California’s new climate disclosure rules
SB 253 and SB 261
California’s new climate disclosure rules, SB 253 and SB 261, are a landmark set of regula=ons
aimed at increasing transparency and accountability for businesses regarding their greenhouse
gas emissions and climate-related financial risks. These rules are part of California’s broader
efforts to combat climate change and transition to a low-carbon economy and present a
significant opportunity for Blue Zone ESG to help companies comply with these regula=ons and
enhance their ESG (environmental, social, and governance) performance. Blue Zone ESG’s
comprehensive data collection and narrative reporting plaform can streamline the compliance
process and provide valuable insights for companies seeking to improve their sustainability
practices.
SB 253: Climate Corporate Data Accountability Act
SB 253 requires large public and private companies doing business in California with annual
revenues over $1 billion to disclose their greenhouse gas emissions, including Scope 1, Scope 2,
and Scope 3 emissions. Scope 1 emissions are direct emissions from a company’s own
operations, while Scope 2 emissions are indirect emissions from purchased electricity, heat, or
steam. Scope 3 emissions are all other indirect emissions that occur in a company’s value chain.
SB 261: Climate-Related Financial Risk Act
SB 261 requires large companies doing business in California with annual revenues over $500
million to disclose their climate-related financial risks and the actions they are taking to mitigate
those risks. This includes risks related to physical climate impacts, such as extreme weather
events, as well as risks related to the transition to a low-carbon economy, such as changes in
regulations and consumer preferences.
Impact of SB 253 and SB 261
These new disclosure rules are expected to have a significant impact on businesses operating in
California. Companies will need to invest in data collection and reporting systems to comply
with the new requirements. They will also need to assess their climate-related risks and develop
strategies to mi=gate those risks.
Compliance Timeline
The compliance =meline for SB 253 and SB 261 is as follows:
2024: Companies must begin collec=ng data on their greenhouse gas emissions.
2026: Companies must report their Scope 1 and Scope 2 emissions for FY2025 for the first time.
Exemptions
There are some exemptions to the new disclosure rules. For example, companies that are already subject to similar federal disclosure requirements may be exempt from SB 253. Addionally, companies that have less than $150 million in annual revenues may be exempt from SB 261.
