What are the implications and impact of the CA SB 253 – Climate Corporate Data Accountability Act?
On September 12, the California Assembly approved CA SB 253 – Climate Corporate Data Accountability Act.
The proposed legislation, set to go to Governor Gavin Newsome’s desk as soon as mid-October, would require both public and private companies meeting revenue requirements and doing business in the state of California to report on Scope 1, 2, and 3 emissions.
Here’s a brief snapshot of the proposed legislation and some thoughts about the importance and directionality of this legislation:
Impacted Parties: Corporations, limited liability companies, other business entities, and specified partnerships with total annual revenues greater than $1 billion that do business in California.
Requirement: Disclosure of Scope 1, 2, and 3 emissions and assurance of those figures
Date: Disclosure beginning in 2026 based on a company’s 2025 fiscal year. Limited assurance of Scope 1 and 2 beginning in 2026 and Scope 3 in 2030. Reasonable assurance of Scope 1 and 2 beginning in 2030.
Framework: Greenhouse Gas Protocol
Where: Disclosed in a public place that maximizes access for consumers, investors, and other stakeholders in a manner that is easily understandable and accessible.
This marks the first time in the US that the scope of GHG disclosure extends to privately-held entities and reflects a broader trend of ESG regulation bringing private companies into the disclosure fold.
For public companies, the disclosure and assurance effects of the regulation is largely duplicative of the EU regulation CSRD and the SEC proposed Issuer Rule. However, the impact will be more profound on private companies, that were previously not subject to these rules.
Furthermore, private companies need to begin to consider what data their supply chain partners can provide as they work through the ramifications of Scope 3. The implications will be far-reaching into this community and the partners that support their business.
With our industry expertise and extensive knowledge of the risk advisory landscape, the Schneider Downs team can help your organization prepare for the proposed disclosure requirements and additional ESG-related risks by developing an ESG strategy that aligns with your overall corporate strategy.
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