California’s Legislature has taken significant steps towards greater transparency in our battle against climate change with the passing of two new climate disclosure bills – SB 253, the Climate Corporate Data Accountability Act (CCDAA), and SB 261, the Climate-Related Financial Risk Act (CRFRA). Working together, these pieces of legislation mandate that a wide variety of entities conducting business within the state must disclose both their carbon footprints and any risk that climate change may pose to their operations.
The CCDAA and the CRFRA have been signed into law by the Governor, with these new requirements expected to come into full effect beginning in 2025. The governor’s support of these laws emphasizes California’s continued commitment towards not only understanding the impacts of climate change but also holding corporations accountable for their role in it. It marks a pivotal moment for corporate responsibility amidst an existential crisis.
This report comes courtesy of a recent announcement by Katten Muchin Rosenman LLP, a leading provider of legal news and analysis.
Many see this as a move towards a more sustainable future, putting the onus on businesses themselves to not only assess their environmental impacts but to actively report them. The passing of these bills ensures that companies are held accountable, promoting transparency within carbon-related dealings and transactions in the state of California.
Starting in 2025, these laws will enforce drastic changes throughout the California business landscape. It will set a precedent for other states and nations to follow, presenting an effective method and model to evaluate corporate contributions to carbon emissions. This will, in turn, influence business practices towards the adaptation of more sustainable methods.
The real test of these pieces of legislation will be their enforcement and the reaction of the businesses under their purview. As the world becomes more conscientious about climate-related risk, it remains to be seen how this increased focus on carbon emissions tracking and reporting will reshape the business landscape in California, and potentially, across the globe.