Dive Brief:
- California Gov. Gavin Newsom signed Senate Bill 219 into law on Friday, which will mandate more climate-related disclosures from large companies operating in the state. The bill includes a series of amendments to climate bills SB 253 and SB 261, originally approved by Newsom last October.
- SB 219 addresses some of the concerns Newsom raised over the two bills’ implementation deadlines, which he said were “likely infeasible” last year, and the “overall financial impact” they posed on California businesses. The governor also proposed delaying reporting deadlines to 2028 — a suggestion that was ultimately rejected by the California legislature.
- The bill has retained the original reporting deadlines laid out in SB 253 and SB 261, with some businesses expected to make disclosures as early as 2026. However, it provides additional flexibility and time for the promulgation of regulations that are to be adopted by the California Air Resources Board.
Dive Insight:
The original text of SB 253 — estimated to impact more than 5,300 companies operating in California — required CARB to pass regulations by 2025 that would compel companies making more than $1 billion in revenue to publicly disclose their scope 1 and 2 emissions to a reporting organization in 2026. Starting in 2027, companies would then need to begin reporting scope 3 emissions. The bill also requires companies to report their greenhouse gas emissions in a “manner that is easily understandable and accessible to residents of the state,” and requires such public disclosures to be independently verified by a third-party auditor.
In a similar vein, the original text of SB 261 — which focuses on climate-related financial risks posed by companies’ operations — required business entities generating more than $500 million in revenue to prepare biennial reports of their climate-related financial risks and strategies for risk management, beginning no later than Jan. 1, 2026. This legislation is expected to impact more than 10,000 companies operating in California, according to a Senate floor analysis last month.
Though SB 219 retains the originally proposed disclosure deadlines outlined in the two bills, it extends the deadline for CARB to publish regulations for scoped emissions disclosures by an additional six months, moving the proposed date of Jan. 1, 2025 to July 1, 2025.
SB 219 also amends the disclosure regulations to provide some flexibility on when companies needed to begin reporting their scope 3 emissions. SB 253 initially asked companies to report their scope 3 emissions beginning in 2027, no later than 180 days after they made their scope 1 and scope 2 disclosures. Though companies will still be expected to disclose scope 3 emissions starting 2027, SB 219 replaced the 180-day requirement with a schedule that will be later specified by CARB.
SB 219 also grants CARB more authority over the climate-disclosure regulations. The state board can now perform certain responsibilities, such as preparing a biennial public report on climate-related financial risk disclosures, that SB 253 and SB 261 had previously asked CARB to delegate to a third-party climate reporting organization.
SB 219 also removed the requirement for reporting entities to pay a filing fee at the time of submitting their disclosure reports to the state board. While entities are still expected to pay this fee, the timeline has been amended.
Newsom announced the signing of the bill as part of a Sept. 27 legislative update, which included the approval of other pieces of legislation concerning transportation, discrimination claims and campaign contributions, among others.
