California’s ESG/Climate Risk Reporting Requirements

Nearly a year after California created the first ESG/Climate Risk reporting requirements in the U.S., California Senate Bill No.219 was approved by Governor Gavin Newsom on September 27, 2024, bringing important updates to the state’s climate disclosure laws, SB 253 and SB261. These laws require organizations to disclose their greenhouse gas emissions, including scope 1, 2, and 3 emissions (SB253) and climate-related financial risks (SB261) starting as early as January 1, 2026, for calendar year 2025.  

The updated SB 219 creates the following changes for organizations: 

• Granting a six-month extension to publish regulations for scope emissions disclosures. SB 219 extends the rulemaking deadline for California Air Resource Board (CARB) for scopes 1, 2, and 3 emissions from January 1, 2025, to July 1, 2025. 
• Permitting consolidated reporting at the parent level for scope emissions. The law clarifies that consolidated reports at the parent level would be acceptable for scopes 1, 2, and 3 emissions disclosures, relieving a subsidiary from generating a separate report. 
• Adjusting the timeline of scope 3 emissions disclosure. SB 219 allows CARB to prepare a schedule rather than the previous timeline, requiring disclosure of scope 3 emissions 180 days after disclosure of scope 1 and 2 emissions. 
• Eliminating the payment at the time of filing’ requirement. SB 219 removes the requirement that reporting entities pay a filing fee when filing their disclosure reports for SB 253 and SB 261. This means that while the time for an entity to pay the fee has changed, the fee itself has not. 

The Impact of SB 219 

The impact of SB 219 on organizations subject to California’s climate disclosure laws is huge. Most significantly, it moves the deadline back for CARB to issue legislation implementation guidance; however, the timeline for when the laws are effective and when companies need to start reporting has not changed.  If companies wait to act until the final guidance from CARB is issued (as late as July 1, 2025), they will scramble to meet these requirements. This is particularly important for companies who will be required to report GHG scope 1 and 2 emissions and obtain a limited assurance report. While specifics will be finalized with CARB guidance, organizations should look to establish their processes for assessing climate risks and reporting on their GHG scope 1 and 2 emissions. With the processes established, they can be fine-tuned to meet final requirements once issued. 

For more information on the California Laws, refer to Climate-Related Disclosure Bills SB 253 and SB 261: What They Mean for Companies in California and Beyond.