UPDATE: California Climate Accountability Package (SB-253 and SB-261) Amendment, Timeline, and Enforcement Notice

Since the signing of the California Climate Accountability Package, comprising Senate Bill 253 (SB-253) and the Climate Corporate Data Accountability Act, and Senate Bill 261 (SB-261), Greenhouse Gases: Climate-related Financial Risk, the California Air Resources Board (CARB) has released an enforcement notice detailing the timeline of the new reporting requirements for companies doing business in California.

Overview and Applicability of the Climate Accountability Package (SB-253 and SB-261)

The Climate Accountability Package is comprised of the following Senate bills:

• SB-253: Climate Corporate Data Accountability Act: SB-253 requires the disclosure of Scopes 1, 2, and 3 of greenhouse gas (GHG) emissions by reporting entities, public or private, doing business in California with $1 billion or more in gross annual revenue.
• SB-261 Greenhouse Gases: Climate-related Financial Risk: SB-261 requires the disclosure of climate-change-associated financial risks by reporting entities, public or private, doing business in California with $500 million or more in gross annual revenue. In addition to the financial risks climate change poses, businesses must also disclose how they plan to address them.

Who is applicable to reporting under the California Climate Accountability Package?

Reporting entities are defined as “entities formed under the laws of California, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States, with total annual revenues in excess of one billion dollars ($1,000,000,000) that do business in California.”

More information on the Climate Accountability Package can be found here.

Greenhouse gases: Climate Corporate Accountability: Climate-related Financial Risk.

(SB-219)

On September 27th, 2024, California Governor Gavin Newson signed SB-219 into law, amending the existing laws from the Climate Accountability Package:

• Extends the deadline for CARB to adopt the regulations specified in SB-253 from January 1st, 2025, to July 1st, 2025.
  • Note: Does not extend the first reporting deadline. Businesses will still be required to report Scope 1 and 2 GHG emissions in 2026.
• Allows CARB to establish Scope 3 GHG disclosure deadlines.
  • Note: The previous Scope 3 GHG disclosure deadline was 180 days after disclosure of Scope 1 and 2 GHG emissions.
• Authorizes Scopes 1, 2, and 3 GHG reporting to be consolidated at the parent company level.
• Eliminates the requirement for reporting entities to pay upon disclosure of Scopes 1, 2, and 3 GHG emissions.
  • Note for SB-253: Does not eliminate the fee requirement. Businesses can pay the annual disclosure fee without needing to pay upon filing disclosure.
  • Note for SB-261: Does not eliminate the fee requirement. Businesses can pay the biennial disclosure fee on or before January 1st, 2026, without needing to pay upon filing disclosure.

The first disclosure reports will be due in 2026 on a date that CARB will determine in its future rulemaking, including Scope 1 and 2 GHG emissions during the reporting entity’s previous fiscal year.

2025 Reporting Preparation

With the rapid approach of the 2025 data-collection period, California businesses and those “doing business” in California should prepare to collect Scope 1 and 2 GHG data for the fiscal year 2025 to achieve SB-253 compliance reporting in 2026. Additionally, obligated reporting entities should prepare their climate-related financial risk reports to be submitted on or before January 1st, 2026, to achieve compliance with SB-261.

Please see the following figure to understand your business’s applicability and timeline for the preparation of Climate Accountability Package reporting:

CARB Enforcement Notice

On December 5th, 2024, CARB released an Enforcement Notice regarding the recent amendments to the Climate Accountability Package under SB-219, notifying reporting entities that CARB will exercise enforcement discretion for the first reporting cycle. CARB recognizes that reporting entities will need ample time to prepare for data collection and implementation of monitoring for Scope 1 and 2 GHG emissions reporting and will not take enforcement action for incomplete reporting for reporting entities that demonstrate good faith efforts to comply with the reporting requirements. The enforcement discretion is aimed at helping support reporting entities who are actively working towards full compliance with SB-253 and SB-261. In future years’ reporting cycles, CARB will provide details on reporting as part of the rulemaking process.

ALL4 continues to track the progress of SB-253 and SB-261 as their developments relate to emissions and climate-related financial risk reporting for affected California businesses and those “doing business” in California.

For questions on the legislation’s progress or how it will affect your business, for assistance in quantifying and reporting Scope 1, 2, and 3 GHG emissions, or for verification of data, please reach out to Connie Prostko-Bell at cprostko-bell@all4inc.com, Daryl Whitt at dwhitt@all4inc.com, or Lauren Coca at lcoca@all4inc.com for more information.