Our newest guidebooks are now available covering California’s ground-breaking climate disclosure laws SB253 – the Climate Corporate Data Accountability Act (see a summary here) and SB261 – Greenhouse gases: climate-related financial risk (see a summary here).
While you may have seen other summaries of the laws, our Guidebooks are unique in providing practical annotations, guidance, tips and traps of both new laws. While many companies may already be disclosing greenhouse gas emissions on a voluntary basis, these new laws have mandates that companies need to know. For instance, both laws apply to any company that “does business in California.”
The laws’ applicability is not limited to California-based or publicly traded companies, the revenue thresholds are company-wide and reporting is on the entity level, not just California operations. “Does business is California” is not defined, which is likely to create confusion and controversy, especially for companies that do not have a physical presence/facility in California but sell any amount of products/services in the state. It appears that a company exceeding the applicable revenue thresholds that has any nexus to California may be subject to the laws.
With the exception of insurance companies, which are excluded from SB261, covered entities are not limited to specific industry sectors, such as manufacturing or retail. This means professional and financial services firms, logistics/transshipment companies, software developers, medical services as well as investment funds meeting the applicability criteria are subject to the laws.
In addition, SB253 does not limit Scope 1 or Scope 2 emissions disclosure to those from facilities located in California — companies must report emissions “regardless of location.”
In addition, while SB253 defers to rulemaking for its disclosure requirements and timing, SB261 does not. It does require rulemaking for fees and penalties, but SB261’s substantive reporting requirements are self-implementing. It is possible, but not mandated by the Act, that rules may be promulgated for how the “climate reporting organization” operates, but that does not impact the substantive reporting requirements for companies subject to the law.
Members can access the SB253 Guidebook here and the SB261 Guidebook here. Are you a PracticalESG.com member with access to these resources, along with many others? If not, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
If you aren’t already subscribed to our complimentary ESG blog, sign up here: https://practicalesg.com/subscribe/ for daily updates delivered right to you.
