On October 7, 2023, California advanced further in the field of environmental, social, and governance (ESG) reporting as Governor Gavin Newsom signed two significant climate reporting bills into law. Details here.
These bills, Senate Bill (SB) 261, colloquially known to legal professionals as the ‘Greenhouse Gases: Climate-Related Financial Risk law, and SB 253, otherwise known as the ‘Climate Corporate Data Accountability Act’, extend their reach beyond purely public companies. They include several private organizations exceeding a certain size, regardless of their geographic location.
The significance of SB 261 lies in its focus on climate-related financial risk. It mandates organizations to consider and report on the financial risks posed by greenhouse gases and their impact on the rapidly changing climate.
On the other hand, SB 253, the Climate Corporate Data Accountability Act, enforces companies to become more transparent about their ESG decisions and impacts. It calls for greater corporate accountability within the realm of ESG.
Within the global landscape of corporate governance, the signing of these bills marks another milestone towards broader and more comprehensive ESG reporting. Legally, these bills embed climate-related considerations deeper into the fabric of reporting requirements.
As these new rules take effect, it’s crucial – now more than ever – for both corporate and legal professionals worldwide to keep an eye on how ESG legislation and norms continue to evolve and adjust their compliance strategies accordingly.