Changes in regulatory requirements are frequently the source of ongoing pressure for corporations. With recent developments in California, businesses across the country could be facing new demands in terms of climate disclosure.
As reported, the California Legislature passed two climate disclosure bills in early September 2023: S.B. 253 The Climate Corporate Data Accountability Act (CCDAA) and S.B. 261 Greenhouse Gases: Climate-Related Financial Risk (CRFR). Both bills were introduced as part of the California Climate Accountability Package, a comprehensive effort by the legislature to increase transparency across companies’ environmental impacts.
The signing into law of these bills by California Gov. Gavin Newsome on Oct. 7, 2023, signifies a key shift in the regulatory landscape. With clear focus on accountability and risk assessment, the expectation is that corporations will need to revisit existing disclosure practices and navigate the challenges these new laws present.
S.B. 253, known as The Climate Corporate Data Accountability Act, is primarily focused on providing governmental bodies access to substantial data related to corporations’ climate-related practices. This information can provide valuable insight to regulators and investors alike, as it reveals the extent and impact of each corporation’s environmental activities.
S.B. 261, the second bill, pertains to financial risks related to greenhouse gases and other climate-related factors. This bill will compel corporations to thoroughly examine and report the risks that environmental factors pose to their financial stability. This goes beyond direct financial implications of climate-related hazards by also demanding insight into prospective regulatory and reputational risks.
This legislative shift in California could have a ripple effect on businesses nationwide, as investors and regulatory bodies seek to embrace similar disclosure initiatives across the country. Now more than ever, corporations will need to closely observe and adapt to changing legal expectations around climate accountability.