CA SB 253 - California Senate Bill 253, known as the Climate Corporate Data Accountability Act requires both public and private US businesses with revenues greater than $1 billion operating in California to report their emissions comprehensively, including scopes 1, 2, and 3, beginning in 2026 (for 2025). CA SB 253 also requires reporting companies get third-party assurance of their reports. Scopes one and two are related to a manufacturer’s direct and indirect emissions from their facilities. Scope three requires companies to track the emissions of their entire supply chain.
Who would CA SB 253 apply to?
The bill requires large public and private US-based organizations that do business in California to report their greenhouse gas emissions in accordance with the GHG Protocol. It applies to US-based partnerships, corporations, limited liability companies, and other entities with operations in California and annual gross revenue of more than $1B USD — an estimated 5,400 companies.
The bill stipulates that companies will have to submit emissions calculations to a digital reporting platform, and they must make disclosures easily comprehensible to residents, investors, and other stakeholders.
The California Air Resources Board will oversee reporting and ensure verification of data by a registry or third-party auditor with expertise in carbon accounting. Companies that fail to comply with the new regulations could be subject to civil penalties from the state’s attorney general.
When will companies need to start reporting emissions under SB 253?
Enterprises will need to report on their 2025 direct emissions starting in 2026 and their 2026 indirect scope 3 emissions starting in 2027. That means that before the end of this year, organizations will need to have a plan in place for gathering auditable emissions data. 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. All emissions disclosures will need to be audited by independent, third-party providers.
How does SB 253 compare to the proposed SEC Climate Rule?
There are two notable differences between SB 253 and the proposed SEC Climate Rule. The first pertains to the regulatory scope of each rule. SB 253 specifically addresses both public and private enterprises with annual revenues exceeding $1 billion, operating within the state of California. Conversely, the SEC Climate Rule is applicable solely to publicly traded entities that report to the SEC, encompassing U.S. public companies and Foreign Private Issuers.
The second difference relates to scope 3 reporting. SB 253 obliges all organizations to provide comprehensive documentation of their scope 3 emissions. In contrast, the SEC Climate Rule mandates scope 3 emission disclosure only in instances where a company has established specific scope 3 reduction targets, or when scope 3 emissions hold material significance within the context of the company's operations.
What should my company do now to prepare for SB 253?
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. Consequently, companies will need to be confident in their reporting and demonstrate the transparency of their methodologies.
To whom and how to report:
The California Air Resources Board
