WASHINGTON, D.C. (OCTOBER 10, 2023) – On Saturday, October 7, Governor Gavin Newsom signed into law California’s Climate Corporate Data Accountability Act (SB 253), which directs the State Air Resources Board to develop regulations requiring corporations that do business in California, with annual revenues over $1 billion, to publicly disclose their greenhouse gas (GHG) emissions. Reporting entities must provide annual disclosures for scope 1 and scope 2 emissions starting in 2026 and must report scope 3 emissions starting in 2027.
Scope 1 refers to direct GHG emissions from sources that a company owns or controls, scope 2 refers to emissions from the electricity a company purchases and uses and scope 3 refers to emissions from a company’s upstream and downstream activities.
California, the fifth largest economy in the world, defines “doing business in California” as either: engaging in any transaction for the purpose of financial gain within California, being organized or commercially domiciled in California, or having California sales exceeding either the threshold amount for that year or 25 percent of total sales.
The Climate Corporate Data Accountability Act is the first of its kind in the United States, but follows the establishment of European Union’s Corporate Sustainability Reporting Directive (CSRD) in July of this year, which requires companies to report greenhouse gas emissions according to European Sustainability Reporting Standards.
Following is a statement from Pankaj Bhatia, Director of Greenhouse Gas Protocol:
“It is very significant that the fifth largest economy in the world – the state of California – now requires large corporations to publicly disclose greenhouse gas emissions across their entire value chain. This landmark legislation will have ripple effects far beyond California's borders and can serve as a model for national and subnational governments to follow.
“Rigorous greenhouse gas accounting is the bedrock for achieving bold climate action. Simply put, you cannot cut what you don't count. SB 253’s requirement to disclose scope 3 emissions is critical as on average more than 70 percent of a company’s GHG emissions take place along the value chain. We applaud California for taking this important step to better position businesses to decarbonize their operations, supply chains, and products.”