California Climate Disclosure Laws: Legislature Affirms Disclosure Deadlines for SB253 and SB261

On Aug. 31, the California legislature passed Senate Bill (SB) 219, making targeted changes to SB253, the landmark California law that requires firms to report Scope 1 and Scope 2 emissions beginning in 2026 and Scope 3 emissions beginning in 2027. In doing so, the legislature appears to have sided with environmental groups in rejecting the Newsom administration’s proposed two-year delay to the reporting requirements of SB253 and SB261. Governor Newsom has until Sept. 30 to sign or veto SB219.

If signed into law, SB219 would not meaningfully change SB261, the law requiring disclosure of climate-related financial risk information beginning in 2026. The bill would, however, make three targeted yet significant changes to SB253 while retaining its core reporting deadlines.

First, the bill would extend the deadline by six months, from Jan. 1, 2025, to July 1, 2025, for the California Air Resources Board (CARB) to develop and adopt regulations to require annual disclosure of Scope 1, Scope 2, and Scope 3 emissions. With the 2026 reporting deadline for Scope 1 and Scope 2 emissions for the prior fiscal year remaining unchanged, however, firms may be forced to begin tracking emissions beginning in 2025, while the pertinent regulations would not be adopted until many months later. This discrepancy may pose a challenge, particularly for those out-of-state firms awaiting guidance on whether their minimal activity in California could subject them to reporting mandates.

Second, the bill would allow for reports to be consolidated at the parent company level. Further, if a subsidiary of a parent company qualifies as a reporting entity, the subsidiary would not be required to prepare a separate report. This change appears to be intended to streamline reporting obligations.

Third, SB219 would give CARB the authority to develop a schedule for reporting Scope 3 emissions, rather than the hard deadline of 180 days after the disclosure of Scope 1 and Scope 2 emissions. This change would give CARB some flexibility as part of the rulemaking process for setting deadlines for Scope 3 emissions. However, Scope 3 emissions would still be first required to be disclosed in 2027, remaining a potentially challenging deadline for affected firms.

The legislature’s affirming the reporting deadlines of SB253 and SB261 will heighten focus on the federal lawsuit challenging the constitutionality of both SB253 and SB261, Chamber of Commerce of the United States of America, et al. v. California Air Resources Board, et al., in the U.S. District Court for the Central District of California, case No. 2:24-cv-00801. The lawsuit argues the two laws unconstitutionally compel speech in violation of the First Amendment and conflict with existing federal law and the Constitution’s delegation to Congress of the power to regulate interstate commerce. A hearing on the parties’ dispositive motions has been pushed to Oct. 15, so it seems that even in a best-case scenario, a final judgment in this action may be pushing up against firms’ SB253 obligations to measure GHG emissions, reemphasizing that preparation and awareness are key for affected firms.

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