If your company does business in California, you may be impacted. Get ahead of regulatory compliance on the following bills: Senate Bill (SB) 253, Climate Corporate Data Accountability Act, SB 261, Greenhouse Gases: Climate-Related Financial Risk, and Assembly Bill (AB) 1305, Voluntary Carbon Market Disclosures.
The three pieces of legislation mark an important moment for California - and the entire U.S. - by joining the global movement of mandatory climate-related disclosures and taking advanced strides to shift toward a net zero-compatible economy. With so many moving parts, navigating the complex and evolving climate policy and carbon markets landscape can prove challenging.
South Pole has a team of experts who can help bridge any gaps you may have and help you prepare for compliance now - from scope 3 accounting to climate-related financial disclosures in line with TCFD recommendations - and beyond.
Each company's compliance journey is unique, and we are here to meet you where your business is at and help you meet your climate targets.
Read our brochure for step-by-step guidance to prepare for your company's compliance.
We are an impartial, independent advisor that has supported clients on their climate action strategy for over 17 years.
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What is the main objective of the California Climate Disclosure bills?
The overall objective of California's climate disclosure bills is to promote corporate accountability, integrity, and transparency in the reporting of greenhouse emissions, climate-related financial risks and climate action-related claims needed to develop a roadmap towards building a resilient low-carbon economy within California.
What companies are impacted by these bills?
Public and private US-based companies that do business in California and exceed revenue thresholds of $1 billion and $500 million under SB 253 and SB 261 respectively will be required to disclose their greenhouse gas emissions and climate-related financial risks.
AB 1305 applies to all business entities operating in California that make net-zero, carbon-neutral, or other similar claims about the goods and/or services they market to consumers located in California or make such claims about the business entities themselves.
What happens if a company fails to comply?
The California Air Resources Board (CARB) may impose penalties for failures to meet the requirements of SB 253 and SB 261. The penalties can be up to $500,000 for SB 253 and $50,000 for SB 261 in a given year.
Non-compliance with AB 1305 carries civil penalties of $2,500 per day, up to a maximum of $500,000, recoverable in a civil action by the Attorney General of California, a district or city attorney in California, or a California county counsel.
When will the new bills start to apply?
SB 253 requires reporting on Scope 1 and 2 emissions in 2026 based on fiscal year 2025. However, the date of disclosure is to be determined by the CARB. Scope 3 emissions are required to be reported no later than 180 days after Scope 1 and 2 emissions reporting deadline. SB 261 requires companies to prepare a climate-related financial risk report by January 1, 2026 and publish the report on the company's website. AB 1305 will become effective on January 1, 2024.
Where should companies report on SB 253 and SB 261?
Annual greenhouse gas emissions should be reported on a publicly accessible digital platform which will be created by the CARB. The biennial climate-related financial risk report should be disclosed on a company's website.
How do companies comply with AB 1305?
To comply with AB 1305, companies making net-zero, carbon-neutral, or other similar claims about the goods and/or services they market to consumers located in California or make such claims about the business entities themselves must disclose the bill's required information on their websites (and update such disclosures no less than annually)..
