News Summary
California Attorney General Rob Bonta is enforcing the state’s SB 253 emissions reporting statute despite legal challenges from a business group. The law mandates large companies to report their greenhouse gas emissions, aiming to enhance corporate transparency and accountability. The U.S. Supreme Court has allowed the litigation to progress, and companies failing to comply may face significant penalties. As California leads in climate legislation, other states may follow suit in implementing similar regulations for environmental accountability.
California – California Attorney General Rob Bonta has taken steps to enforce the state’s corporate emissions reporting statute, known as SB 253, despite a legal challenge from a business group. The law, enacted in 2023, mandates that companies provide factual emissions data, which is essential for climate accountability efforts within the state. This push for enforcement comes as the U.S. Chamber of Commerce has initiated a lawsuit seeking to overturn the law, arguing that it violates First Amendment rights.
Bonta and his legal team assert that implementing SB 253 will not cause irreparable harm to the companies involved while litigation is ongoing. They are advocating for the court to allow the state to begin enforcement of the law, emphasizing that it is crucial for holding companies accountable for their greenhouse gas (GHG) emissions.
The Climate Corporate Data Accountability Act (CCDAA) included in SB 253 requires public and private companies in the U.S. with more than $1 billion in annual revenues that operate in California to report their Scope 1, 2, and 3 GHG emissions. Under this law, the initial reports covering emissions from the prior fiscal year (2025) for Scope 1 and 2 are due in January 2026, while Scope 3 emissions will need to be reported by 2027. This reporting is vital for increasing corporate transparency regarding environmental impact and associated financial risks.
On December 5, 2024, California’s Air Resources Board (CARB) announced that it would not impose penalties for incomplete or inaccurate reporting during the first reporting cycle, given that companies demonstrate good faith efforts to comply. This decision aligns with concerns raised by Governor Gavin Newsom and other stakeholders regarding the timeline for implementing the new regulations. As a response, the California legislature passed SB 219 to extend CARB’s deadline for regulatory adoption from January 1, 2025, to July 1, 2025, while maintaining the reporting compliance deadlines.
In February 2024, the U.S. Supreme Court dismissed parts of the business groups’ legal challenge against both SB 253 and SB 261, allowing the litigation to progress. Companies that fail to report emissions as required could face penalties of up to $500,000. Additionally, to enhance the credibility of the emissions reports, third-party assurance assessments will be a necessary component of compliance.
Businesses should evaluate their revenue standings concerning SB 253 or SB 261 and develop systems to effectively track their GHG emissions. The repercussions of California’s stringent climate disclosure laws may encourage other states, including New York and New Jersey, to pursue similar legislation aimed at climate accountability.
California’s initiative to impose these laws is designed to improve transparency in corporate emissions and highlight climate-related financial risks, reflecting a growing trend toward stricter environmental regulation across the country. As businesses prepare for these changes, effective compliance will be key to both mitigating potential penalties and contributing to statewide climate goals.
Deeper Dive: News & Info About This Topic
- Vela Law: California Provides Flexibility on Greenhouse Gas Emissions Reporting Law
- Daily Journal: Red Tape or Green Future Unpacking California’s Climate Disclosure Laws
- Inside Energy and Environment: California Climate Disclosure Laws Compliance Timeline
- Wall Street Journal: California Legislature Rejects Delay to Emissions Reporting Rules
- Wikipedia: Greenhouse Gas Emissions
