Sacramento, CA - December 17: Exterior view of the California State Capitol in Sacramento Tuesday, ... [+]
In 2023, California passed legislation requiring large companies to file climate disclosures beginning in 2026 for FY 2025. A year later, Governor Gavin Newsom signed legislation that delayed the releasing of the implementation guidelines for climate reporting until July 1, 2025. Now, the California Air Resources Board is beginning the rulemaking process by soliciting comments on the implementation and scope of the reporting requirements.
In September 2023, California approved the Climate Accountability Package, a pair of bills aimed at creating sustainability reporting requirements. Senate Bill 253 required companies that do business in California and have an excess of $1 billion in revenue, defined as “reporting entities”, to submit an annual report for Scope 1 and Scope 2 starting in 2026. Scope 3 reporting will begin in 2027.
Senate Bill 261 required companies that do business in California and have an excess of $500 million in revenue, defined as “covered entities”, to submit a biennial climate-related financial risk report.
The responsibility of drafting specific regulations and implementing the reporting standards was delegated to CARB. CARB was initially given until January 1, 2025 to draft the rules and processes.
In July, Newsom proposed new legislation to delay implementation until 2028. It also called for an extension of the timeline for CARB by six months to July 1, 2025. However, when Newsom signed SB 219 on September 27, the extension was granted, but the original 2026 implementation date stayed intact.
On December 5, CARB released an enforcement notice delaying the enforcement of reporting requirements. Businesses will still have to file a report in 2026, but the information for FY 2025 will be based on processes in place on December 5, 2024. This means companies do not need to rush to implement new processes trying to anticipate the final reporting requirements.
In the interim, CARB has started the rulemaking process. On December 16, CARB quietly released an “Information Solicitation to Inform Implementation of California Climate-Disclosure Legislation.” In the solicitation, CARB stated:
“The California Air Resources Board (CARB or Board) is soliciting feedback to help inform its work to implement Senate Bills (SB) 253 (Wiener, Statutes of 2023) and 261 (Stern, Statutes of 2023), both as amended by SB 219 (Wiener, Statutes of 2024). This early solicitation step allows CARB to gather important information, from a wide range of stakeholders, relating to developing approaches to implementation...
“CARB is conducting this solicitation step to gather information that will aid in implementing SB 253 and SB 261. The solicitation for feedback on the questions below will be open for 60 days. We also welcome any additional feedback that respondents feel is important for staff to consider regarding the implementation of SB 253 and SB 261.”
Notably, CARB will address the definitions of “reporting entities” and “covered entities.” As noted previously, the lack of a clear definition in the statute causes an issue for companies that are not based in California, but conduct business in the state.
Given CARB’s ability to draft their own definition for which companies are required to report, businesses that have any presence in California would be wise to submit a comment, even if they do not currently believe the fall under the reporting requirements. The deadline to submit a response is February 14, 2025.
