The California Air Resources Board (CARB) took another step towards implementing regulations for SB 253. SB 253 is California’s new law requiring in-scope companies to report their GHG emissions. Earlier this week, the regulator hosted a workshop on upcoming SB 253 regulations. Those regulations include definitions on what are considered “operational boundaries” under the law. A recent Ropes & Gray memo provides details:
“CARB presented two approaches for setting organizational boundaries for reporting GHG emissions. Reporting entities would be able to use either approach.
- Equity share approach: A company accounts for GHG emissions based on its ownership interest in an operation.
- Control approach: A company accounts for 100% of the emissions from operations over which it exercises financial control (the ability to direct financial and operating policies of the operation to gain economic benefits) or operational control (the authority to introduce and implement operating policies for the operation).
CARB staff proposes requiring disclosures that include information about entities’ organizational boundary selection.
CARB is soliciting feedback on whether additional boundary-setting approaches should be considered and how entities should explain their boundary selection choices.”
In addition to putting forward these two definitions on operational boundaries, CARB also discussed several other upcoming regulations. These include standardized reporting templates for scope 1 and 2 emissions, regulatory approaches for scope 3 reporting, GHG accounting methods, and assurance requirements. While companies will report under SB 253 later this year, the items discussed at the March workshop will only apply to 2027 reporting.
Our members can learn more about climate disclosure laws here.
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