California Climate Disclosure Laws Garner Public Support

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A collaborative meeting focused on California's climate disclosure laws.

News Summary

California’s new climate disclosure laws have received strong public backing, with a recent analysis showing 59% of commenters in favor. The laws require companies to disclose greenhouse gas emissions and climate risks, with the California Air Resources Board overseeing implementation. Feedback emphasizes global alignment and clearer definitions for compliance. Major corporations will need to submit emissions data starting in 2026. Despite legal challenges, the framework is progressing, reflecting broader trends in climate accountability across various states.

California is showcasing significant public support for its newly enacted climate disclosure laws, as preparations are underway for their implementation. A recent analysis conducted by sustainability nonprofit Ceres has revealed that 59% of public commenters back the laws, while only 9% are opposed. These laws, passed in 2023, will require companies engaged in business within California to report their greenhouse gas (GHG) emissions and disclose climate-related financial risks.

The California Air Resources Board (CARB) is tasked with the implementation of these laws. The Ceres analysis reviewed a total of 245 unique submissions to CARB, with 199 responses coming from various stakeholders, including investors, businesses, and advocacy groups. The overwhelming support indicates a strong consensus around the need for transparency and accountability regarding climate-related risks.

Among the concerns raised by commenters, a key point emphasized the importance of global alignment. Many urged CARB to ensure the rules align with existing international standards, notably those from the International Sustainability Standards Board (ISSB) and the European Union’s Corporate Sustainability Reporting Directive. This reflects a desire for California’s climate disclosure framework to be consistent with global best practices.

Another critical area of concern was the definition of “doing business in California.” Commenters called for clearer criteria to determine which companies fall under the jurisdiction of the law. Some suggested using California’s Revenue & Tax Code as a reference. This clarity is essential for companies to understand their liability and compliance obligations effectively.

Additionally, participants addressed reporting requirements for corporate groups, requesting clearer guidelines for multinational corporations that have complex operational structures. Stakeholders suggested that parent companies should consolidate reports that encompass their subsidiaries to provide a comprehensive view of emissions and climate-related risks.

Ceres advocates for enhanced transparency surrounding corporate climate risks, driven by the stakeholder feedback emphasized in their analysis. The legislation aims to produce standardized and high-quality disclosures of companies’ climate-related financial risks, thereby fostering a more resilient and sustainable business environment.

The California Climate Corporate Data Accountability Act (SB 253) targets corporations generating over $1 billion in revenue, compelling them to submit annual public emissions disclosures starting in 2026. Similarly, the Climate-Related Financial Risk Act (SB 261) mandates that companies with revenues exceeding $500 million report their climate-related financial risks biennially beginning in January 2026. Both acts require companies to disclose Scope 1, 2, and 3 emissions data, with Scope 1 and 2 disclosures required to begin in 2026, followed by Scope 3 disclosures in 2027.

For its part, CARB is required to finalize the implementing regulations by July 1, 2025, which will further clarify the criteria governing what it means to “do business in California.” Violations of SB 253 could result in penalties reaching up to $500,000 per reporting year, while noncompliance with SB 261 could incur fines of up to $50,000 annually.

Despite some legal challenges from business groups claiming the laws infringe on the First Amendment and conflict with federal regulations, the framework for California’s climate disclosures remains intact and its implementation is progressing. These developments mirror trends seen in other states, such as New York, Illinois, Colorado, and New Jersey, where similar laws are being modeled after California’s framework.

Ceres has highlighted the urgent need for clear and predictable regulations to help businesses prepare for compliance with these new requirements. Feedback from over 100 experts, gathered during Ceres’ roundtables, indicates that companies are generally ready to adapt to the emerging climate disclosure mandates, underscoring a strong commitment to addressing climate change at a corporate level.