California Enacts Landmark Climate Disclosure Law for Large Companies

On October 1, 2024, California Governor Gavin Newsom signed into law a landmark climate disclosure bill, mandating those large businesses operating in the state report on their emissions and climate-related financial risks. Despite previously voicing concerns about the feasibility of implementation, the bill retains its original start date of 2026.

The bill, known as SB 219, incorporates amendments to two prior laws: SB 253, the "Climate Corporate Data Accountability Act," and SB 261, which requires reporting on climate-related financial risks. Under SB 253, companies with revenues exceeding $1 billion must report their Scope 1 (direct emissions), Scope 2 (indirect emissions from energy use), and Scope 3 (other indirect emissions, such as those from supply chains and business travel). SB 261 applies to businesses with revenues over $500 million and requires them to disclose climate risks and strategies for mitigation.

Although the 2026 reporting deadline remains, some provisions have been adjusted. For instance, companies now have more flexibility in reporting Scope 3 emissions, as the schedule will be determined by the California Air Resources Board (CARB). Additionally, reporting can be consolidated at the parent company level, and fees for filing reports have been eliminated. CARB has also been given an extension, now having until July 1, 2025, to finalize regulations for the emissions reporting.

This legislation positions California as a leader in climate transparency, affecting most large U.S. businesses, and underscores the state’s commitment to addressing climate change through corporate accountability.