Organizations around the country continue to wait for the U.S. Securities and Exchange Commission’s (SEC) long-anticipated announcement of its new climate disclosure rule. But it is not the only government with an interest in climate change. Consider the State of California.
On Oct. 7, 2023, California Governor Gavin Newsom signed newly passed legislation dubbed the California Climate Accountability Package (CCAP) into law. The two bills (Senate Bills 253 and 261) will make California the first state to impose a mandate that calls for large companies to establish robust ESG data monitoring and collection in 2025, to meet the requirements to furnish sustainability disclosures by 2026.
DFIN has long recognized that forward-looking companies, no matter their filing status, should adopt a proactive ESG approach to meet the growing demand — from regulators, investors, and others — to report their material financial risk and impact on the environment and society. Now, businesses affected by this California legislation have no time to waste. The legislation, designed to impose extensive new climate-related disclosure obligations on thousands of U.S. public and private companies with operations in the state, contains the following details:
- Senate Bill 253 (SB 253): The Climate Corporate Data Accountability Act (CCDAA). SB 253 will require any public or private company that operates in California and has annual gross revenues of more than $1 billion to publicly disclose the greenhouse gas (GHG) emissions released from their operations and supply chain beginning in 2026. These reports will cover scopes 1, 2, and 3 emissions. The hope is that transparency will ultimately help spur companies to increase their efforts to mitigate climate change.
- Senate Bill 261 (SB 261): The Climate-Related Financial Risk Act (CRFRA). SB 261 would require corporations with total annual revenues over $500 million and doing business in California to prepare and submit a climate-related financial risk report. In these reports, which would begin in January 2026, and then continue biennially thereafter, businesses would share their climate-related financial risks and the measures they’re taking to mitigate these risks. The Act would also require businesses to post these reports on their corporate website.
This news provides further evidence that while the nation continues to wait on the final ruling from the SEC, not everyone is taking a wait-and-see approach before activating their ESG plans. With our end-to-end ESG platform and deep ESG experience, DFIN is ready to help affected companies achieve compliance more quickly, easily, and affordably than the competition.
Please reach out to our team of ESG experts, who can answer your questions regarding this latest news from California and set you on the right course now. We also encourage you to check back here regularly to receive the latest updates on the SEC’s climate disclosure rule, which our team continues to monitor closely.