California SB 253 and SB 261 (2023)
Two laws signed on October 7, 2023 requiring large companies doing business in California to disclose their greenhouse gas emissions and their climate-related financial risks.
Without a federal rule, California used its power over companies doing business in the state to require climate disclosure, from public and private companies alike. SB 253 targets emissions: scopes 1 and 2 first, then scope 3, the entire value chain, with third-party assurance. SB 261 targets risks: a report every two years on climate-related financial risks and the measures taken to reduce them, in the spirit of the TCFD framework. The threshold chosen, global rather than Californian revenue, brings thousands of foreign groups into scope. For insurers, the laws act twice: as companies subject to them, and as readers of the climate exposures their insureds disclose.
Signed by Governor Gavin Newsom on October 7, 2023, SB 253 applies to companies with more than one billion dollars of annual revenue, for scopes 1 and 2 from 2026 and scope 3 from 2027, and SB 261 to those above 500 million dollars, with a first report due by January 1, 2026.
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