California's Corporate Climate Data Accountability Act: Navigating SB 253, SB 261, and SB 219
California has set a high bar for climate policy, leading the charge with ambitious laws on greenhouse gas emission reporting and climate resilience. This guide breaks down the key legislation in the state's "Climate Accountability Package"—Senate Bills (SB) 253, 261, and the foundational discussions of SB 219—each designed to enhance corporate transparency and accountability.
For companies doing business in California, keeping up with these regulations is crucial not only for compliance but also for managing strategic risks, maintaining investor trust, and contributing to a sustainable economy. As a global leader in safety solutions, we offer expertise and guidance to help you navigate these complex regulations with confidence.
Understanding the Climate Corporate Data Accountability Act (SB 253)
The Climate Corporate Data Accountability Act, or SB 253, is a pivotal shift in how companies report environmental impacts in the U.S. This law requires transparency in greenhouse gas (GHG) emissions reporting, impacting thousands of businesses.
| Revenue Requirement |
| GHG Emission Scopes |
| Assurance Timeline |
| Public & Private Companies $1 billion or more annually |
| Scope 1, Scope 2, Scope 3 |
| 2026: Scope 1 & 2 Reporting |
| 2027: Scope 3 Reporting |
Navigating the Climate-Related Financial Risk Act (SB 261)
SB 261 builds on SB 253 by requiring businesses to disclose climate-related financial risks, addressing the broader impact of climate change on operations and strategy.
This bill would require, on or before January 1, 2026, and biennially thereafter, a covered entity, as defined, to prepare a climate-related financial risk report disclosing the entity's climate-related financial risk and measures adopted to reduce and adapt to climate-related financial risk. The bill would require the covered entity to make a copy of the report available to the public on its website.
| Covered Entities |
| Revenue Threshold |
| Financial Risk Reporting |
| Reporting Schedule |
| Public & Private Companies $500 million or more annually |
| Physical & Transition Risks |
| TCFD Alignment |
Clarifying SB 219: The Legislative Pathway
Though not enacted, SB 219 played a significant role in the amendment of California's climate accountability framework. Its elements ultimately informed SB 253 and SB 261.
Role of SB 219
While it aided in shaping the legislative discourse, companies should focus on SB 253 and SB 261 to understand current requirements and timelines.
This bill would delay the requirement that the state board adopt regulations until July 1, 2025. It would require that the regulations adopted by the state board require, among other things, a reporting entity to make the annual disclosure to either the emissions reporting organization or the state board, and that the reporting entity publicly disclose its scope 3 emissions on a schedule specified by the state board, rather than no later than 180 days after its scope 1 emissions and scope 2 emissions are publicly disclosed.
The bill would authorize reports to be consolidated at the parent company level and would delete the requirement that the annual fee be paid upon filing the disclosure. The bill would authorize, rather than require, the state board to contract with an emissions reporting organization to develop a reporting program to receive and make certain required disclosures publicly available. The bill would make other related changes to the duties of the emissions reporting organization and the state board, as provided.
| Compliance with these laws requires extensive data collection and strategic alignment. Here's how we recommend managing these challenges: | |
| Detailed GHG data collection | Regulatory adherence |
| Advanced data systems | Stay updated with CARB regulations |
| Cross-functional team collaboration | Interpretive guidance for "doing business" |
| Assurance and Verification | Strategic integration |
| Audit-ready data preparation | Incorporate climate risk into strategy |
| Choosing experienced assurance providers | Strengthen ESG alignment |
DEKRA's Collaborative Approach to Climate Disclosure Compliance
At DEKRA, we offer technical precision and an unwavering commitment to helping organizations navigate these complex regulations. Our goal is to ensure your disclosures are comprehensive, credible, and conducive to enhancing operational resilience.
Our Services Include:
- Assurance and Verification of GHG Emissions
- Technical Support in GHG Accounting
- Climate Risk Assessment and Strategic Alignment
- Process Improvement for Sustainability Actions
Paving the Way for a Sustainable Future
California's legislative actions set rigorous standards that drive transparency and accountability, supporting a sustainable business ecosystem. By engaging with DEKRA, you'll not only adhere to these standards but also affirm your dedication to a sustainable future, securing trust and strengthening your market position.