SB-253, a comprehensive new law, has been signed into effect by Governor Gavin Newsom of the state of California. This law compels that significant firms who operate within the state publish their greenhouse gas emissions. This piece of legislation mandates that California’s regulatory agencies come up with standards by the year 2025 that would require all publicly traded and privately held businesses in the state with yearly earnings of more than one billion dollars to report not only their direct but also their indirect greenhouse gas emissions. Emissions from company-owned buildings or storefronts, as well as emissions from work-related employee travel and transportation associated to the delivery of their products, are all included in the scope of the reporting requirement.
Because of Senate Bill 253, more than 5,300 businesses in the state of California, including big organizations such as Apple, Amazon, Chevron, and Wells Fargo, will be impacted. According to the legislation, violators of the reporting requirements might be subject to fines of up to $500,000 per year if they fail to comply with the rules.
In addition, the law requires these businesses to declare all “scope 3” emissions that result from their supply chains or the consumer use of their products by the year 2027. This provision is especially important for businesses that deal with energy.
While highlighting California’s commitment to solving the climate catastrophe via transparency and action, the Governor Newsom acknowledged the ambitious schedule of the law and its potential financial implications on companies. He also emphasized the state’s commitment to the law. He advocated for close surveillance as well as close engagement with the state legislature in order to lessen the financial burden that would be placed on businesses.
In addition to Governor Newsom signing SB-253, he also signed SB-261, a companion bill that requires businesses with annual earnings of more than $500 million to report climate-related financial risks every other year beginning in 2026. SB-261 was signed into law by Governor Newsom. If you do to comply with these reporting requirements, you could be subject to fines of up to fifty thousand dollars per year.
Some businesses and the California Chamber of Commerce have voiced concerns about the significant obligations that the new laws place on affected businesses. The California Chamber of Commerce has also called for potential “clean-up legislation” to address these concerns, particularly in regard to the impact the new laws will have on small businesses.