Are You Ready for California’s New Climate Accountability Regulations?
Senate Bill 253 and Senate Bill 261 boost corporate climate accountability in California.
Once again, California is leading the nation. This time, with the first Climate Accountability Package in the U.S. The two bills in the package require companies to disclose and standardize their climate-related information. The first, Senate Bill (SB) 253, called the Climate Corporate Data Accountability Act, requires greenhouse gas emission disclosures for large businesses operating in California. The second, SB 261, Greenhouse Gases: Climate-Related Financial Risk, focuses on the disclosure of climate-related financial risks.
Who Will These Bills Affect? (Public and Private Companies, Listen Up!)
Even if your organization is not headquartered in California, any company doing business in the state that exceeds total annual revenue of $1 billion will be required to report under SB 253. Under SB 261, companies with total annual revenue of more than $500 million that do business in California will be required to comply. For both bills, public and private companies will be affected.
What Are the Regulatory Requirements?
First, all emissions disclosures will need to be audited by third-party independent auditors. Next, SB 253 will require regulated businesses to annually report their greenhouse gas emissions in line with the Greenhouse Gas Protocol. This includes the mandatory disclosure of both their scope 1 and scope 2 (i.e., direct) emissions by 2026. By 2027, companies will be required to report on their scope 3 (i.e., indirect) emissions from the previous financial year.
SB 261 requires companies to prepare a report disclosing their climate-related financial risks and the actions they are taking to mitigate, reduce, and adapt to them. The disclosures need to align with the Task Force on Climate-Related Financial Disclosures’ (TCFD) recommendations, and this information must be available on your company’s website.
What Are the Consequences of Failing to Comply?
For SB 253, the state board is in the process of adopting regulations intended to seek administrative penalties for failure to meet the requirements. For failure to comply with SB 261, the penalty to comply is a fine of up to $50,000 per reporting year.
How Should Companies Prepare?
Today, regulatory change happens so fast it can feel impossible to keep up. Not only is it important to stay on top of environmental regulations, but it is an organizational imperative. Regulators will not tolerate ignorance of the law as an acceptable defense, and procrastinating can be a very costly and brand-tarnishing mistake.
At APTIM, we understand the complexity and importance of keeping up with environmental regulations while still maintaining order in your day-to-day business operations. There are several actions companies can take to be better prepared for the 2026 reporting deadline shared by both bills. You should anticipate it will take time before your organization becomes climate compliant, so now is the time to start preparing.
APTIM can help your organization comply with the Climate Accountability Package.
Our team of subject matter experts in sustainability can offer third-party verification needed for SB 253. We also provide guidance start to finish for climate risk reporting in alignment with the TCFD framework, from initial reporting to tracking, guiding, and executing on disclosure deadlines.
Future proof your business and feel empowered to take climate action with APTIM. Fill out the request form below to get connected.
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