SB 253; Top 5 takeaways for businesses and activists from California’s new climate change law
First, lets start with the facts of the law
Timeline: Companies with revenues greater than $1 billion will be required to report their Scope 1 and Scope 2 emissions starting in 2026. Scope 3 emissions reporting will be required starting in 2027.
Reporting standards: Companies will be required to report their emissions in accordance with the Greenhouse Gas Protocol (GHG Protocol). The GHG Protocol is a widely recognized standard for measuring and reporting greenhouse gas emissions.
Third-party assurance: Companies will be required to get third-party assurance of their emissions reports. This means that an independent auditor will review the company's emissions data and provide an opinion on its accuracy.
Enforcement: The California Air Resources Board (CARB) will be responsible for enforcing the law. CARB has the authority to issue fines for non-compliance.
Safe harbor: Companies will not be penalized for good-faith errors in their Scope 3 emissions reports. This is intended to encourage companies to start reporting their Scope 3 emissions even if they do not have all of the necessary data.
Top 5 takeaways for businesses
Increased transparency and accountability: SB 253 will require businesses to disclose their greenhouse gas emissions in a comprehensive and transparent manner. This will increase scrutiny of corporate climate impact and hold businesses accountable for their emissions.
Enhanced investor confidence: Investors are increasingly demanding transparency on climate risks. SB 253 will provide investors with the information they need to make informed investment decisions.
Reduced reputational risks: Businesses that are seen as taking climate action are more likely to be viewed favorably by customers and employees. SB 253 can help businesses demonstrate their commitment to climate change mitigation.
Improved risk management: By understanding and disclosing their climate risks, businesses can better manage those risks. This can help businesses avoid costly surprises in the future.
Opportunities for innovation: The transition to a low-carbon economy will create new business opportunities. Businesses that are prepared to adapt to the changing climate landscape will be well-positioned to succeed.
Top 5 takeaways for activists
A significant step forward: SB 253 is a major victory for climate activists. It is the first law in the United States to mandate comprehensive emissions reporting by businesses.
A model for other jurisdictions: SB 253 can serve as a model for other jurisdictions around the world to adopt similar laws. This could create a wave of mandatory climate disclosure requirements that would have a major impact on corporate behavior.
Increased pressure on businesses: SB 253 will increase pressure on businesses to take action to reduce their emissions. Businesses that are not seen as taking climate action will face increasing scrutiny from investors, customers, and the public.
A tool for holding businesses accountable: SB 253 will provide activists with the information they need to hold businesses accountable for their climate impact. Activists can use this information to pressure businesses to reduce their emissions and take other steps to address climate change.
A sign of growing momentum: SB 253 is a sign of the growing momentum behind efforts to address climate change. As more and more jurisdictions adopt mandatory climate disclosure requirements, it will become increasingly difficult for businesses to ignore the issue of climate change.
