Newsom Signs Bill Revising Climate Disclosure Legislation
While the signing of the hotly debated Responsible Textile Recovery Act (SB 707) has dominated discussions within California’s textile and apparel community over the past week, Governor Gavin Newsom has made other recent moves that stand to impact sustainability legislation in the state.
Last week, Newsom signed SB 219, which would reframe several requirements of two climate disclosure bills passed in 2023: SB 253, otherwise known as the Climate Corporate Data Accountability Act, and SB 261, “Greenhouse gases: climate-related financial risk.”
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The former of the two bills mandates that any U.S. business with yearly revenues of more than $1 billion that does business in California disclose data surrounding its Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions. Projected to impact around 5,300 companies, the bill stipulates that Scope 1 and Scope 2 GHG output reporting will begin in 2026, with Scope 3 reporting due to begin one year later.
Meanwhile, SB 261 dictates that companies making more than $500 million per year—and selling in California—must report on their climate-related financial risk in accordance with Task Force on Climate-related Financial Disclosures (TCFD) guidelines along with the actions they’re taking to mitigate that risk. Applicable to more than 10,000 companies, the law currently mandates that companies begin posting publicly about this reporting on or before Jan. 1, 2026.
Both laws exceed the Securities and Exchange Commission’s (SEC) proposed climate disclosure regulations, still under review, as SB 253 applies to Scope 3 emissions and both apply to public and private companies.
Upon signing both bills in 2023, however, Newsom expressed misgivings about their timelines, which he viewed as too aggressive for the majority of covered enterprises. He called the implementation deadlines “likely infeasible” last year, indicating concerns about the “overall financial impact” on California businesses.
In July, he proposed that the compliance dates for both pieces of legislation be pushed out to 2028, though bill writers balked at the suggestion. In late August, however, the California Legislature voted to pass SB 219. Proposed by two of the bills’ authors, it seemingly intends to soften some of the provisions and push out certain adoption dates.
The newly minted law pushes back California Air Resources Board’s (CARB) responsibility to adopt regulations for companies covered under SB 253 from Jan. 1, 2025 to July 1, 2025. But notably, the bill does not change the compliance dates for those companies as Newsom had hoped to do.
SB 219 does, however, revise some other elements of the law. It authorizes parent companies to consolidate reports on behalf of subsidiaries and dispenses with the requirement than annual fees be paid upon the filing of disclosures. It will also “authorize, rather than require, the state board to contract with a climate reporting organization to carry out the above-described actions that the state board deems appropriate.”
With regard to SB 261, several changes were made as well. The newly passed legislation authorizes, rather than requires, the state board to contract with a climate reporting organization to carry out certain actions that the state board deems appropriate, like preparing a biennial public report on climate-related financial risk disclosures or monitoring federal regulatory actions. As with SB 253, it gets rid of the requirement that fees be paid upon filing disclosures. It does not shift the timing for compliance with reporting requirements for covered companies.
The news comes as many companies express anxieties about hitting the climate targets and ESG goals they set for themselves in recent years. With 2030 around the corner, many have found themselves behind, or even backsliding, when it comes to emissions reductions and reducing Scope 3 impacts.
California lawmakers are likely looking to the EU and the rollout of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) as a template for implementation in the Golden State. But notably, in June, a study from global intelligence and cyber security consultancy S-RM revealed that a whopping 84 percent of Europe-based corporations and 82 percent of regional investors did not feel confident in their ability to comply with the laws.
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