California's Climate Disclosure Laws Move Forward After Governor Newsom's Proposal to Delay Implementation Fails
The California legislature continues to press forward with the implementation of two of the state's sweeping climate disclosure laws after a proposal to delay the implementation dates by the governor failed to be considered by the legislature.
Under Senate Bill ("SB") 253, the California Air Resources Board ("CARB") is required to adopt implementing regulations on or before January 1, 2025, and companies must start reporting their Scopes 1 and 2 emissions beginning in 2026, and their Scope 3 emissions beginning in 2027. Under SB 261, companies are required to submit their required biannual climate-related financial risk report on or before January 1, 2026 (see our prior Commentary for more details). While Governor Gavin Newsom proposed to delay the implementation deadlines for both SB 253 and SB 261 by two years through a budget trailer bill, the legislature did not vote on it prior to the end of the legislative session, effectively killing the trailer bill for the time being. However, both bills are currently the subject of litigation in the U.S. District Court for the Central District of California and their overall fate, including implementation deadlines, is uncertain.
On August 31, 2024, the California legislature passed SB 219 to mark the end of California's legislative session. SB 219 would amend both climate bills but reiterates that reporting deadlines remain unchanged. Companies would still be required to publish their climate-related financial risk report and begin reporting their Scopes 1 and 2 emissions in 2026, and begin reporting their Scope 3 emissions in 2027. However, under SB 219, the timeline and ultimate deadline for Scope 3 reporting would now be determined by CARB, rather than the previous deadline of 180 days after the disclosure of Scopes 1 and 2 emissions.
SB 219 also would clarify that companies may consolidate their emissions disclosure reports at the parent level, thereby relieving companies from having to submit separate reports for each subsidiary. However, the bill extends the deadline for CARB to adopt implementing regulations from January 1, 2025, to July 1, 2025, giving affected companies less time to prepare for their first reports.
Governor Newsom has until September 30, 2024, to either sign or veto SB 219 or allow SB 219 to become law by taking no action.
