California Governor Gavin Newsom announced that he has signed a new bill into law obligating large companies that do business in the state to disclose their value chain emissions and report on climate-related financial risks, and retaining an initially proposed start date for reporting to begin, despite previously expressing concerns about companies’ abilities to meet the deadline.

Applying to companies that do business in California, the new law would effectively introduce climate reporting obligations for most large businesses in the U.S.

The bill, SB 219, included a series of amendments to SB 253 and SB 261, approved by the Governor in 2023.

SB 253, the “Climate Corporate Data Accountability Act,” requires companies with revenues greater than $1 billion that do business in California to report annually on their emissions from all scopes, including direct emissions (Scope 1), emissions from purchase and use of electricity (Scope 2), and indirect emissions, including those associated with supply chains, business travel, employee commuting, procurement, waste, and water usage (Scope 3). SB 261, “Greenhouse gases: climate-related financial risk,” applies to U.S. companies that do business in California and with revenues greater that $500 million to prepare a report disclosing their climate-related financial risk, as well as measures to reduce and adapt to that risk.

While signing the initial bills into law in October 2023, Newsom pushed back on the timeline and anticipated cost of the laws, warning that the implementation deadlines “are likely infeasible,”and adding that he was “concerned about the overall financial impact of this bill on businesses.” Newsom subsequently proposed pushing back the disclosure deadlines, with reporting to begin in 2028, although the change was ultimately not included in the new bill.

The new bill did include a few amendments, however, including slightly easing Scope 3 emissions reporting timing, which will still begin in 2027, but rather than being required within 180 days after disclosure of Scope 1 and 2 emissions, it will now be done according to a schedule specified by  the California Air Resources Board (CARB). The amended law also allows climate reporting to be consolidated at the parent company level, instead of the prior requirement for subsidiary companies qualifying for application of the law to provide separate reports, and it also no longer requires companies to pay fees upon filing their disclosures.

Additionally, the amended law also delays the deadline for CARB to develop and adopt the regulations requiring companies to report on their Scope 1, 2, and 3 emissions by six months to July 1, 2025, while leaving the 2026 reporting date in place.

Click here to access the final text of the signed bill SB 219.