparing for these new climate-related disclosure requirements, we have provided a summary of some of the key requirements below.

SB-253: Climate Corporate Data Accountability Act (relating to emissions disclosure)

This law would establish the strictest corporate emissions disclosure requirements in the US – even stricter than the Securities and Exchange Commission’s (SEC’s) proposed climate disclosure rules. It would require certain US companies to disclose their greenhouse gas (GHG) emissions.

Who would be covered by the law?

The law would require the California Air Resources Board to adopt regulations by 2025 that would apply to all US companies – public or private – with over $1 billion in annual revenue that are “doing business”² in California, regardless of where in the US such companies are headquartered.

More than 5,000 companies are expected to be subject to these new requirements. Unlike similar EU legislation, the law does not have extraterritorial effect. (See further our alert on this EU legislation (i.e., the EU Corporate Sustainability Reporting Directive).)

What emissions would need to be disclosed?

Companies would need to disclose their GHG emissions from Scope 1, 2, and 3 sources – with reporting for Scope 1 and 2 emissions to begin in 2026, and reporting for Scope 3 emissions to begin in 2027.

• Scope 1 emissions are direct...