On September 27, 2024, California’s Democratic Governor, Gavin Newsom, signed into law Senate Bill 219 (SB 219). This landmark legislation amends the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). Both acts previously set rigorous reporting requirements for companies operating in California.

Importantly, SB 219 does not abolish these existing reporting mandates. Instead, it introduces new flexibility for covered entities. Companies now have more options for compliance, which may ease the reporting burden. Furthermore, SB 219 is less prescriptive regarding the regulations CARB must adopt. This shift allows for a more adaptive regulatory environment, accommodating the diverse needs of businesses while maintaining accountability.

Recapping SB 253 & SB 261

On October 7, 2023, Governor Newsom signed into law two pivotal bills: SB 253 and SB 261. Together, these bills form the Climate Accountability Package. This legislation generated significant attention, as it mandates climate-related disclosures for all U.S. companies “doing business” in California that meet specific annual revenue thresholds. Under SB 253, companies with revenues exceeding $1 billion must report their emissions. Meanwhile, SB 261 targets those with over $500 million in annual revenue.

Given California’s status as the fifth largest economy in the world by gross domestic product, many experts believe these bills will impact a substantial number of large U.S. companies. Some estimates suggest that the laws could capture the majority of Fortune 1000 companies. This wide reach highlights the potential influence of California’s regulations on corporate sustainability practices nationwide.

Amendments to SB 253 and SB 261 by SB 219

The amendments introduced by SB 219 primarily focus on granting additional time for the promulgation of related regulations while largely maintaining the existing reporting deadlines. This change will likely reduce the time available for companies to prepare their disclosures.

Key substantive changes between SB 219 and the original SB 253/SB 261 include:

1. Delay in Regulation Publication: SB 219 extends the rulemaking deadline for the California Air Resources Board (CARB) regarding scopes 1, 2, and 3 emissions. The deadline now shifts from January 1, 2025, to July 1, 2025. This six-month extension allows CARB additional time to finalize the regulations.
2. Revised Timeline for Scope 3 Emissions Disclosure: Under SB 219, CARB gains the authority to create a schedule for disclosing scope 3 emissions. This contrasts with the previous requirement mandating disclosure within 180 days after scopes 1 and 2 emissions disclosure.
3. Increased Authority for CARB: SB 219 enhances CARB’s permissive authority. Previously, CARB was mandated to engage a “climate reporting organization” for certain tasks, such as receiving GHG emissions disclosures. Now, CARB can choose to perform these responsibilities independently, offering more flexibility.
4. Consolidated Reporting at the Parent Level: The law clarifies that companies can submit consolidated reports at the parent company level for scopes 1, 2, and 3 emissions disclosures. This change relieves subsidiaries from generating separate reports, aligning SB 253 with SB 261, which already allowed for consolidated parent-level reporting.
5. Extension of Filing Fee Payment Deadlines: SB 219 removes the requirement for reporting entities to pay a filing fee when submitting their disclosure reports for SB 253 and SB 261. While the timeline for payment has changed, the fee itself remains unchanged.

SB 219 Compliance Dates

SB 219 generally aligns with the compliance dates established in SB 253 and SB 261. However, in certain instances where SB 219 modifies compliance requirements, it offers greater flexibility. Below is a summary of the compliance dates for covered entities, highlighting where SB 219 differs from the original timelines outlined in SB 253 and SB 261.

Compliance Dates Overview

Comparison with SB 253

Comparison with SB 261

Next Steps for Companies Navigating California’s Climate Disclosures

As SB 219 unfolds, it introduces flexibility for the California Air Resources Board (CARB) to navigate SB 253 and SB 261. However, this flexibility may create uncertainty for companies preparing for upcoming climate disclosure requirements. The ongoing litigation surrounding these bills adds another layer of complexity, potentially affecting reporting timelines and requirements.

Amidst these developments, companies face an urgent call to action as the 2025 compliance period approaches. Establishing strong greenhouse gas (GHG) emissions monitoring, accounting, and auditing systems is essential. This preparation becomes a vital step toward fulfilling California’s climate accountability goals.

While these tasks may feel overwhelming, they also represent an exciting opportunity for growth and innovation. With Sprih, companies can simplify their sustainability efforts. Our platform offers comprehensive tools for measuring and monitoring carbon emissions, including the often challenging Scope 3 emissions. We also facilitate science-based target reduction settings and provide industry benchmarking.

We align with key global reporting frameworks such as TCFD, CDP, SASB and GRI. This alignment ensures that you can efficiently generate reports for compliance filings.

Moreover, we are eager to empower you as environmental champions. Our platform connects you with climate solution partners, helping you identify actionable steps to reduce and offset your environmental impact.

With Sprih, you can ease the burden of sustainability. This allows you to focus on what matters most—running your business. Together, we can navigate these changes and work towards a greener future for our planet.