Governor Newsom Signs Pair of Climate Disclosure Bills into Law
California Governor Gavin Newsom has signed two climate disclosure bills – named the Climate-Related Risk Disclosure Act (CA SB 261) and the Climate Corporate Leadership and Accountability Act (CA SB 253) – into law. The first law (SB 261) requires companies doing business in California with total revenues over $500 million to begin submitting biennial public climate-related financial risk reports to the state beginning January 1, 2026. The reports must disclose the company’s climate-related financial risks and measures the company will take to mitigate those risks. Reports must conform to the framework recommended by the Task Force on Climate-Related Financial Disclosures (TCFD). The TCFD was established by the Financial Stability Board, a Swiss-based non-profit that monitors and makes recommendations about the global financial system.
The second law (SB 253) requires companies doing business in California with total revenues over $1 billion to submit annual public reports on their Scope 1, 2, and 3 carbon emissions to a non-profit emissions registry selected by the California Air Resources Board (CARB). CARB is an agency of California’s state government that protects public health and ecological resources by reducing air pollutants. Scope 1 emissions are direct emissions from a company’s owned or controlled sources while Scope 2 emissions are indirect emissions from generating a company’s purchased energy. Scope 3 emissions are all indirect emissions that occur throughout a company’s value chain.
A company’s reported emissions must be verified by an independent auditor before submission. Reports must conform to the Greenhouse Gas Protocol standards and guidance developed by the World Resources Institute (WRI) (a global research nonprofit that works with governments, companies and civil society to build solutions to urgent environmental challenges) and the World Business Council for Sustainable Development (WBCSD) (a CEO-led organization that aims to create a sustainable future for business, society and the environment). Companies must report on their 2025 direct emissions (Scope 1 and 2) starting in 2026 and their 2026 indirect Scope 3 emissions starting in 2027.
Under both laws, the revenue thresholds apply to a company’s total global revenue, and not just its California-derived revenue. Both laws apply to publicly traded and private companies.
In signing these bills into law, Governor Newsom expressed pride in California’s leadership in requiring carbon emission and climate risk disclosures that could serve as models for other states. But he also signaled that the implementation dates in the new laws may change. The governor acknowledged concerns that those deadlines may be impractical and financially burdensome and stated that his administration will work with the legislature next year to address these issues.