California Climate Reporting Bill Reintroduced
Disclosure requirements could have national impact.
On January 30, 2023, Senator Scott Wiener introduced SB 253, known as the Climate Corporate Data Accountability Act, which would require companies to report greenhouse gas (GHG) emissions and the California Air Resources Board (CARB) to regulate those emissions. Wiener introduced an earlier version of the bill, SB 260, in 2021. That bill passed the state Senate but failed in the Assembly.
Reporting Requirements
The bill would require CARB to develop and adopt regulations requiring U.S. partnerships, corporations, limited liability companies, and other business entities that do business in California and have total annual revenues of more than $1 billion to disclose their scope 1, 2, and 3 GHG emissions publicly. CARB would be required to develop the regulations by January 1, 2025, disclosure would begin during 2026. The bill would also require CARB, on or before January 1, 2030, to review, and update as necessary, these deadlines to evaluate trends in scope 3 emissions reporting and to consider changes to the deadlines.
The bill would require reporting entities to disclose their GHG emissions in a manner that is easily understandable and accessible to residents of the state. Reporting entities must also ensure that their public disclosures have been independently verified by the emissions registry or a third-party auditor, approved by the state board, with expertise in GHG emissions accounting.
In developing the regulations, CARB would also be required to consulting with the Attorney General, other government stakeholders, investors, stakeholders representing consumer and environmental justice interests, and reporting entities that have “demonstrated leadership in full-scope greenhouse gas emissions accounting and public disclosure and greenhouse gas emissions reductions.”
CARB would be required to establish auditor qualifications and a process for approval of auditors that ensures sufficient auditor capacity, as well as timely reporting implementation. CARB would also be required to contract with an emissions registry to develop a reporting and registry program to receive and make publicly available the required disclosures.
On or before July 1, 2027, CARB would be required to contract with the University of California, the California State University, a national laboratory, or another equivalent academic institution to prepare a report on the public disclosures made by reporting entities to the emissions registry.
Scope of Emissions
The bill applies to Scope 1, 2, and 3 emissions:
Scope 1 emissions are all direct greenhouse gas emissions that stem from sources that a covered entity owns or directly controls, including, but not limited to, fuel combustion activities.
Scope 2 emissions are indirect greenhouse gas emissions from electricity purchased and used by a covered entity.
Scope 3 emissions are indirect greenhouse gas emissions, other than scope 2 emissions, from activities of a covered entity that stem from sources that the covered entity does not own or directly control and may include, but are not limited to, emissions associated with the covered entity’s supply chain, business travel, employee commutes, procurement, waste, and water usage.
National Impact
The reach of the reporting requirement would have a national impact. Companies without a physical presence in California would have to determine whether they “do business” in the state. Additionally, smaller companies that are part of a larger company’s supply chain would have to determine the impact of their emissions to the larger company’s Scope 3 emissions.