Understanding the Climate Corporate Data Accountability Act

On October 7th, California Governor Gavin Newsome signed the Climate Corporate Data Accountability Act (CA SB 253).

The climate-focused legislation will impact thousands of companies, both public and private operating in California. This article will breakdown each legislation and answer the key questions organizations are asking themselves as the journey to California’s new climate legislation begins.

What is the Climate Corporate Data Accountability Act?

The Climate Corporate Data Accountability Act (CA SB 253) requires both public and private companies meeting revenue requirements and operating in the state of California to report on Scope 1, 2 and 3 emissions.

Who Does CA SB 253 Apply To?

CA SB 253 affects corporations, limited liability companies, other business entities and specified partnerships with total annual revenues greater than $1 billion that do business in California.

What is the CA SB 253 Assurance Requirement?

CA SB 253 requires reporting companies to obtain an annual assurance report conducted by an independent third-party assurance provider. The report must be disclosed in a public place that maximizes access for consumers, investors and other stakeholders in a manner that is easily understandable and accessible, such as a company website.

What is the CA SB 253 Framework?

CA SB 253 reporting will use the Greenhouse Gas Protocol (GHGP) and associated guidance framework.

What is the CA SB 253 Timeline?
  • 2026 Disclosure and limited assurance of scopes 1 and 2 emissions based on 2025 fiscal year.
  • 2027 Disclosure of scope 3 emissions based on 2026 fiscal year.
  • 2030 Companies to obtain reasonable assurance of scopes 1 and 2 emission disclosures and limited assurance over their scope 3 emissions disclosures.
What Does “Doing Business in California” Mean?

While neither bill explicitly defines “doing business” in California, the California Franchise Tax Board offers some guidance. According to their website, they consider you “doing business” in California if you meet any of the following criteria:

  • Engage in any transaction for the purpose of financial gain within California
  • Are organized or commercially domiciled in California
  • Your California sales, property or payroll exceed the following amounts for 2022:
    • California sales tax $690,144
    • California real and tangible personal property exceed $69,015
    • California payroll compensation exceeds $69,015.

Organizations impacted by CA SB 253 need to start preparing for the California climate disclosure immediately. By properly preparing for the disclosures, your organization will have stronger controls over emission data and reporting and avoid the risks and penalties associated with non-compliance.

Schneider Downs Resources

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How Can Schneider Downs Help?

Schneider Downs can help organizations identify material climate-related financial risks and create an accompanying report in line with Task Force on Climate-Related Financial Disclosures TCFD recommendations. In addition, our team can help develop a greenhouse gas inventory and calculation process, as well as eventual limited assurance on the calculations.

If you have any questions about CA SB 253 0r CA SB 261, please our Senior ESG & Sustainability Manager Matt Hartman at [email protected].

About Schneider Downs ESG Consulting

With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization perform a gap assessment relative to the finalized regulation, suggest areas of improvement and meet disclosure requirements.

Learn more about our ESG consulting services at www.schneiderdowns.com/esg or contact the team at [email protected].

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2024 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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