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Understanding the California Climate Bills

The California Climate Bills were signed into law in October, making it mandatory for large businesses operating in California to report on their Climate-related risks. Read more to learn who is affected by the bills, what is required to report and what is the timeline for implementation.

California, a leader in environmental initiatives, continues to take significant steps toward combating climate change. The California Climate bills represent a series of legislative actions aimed at addressing the state's environmental challenges.

 What are the California Climate Bills?

The California Climate Bills are a set of 2 bills (SB 253 and SB 261) that the California Governor signed into law on October 7, 2023. The bills make it mandatory for large businesses operating in California to report on their Climate-related risks, GHG emissions, and more. 

The bills are part of the California Comeback Plan, which is a comprehensive recovery plan that addresses the state's most urgent challenges, such as the pandemic, homelessness, education, and climate change.

Who Is Affected by the bills?

The California Climate Bills affect California businesses, particularly those in energy, transportation, and manufacturing sectors. They must adhere to emissions reduction targets, transition to cleaner energy sources, and adopt sustainable practices.

SB 253 deems all companies with a total annual revenue exceeding $1 billion a “reporting entity”. SB 261 deems all companies with a total annual revenue exceeding $500 million a “covered entity.

What Is Required to Report?

The California Climate Bills require two types of reporting from businesses:

  1. GHG emissions reporting: Businesses with annual revenues of more than $1 billion must report scope 1,2 and 3. The reporting must follow the Greenhouse Gas Protocol framework and be verified by an independent third party. 

  1. Climate-related financial risk reporting: Businesses with annual revenues of more than $500 million must report their climate-related financial risks and measures adopted to reduce and adapt to such risks.

The reporting requirements aim to increase transparency and accountability for businesses' climate performance and encourage them to take actions to mitigate and adapt to climate change.

What Is the Timeline for the Implementation? 

The California Climate Bills have different timelines for their implementation, depending on their specific provisions. Some of the key milestones are:

  • January 1, 2025: The State Air Resources Board must develop and adopt regulations for GHG emissions reporting.
  • January 1, 2026: Businesses must start reporting their scope 1 and scope 2 GHG emissions and their climate-related financial risks.
  • January 1, 2027: Businesses must start reporting their scope 3 GHG emissions.
  • January 1, 2030: Businesses must obtain reasonable assurance for their scope 1 and scope 2 GHG emissions reporting.

By reducing greenhouse gas emissions, transitioning to clean energy sources, and adapting to the impacts of climate change, California aims to set an example for the rest of the world.

How ESGgo software can help with the California Climate Bills?

ESGgo software can play a crucial role in helping businesses and organizations comply with the California Climate Bills by providing a comprehensive platform for tracking, reporting, and managing environmental and sustainability data. It allows companies to monitor their emissions, energy usage, and sustainability efforts, ensuring they meet the state's stringent requirements. ESGgo's reporting tools can help streamline the process of preparing and submitting the necessary documentation, enabling organizations to stay in compliance with California's climate legislation.

*Disclaimer: This summary is for general education purposes only and may be subject to change. ESGgo, Inc., and its affiliates (the “Company”, “ESGgo”, “we”, or “us”) cannot guarantee the accuracy of the statements made or conclusions reached in this summary and we expressly disclaim all representations and warranties (whether express or implied by statute or otherwise) whatsoever.

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