News Summary
California Attorney General Rob Bonta is taking action to uphold the state’s corporate emissions reporting law, SB 253, amid a legal challenge from the U.S. Chamber of Commerce. This law mandates corporations with revenues over $1 billion to disclose comprehensive greenhouse gas emissions data. While litigation unfolds, Bonta asserts that enforcing the law will not irreparably harm businesses, emphasizing the importance of transparency in addressing climate change. The California Air Resources Board will adopt a lenient enforcement approach in the initial reporting cycle to ease compliance concerns.
California Attorney General Rob Bonta is actively seeking to enforce the state’s corporate emissions reporting statute as a business group mounts a legal challenge against the law. This request is directed at a federal court, which could significantly impact how California monitors and regulates greenhouse gas emissions from large corporations.
The legislation in question, Senate Bill 253 (SB 253), was enacted in 2023 and mandates that private and public companies with annual revenues exceeding $1 billion and conducting business in California disclose detailed emissions data, including their Scope 1, 2, and 3 greenhouse gas (GHG) emissions. Scope 1 emissions refer to direct emissions from owned or controlled sources, Scope 2 pertains to indirect emissions from the purchase of electricity, steam, heating, and cooling, while Scope 3 includes all other indirect emissions that occur in a company’s value chain.
As litigation unfolds, the U.S. Chamber of Commerce has filed a lawsuit against California, claiming that SB 253 infringes on First Amendment rights. In response to the legal issues, Attorney General Bonta and his legal team argue that upholding the law during the ongoing litigation will not inflict irreparable harm on corporations. They emphasize that many businesses already possess or can reasonably procure the emissions data they are required to report.
The initial reports for Scope 1 and 2 emissions are due by January 2026, requiring data from the companies’ fiscal year of 2025. Scope 3 emissions reports will follow in 2027. To ease concerns over compliance, the California Air Resources Board (CARB) announced that it would not impose penalties for any inaccuracies or incomplete reports in the first cycle, provided that companies demonstrate a good faith effort to comply with the requirements.
Concerns regarding the timeline for implementing these regulations led to changes in the legislation. In response to apprehensions expressed by Governor Gavin Newsom about the feasibility of reporting deadlines, the California legislature passed an amendment known as SB 219, which postpones the deadline for CARB to adopt regulations from January 1, 2025, to July 1, 2025. However, compliance deadlines for reporting emissions data remain unchanged.
The CARB has stated its intention to use enforcement discretion for the first reporting cycle in 2026. Companies will be expected to submit emissions data that align with what they already have or can access by the time an Enforcement Notice is issued. Noncompliance could result in significant penalties, ranging from fines to potentially half a million dollars.
Under the new climate accountability initiative, third-party assessments will be mandated to authenticate emissions reports, enhancing their reliability and credibility. Businesses aiming to comply with SB 253 or the accompanying Senate Bill 261 should conduct an evaluation of their revenue thresholds and develop systems for monitoring GHG emissions accurately.
The ongoing legal battle and California’s stringent climate disclosure laws could inspire other states such as New York and New Jersey to pursue similar measures for corporate climate accountability. The overarching purpose behind these laws is to foster corporate transparency regarding emissions and the financial risks associated with climate change.
California’s initiative reflects a broader commitment to combat climate change and catalyze a transition towards sustainable business practices that prioritize environmental responsibility. By mandating comprehensive reporting on corporate emissions, California seeks to hold companies accountable while also contributing to the global effort of mitigating climate-related impacts. As litigation continues, the outcome may set significant precedents for corporate accountability in environmental matters across the nation.
Deeper Dive: News & Info About This Topic
- Vinson & Elkins: California Provides Flexibility on Greenhouse Gas Emissions Reporting Law
- Wikipedia: Greenhouse Gas
- Daily Journal: Red Tape or Green Future?
- Google Search: California emissions reporting law
- Wall Street Journal: California Legislature Rejects Delay to Emissions Reporting Rules
- Encyclopedia Britannica: Climate Change
- Supply Chain Brain: A Plan of Action for Complying with California’s Emissions Reporting Bill
- Google News: California greenhouse gas emissions
- Independent: California Leads with a Radical Emissions Disclosure Bill
