California's climate disclosure regime centers on two laws signed by Governor Gavin Newsom in October 2023: the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). A third measure, AB 1305 (the Voluntary Carbon Market Disclosures Act), addresses claims made about carbon offsets and net-zero commitments.
SB 253 requires U.S. companies with annual revenues above $1 billion that do business in California to disclose their Scope 1, Scope 2, and Scope 3 greenhouse gas emissions. Reporting is to be conducted under protocols aligned with the Greenhouse Gas Protocol, with third-party assurance phased in over time. The California Air Resources Board (CARB) is charged with implementing the rules.
SB 261 applies to U.S. companies with revenues above $500 million doing business in California and requires biennial reports on climate-related financial risks and the measures taken to reduce and adapt to those risks. The statute references the framework developed by the Task Force on Climate-related Financial Disclosures (TCFD).
AB 1305 requires entities operating in California that make net-zero, carbon-neutral, or similar claims, or that purchase or sell voluntary carbon offsets, to post supporting information on their websites.
The laws are significant because California's market size effectively extends disclosure obligations to thousands of large private and public companies nationwide, going beyond the narrower climate rule adopted by the U.S. Securities and Exchange Commission in March 2024 (which was subsequently stayed amid litigation). The California statutes have themselves faced legal challenges, including a suit filed by the U.S. Chamber of Commerce in early 2024 arguing that they compel speech in violation of the First Amendment. In 2024 the legislature passed SB 219, which adjusted implementation timelines and gave CARB additional flexibility, while preserving the core reporting obligations.
Example
In October 2023, Governor Gavin Newsom signed SB 253 and SB 261, making California the first U.S. state to require large companies—including privately held firms like Cargill—to disclose Scope 1, 2, and 3 emissions and climate financial risks.
Frequently asked questions
SB 253 covers U.S. companies doing business in California with annual revenues over $1 billion; SB 261 covers those with revenues over $500 million. Both apply regardless of whether the company is publicly traded.
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