Written by: Colin Greer

SB 253 – What Every Company Needs to Know About the New California Emissions Reporting Law

It’s not surprising that California is the first state to pass climate reporting legislation that will require companies to publicly disclose their greenhouse gas (GHG) emissions. After all, the Golden State has a history of being environmentally proactive and serving as a trailblazer for initiatives that combat the effects of climate change. What is surprising is just how many organizations California State Bill 253 impacts—about 5,600 organizations are expected to be affected, and not just public companies that call California home.

Unlike the highly publicized forthcoming climate disclosure rule from the U.S. Securities and Exchange Commission that applies only to publicly traded organizations, California’s Climate Corporate Data Accountability Act affects companies of all ownership types that “do business in California,” a designation that includes more than just CA-headquartered organizations. Here’s what every company most needs to know about the new law:

Some examples of companies responsible for reporting emissions include:

Scope 3 emissions includes other indirect emissions from upstream and downstream activities. Purchased goods and services, business travel, employee commutes, and processing and use of sold products are a few examples of what falls under the umbrella of scope 3 emissions. These GHG emissions are obviously somewhat more challenging for companies to identify and calculate.

Companies will have a little longer to prepare for Scope 3 emissions reporting with the first scope 3 reports due in 2027 using data from 2026. Once scope 3 emissions reporting begins, reporting entities will need to be sure to report within 180 days of reporting their scope 1 and scope 2 emissions.

Following such standards will help companies achieve assurance, which with they will need to obtain from an independent third-party assurance provider. Assurance attests that a company’s public disclosures are accurate and there are different levels of assurance often based on the degree of risk of a misstatement. Per SB253, reporting entities will need limited assurance on Scope 1 and 2 emissions starting in the first year of reporting (2026) and a higher level of reasonable assurance by 2030. Assurance requirements for scope 3 emissions are yet to be determined but may be set by the state legislature in the future.

Get ready for SB253 and other climate disclosure rules soon to follow.

California SB253 represent the first emissions reporting disclosure requirement many organizations will have to meet. But it won’t be the last. As other regulators including the SEC look to finalize emissions disclosures rules, more and more companies will need to step up their emissions reporting game and do a better job of collecting, measuring, and controlling GHG emissions throughout their operations and supply chains. It’s reasonable to expect that the rules will only become more stringent moving forward.

Companies of all types and sizes need to get serious about putting their emissions reporting plans in place, regardless of where they operate. And SIB can help. From identifying data sources, to collecting and cleaning the data, to implementing the right emissions reporting platform, reach out to SIB for support in meeting all the current and future GHG emissions reporting requirements that apply to your organization.

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