California AG Advocates for Corporate Emissions Disclosure Law

News Summary

California’s Attorney General Rob Bonta is urging a federal court to allow the enforcement of SB 253, a law requiring companies to report greenhouse gas emissions. Despite legal challenges from business groups, Bonta emphasizes the importance of transparency in corporate emissions as part of California’s climate strategy. The law mandates large companies to report Scope 1, 2, and 3 emissions starting in 2025, with the aim of fostering corporate accountability and potentially inspiring similar legislation in other states.

California – The state’s Attorney General Rob Bonta is urging a federal court to permit the enforcement of a corporate emissions reporting statute known as SB 253. This law, enacted in 2023, mandates that companies disclose factual greenhouse gas emissions data as California prepares to strengthen its fight against climate change.

Currently, a business group is pursuing legal action to halt the enforcement of this law, which the U.S. Chamber of Commerce challenged in 2024. The Chamber’s lawsuit argues that SB 253 infringes upon First Amendment rights, claiming that the law imposes undue burdens on businesses operating in the state.

Bonta, alongside his legal team, contends that moving forward with the enforcement of SB 253 would not result in irreparable harm to companies while litigation is ongoing. He emphasizes the importance of transparency in corporate emissions as California seeks to tackle the climate crisis.

The Climate Corporate Data Accountability Act (CCDAA), which encompasses SB 253, requires both public and private U.S. companies that generate more than $1 billion in annual revenue and do business in California to report their Scope 1, 2, and 3 greenhouse gas emissions. Initial reports covering Scope 1 and 2 emissions are expected to be submitted by January 2026, detailing emissions from the previous fiscal year (2025). Companies will need to report Scope 3 emissions by 2027.

Furthermore, California’s Air Resources Board (CARB) announced that it would not impose penalties for inaccuracies or incomplete reports during the first reporting cycle, as long as companies make a good faith effort to comply. However, noncompliant companies could face penalties of up to $500,000.

This situation comes amid concerns voiced by Governor Gavin Newsom regarding the feasibility of the law’s implementation timelines. To address these concerns, California’s legislature passed SB 219, extending CARB’s deadline to develop regulations from January 1, 2025, to July 1, 2025, though it did not delay the deadlines for compliance in reporting.

As companies prepare for compliance with SB 253, they are urged to assess whether they meet the revenue threshold and implement systems to accurately track their greenhouse gas emissions. The law mandates that third-party assurance assessments be conducted to ensure the credibility of emissions reports. All required emissions data must align with information companies already possess or can feasibly collect.

Despite the ongoing legal challenges, the Supreme Court dismissed portions of the business groups’ challenge against SB 253 and SB 261, allowing litigation to continue while not halting the enforcement of the laws.

The repercussions of California’s corporate emissions reporting laws may set a precedent, potentially prompting other states such as New York and New Jersey to implement similar climate accountability legislation. The intent behind such climate disclosure laws is to bolster corporate transparency regarding emissions and climate-related financial risks, ultimately contributing to more informed stakeholder decisions and improved environmental stewardship.

As the debate over SB 253 unfolds, the focus remains on creating a sustainable future through accountability and transparency in corporate emissions reporting practices.

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• Ropes & Gray: California Issues Important Enforcement Guidance for Its New GHG Emissions Disclosure
• Supply Chain Brain: A Plan of Action for Complying with California’s Emissions Reporting Bill
• Wikipedia: Climate Change in California
• Wall Street Journal: California Legislature Rejects Delay to Emissions Reporting Rules