California Air Resources Board Solicits Input on Implementation of SB 253 and SB 261 Climate Disclosure Laws

On Monday, the California Air Resources Board (CARB) issued an Information Solicitation to Inform Implementation of California Senate Bills 253 and 261, as amended by SB 219.

SB 253 requires certain public and private companies to annually report all of their Scope 1, 2, and 3 greenhouse gas (GHG) emissions, beginning with Scopes 1 and 2 emissions for fiscal year 2025 on a date in 2026 to be determined by CARB.

SB 261 requires certain public and private companies to biennially report on climate-related financial risk.

The information solicitation comes just days after California State Senators Scott Wiener and Henry Stern, authors of the climate disclosure laws, threatened CARB with legislative oversight hearings over its plans to delay enforcement of the new climate reporting regulation.

Specifically, CARB is seeking input on the following issues:

General

• How should it define “does business in California”?

• How can it identify all covered businesses (i.e., that exceed the annual revenue thresholds in the statutes and do business in California) in a cost-effective manner?

• How can it best incorporate external protocols or standards, ensure the regulations are kept current and align with the standards incorporated, minimize reporting duplication, and should it permit flexibility in reporting methods?

• How should it assess the laws’ fiscal impacts?

• Should the state require reporting directly to CARB or to another organization, and are there nonprofits or private companies that already provide these services?

SB 253: Climate Corporate Data Accountability Act

• Given the flexibility allowed by the GHG Protocol (the protocol to be used for reporting under SB 253), are there specific aspects of Scopes 1, 2, or 3 reporting that CARB should consider standardizing?

• What options exist for third-party verification or assurance for Scope 3 emissions and what standards should be used to define “limited assurance” and “reasonable assurance”?

• How should voluntary emissions reporting inform CARB’s approach to implementing SB 253 requirements?

SB 261: Climate-Related Financial Risk Disclosure

• What is the appropriate timeframe within a reporting year to ensure data are available, reporting is complete, and the necessary assurance review is completed?

• Should CARB require a standardized reporting year or allow for reporting any time in a two-year period?

• What, if any, disclosures should be required by an entity that qualifies as a reporting entity (because it exceeds the revenue threshold) for the first time during the two years before a reporting year?

• How other current voluntary reporting of climate financial risk can be used to inform the requirements of SB 261.

What’s Next

Companies should consider whether they want to offer comments (individually or through industry organizations). In particular, we expect companies or industry organizations to offer commentary on the definition of “does business in California” and on the standard for and timing of reporting. There are practical implementation and policy grounds to be addressed in each of those areas (such as setting a bright line test, due consideration of the burden involved, and harmonization with other reporting companies may be doing).

The deadline for submitting comments to CARB is February 14, 2025. We expect CARB will receive significant input from parties both in favor of and opposed to the new legislation. The request also welcomes additional feedback that respondents feel is important for the staff to consider regarding implementation of the new laws, which could certainly open the floodgates to those who feel passionately, one way or the other, about the new laws.