On October 7, 2023, California became the first U.S. state to place requirements on greenhouse gas emissions disclosure and enforcement of reporting on climate-related financial risks. This significant change came into effect when California Governor Gavin Newsom signed two extensive climate disclosure bills, SB 253 and SB 261 into law. The news was first reported by legal news portal, JDSUPRA.
The SB 253 legislation specifically mandates both public and private U.S. entities that conduct business in California and have total annual revenue in excess of $1 billion U.S. dollars, to disclose their greenhouse gas emissions. The imposition of greenhouse gas disclosures upon private entities, regardless of jurisdiction, with substantial revenue signifies an unprecedented move in achieving more transparency and accountability in environmental impacts of business operations.
Furthermore, the bills are set to strongly influence future regulatory trends across the U.S. and could potentially set new standards for the rest of the country, industry professionals say. The legislation signifies greater emphasis on businesses’ role in mitigating climate change, and the increasing imperative for transparent disclosure of environmental impacts and risks in the corporate world.
The ripple effects of this new regulation might have a wider impact on corporations globally, especially those who have or plan to have operations in California. Still, its most significant influence will be on entities with total annual revenue exceeding $1 billion. These companies, regardless of their domicile, will now have to face the added responsibility to their stakeholders and the general public to accurately report their environmental footprint.