Despite Governor Newsom's proposal for a two-year delay during the 2024 California legislative session, the implementation date for SB 253 remains unchanged, with companies required to begin reporting by January 1, 2026. Although the California Air Resources Board (CARB) has been granted a six-month extension to finalize the disclosure requirements by July 1, 2025, businesses should not delay their preparations. Companies should begin preparing to calculate and report their GHG footprints using FY2025 data, even as we await the conclusion of legal challenges to these laws.
Companies under $1 billion in revenue are not subject to California SB 253, but we expect the inclusion of scope 3 reporting for SB 253 subject companies will lead to increased pressure throughout value chains for scope 1 and 2 emissions disclosures as these help larger companies create more accurate scope 3 emission footprints.
Public and private companies doing more than $1 billion in revenue and .
There are two notable differences between SB 253 and the proposed SEC Climate Rule. The first is who is subject to each rule. SB 253 targets public and private companies doing more than $1 billion in revenue and operating in California. The SEC Climate Rule targets Public companies reporting to the SEC, including U.S. public companies and Foreign Private Issuers. The second difference relates to scope 3 reporting. SB 253 requires all scope 3 emissions be reported, while the SEC Climate Rule requires scope 3 emission disclosure only if the company has set scope 3 reduction targets or the scope 3 emissions are material.
The bottom line – companies need to focus on building capacity to collect, calculate, and report on their GHG emissions data in a way that sets them up for auditable success. As we move from a voluntary reporting landscape to a regulated one, emissions data will be treated in a similar manner to financial data, including increased financial and legal internal review as well as third-party assurance. Companies will need to be confident in their reporting and be able to show their work.
By 2026, companies will need to adhere to GHGP standards for measuring and reporting scope 1 and 2 emissions on the prior fiscal year, as well as obtain limited third-party assurance for scope 1 and 2 emissions. By 2027, companies will need to adhere to the GHGP standards for measuring and reporting scope 3 emissions on the prior fiscal year. By 2030, companies will need to obtain reasonable, third-party assurance for their scope 1 and 2 emissions reporting, as well as limited third-party assurance for their scope 3 emissions reporting.