California introduces climate disclosures and assurance

On October 7, 2023, the California Governor signed two climate disclosure laws that will shape climate disclosure practices beyond the state’s borders. The laws apply to US businesses that meet specified revenue thresholds and do business in California.

Applicability

• Climate Corporate Data Accountability Act (SB-253)
• Greenhouse Gases: Climate-Related Financial Risk Act (SB-261)

Relevant dates

• The laws were signed by Governor Newsom on October 7, 2023
• Effective for reporting in 2026

Key impacts

There has been mounting pressure from governments and shareholders for companies to disclose their GHG emissions and report on climate-related risks. For most US companies, the current approach for such disclosures relies largely on voluntary reporting. 

This is changing, as evidenced by reporting requirements on the national level (the SEC’s climate proposal) and international developments (standards from the International Sustainability Standards Board (ISSB) and European Sustainability Reporting Standards). The California laws add a new dimension, with state-level requirements that have national and international implications. 

In the movement to improve transparency and standardize climate-related disclosures, California passed two laws that apply to both public and private US companies (and other business entities) that do business in California – whether or not they are physically present in the state.

The following table compares key details from the two laws, with further analysis in our Hot Topic.

Report contents

• Fast facts, impacts, actions  
• Background  
• A broad scope  
• Targeted disclosures  
• Effective dates are coming soon  
• Assurance required from the onset 
• Comparison to the SEC proposal  
• It’s all about the value chain  
• Contacts 

Related content