A PDF version of this publication is attached here: California's climate disclosure laws will have global impact (PDF 398kb)

This publication has also been distributed under the title "California’s not waiting for the SEC’s climate disclosure rules."

On October 7, 2023, California Governor Gavin Newsom signed three landmark climate disclosure bills that are poised to change the landscape of climate reporting in the United States. Over 10,000 US companies — including both public and private companies as well as subsidiaries of non-US headquartered companies — will be subject to the climate disclosure requirements in the near term.

The bills require (1) greenhouse gas (GHG) emissions reporting in compliance with the Greenhouse Gas Protocol (GHG Protocol), (2) climate-related financial risk reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and (3) disclosure of information about certain emissions claims and the sale and use of carbon offsets. ¹ Both the GHG Protocol and TCFD requirements should be familiar to companies given their reference in the Securities and Exchange Commission’s (SEC) climate disclosure proposal, the European Sustainability Reporting Standards (ESRS), and IFRS^® Sustainability Disclosure Standards. The number of entities in scope of the California bills, however, goes well beyond that of the SEC’s climate disclosure proposal because the requirements apply to both public and private companies with business activities in California.

The bills are brief — only a few pages each — and lack answers to some questions regarding how and when to apply the requirements. The California Air Resources Board (CARB) is expected to provide more detailed guidance on SB 253 and SB 261 in regulations required to be issued prior to January 1, 2025. But there are no definitive plans to develop additional guidance for AB 1305 and the initial disclosure requirements are imminent. We recommend that companies evaluate applicability and reporting requirements related to all of the bills based on what is known now, to prepare for what may be a company’s first foray into mandatory climate-related disclosure.

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