In 2023, the State of California passed two landmark climate bills—SB 253 and SB 261—collectively known as the “Climate Corporate Accountability Package.”
This legislation aims to enhance corporate transparency and accountability regarding climate change. It mandates large corporations to disclose their greenhouse gas (GHG) emissions and climate-related financial risks, driving businesses to formulate strategies and take concrete actions to address climate change.
SB-253 applies to all reporting entities "doing business" in California, regardless of industry. This includes partnerships, private companies, and corporations with annual revenues exceeding $1 billion that are required to file tax and financial information.
Covered entities must annually disclose their GHG emissions for the prior fiscal year. These companies are required to conduct GHG inventories in accordance with the GHG Protocol, with Scope 1 and Scope 2 emissions disclosures beginning in 2026, followed by Scope 3 emissions in 2027.
SB-261 applies to all business entities with annual revenues exceeding $500 million (excluding entities regulated by the California Department of Insurance or those conducting insurance business in other states). Covered entities must prepare and submit a climate-related financial risk report every two years (biennially) aligned with the TCFD framework (Task Force on Climate-related Financial Disclosures), outlining their climate-related financial risks and corresponding response measures.
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