Support for California’s Climate Disclosure Rules Remains Strong Despite Push for Delay

California Governor Gavin Newsom proposed a two-year delay on Senate Bills (SB) 253 and 261. The move comes in spite of widespread support for the initiatives. The fate of the climate risk disclosure bills now rests with the state’s legislature. The governing body has until the end of the month to decide whether they will be enacted on schedule.

SB 253 requires companies doing business in California with a total revenue above $1 billion to report the greenhouse gas emissions associated with their direct operations (Scope 1) and their purchased energy (Scope 2) beginning in 2026 and the emissions produced across their value chain (Scope 3) the following year. The revenue threshold for SB 261 — which requires companies to report on climate-related financial risks — is half that amount, at $500 million. If Governor Newsom’s proposal is passed, neither will be implemented until 2028.

“We're experiencing climate change right now. We've got wildfires, we've got flooding, and we need to take care of California and its residents,” Catherine Atkin, director and co-founder of the climate data initiative Carbon Accountable, told TriplePundit. “The only way to do that is to address the broader greenhouse gas emissions environment, and this data will support California protecting its citizens.”

An unnecessary delay

Atkin, who collaborated with bill author and California State Senator Scott Wiener to develop the framework for SB 253, said the proposed delay is unnecessary. To demonstrate this, Carbon Accountable compiled a report, which Atkin was the lead author of, detailing why the bill needs to be put into practice along its original timeline and how to do so. Additionally, a coalition of policy and action organizations joined forces with Carbon Accountable to request the passage of SB 219, which makes technical amendments to ease the bill’s implementation and gives the California Air Resources Board (CARB) an additional six months to complete rulemaking without delaying the reporting requirements.

“There really is no reason for the delay. Both bills have timelines that are attainable,” Dave Jones, director of the Climate Risk Initiative at the University of California Berkeley’s Center for Law and the former insurance commissioner of California, told 3p. “There’s some regulatory work that [CARB] will have to do, but it’s very minimal because both bills rely on well-established international standards for greenhouse gas emissions reporting.”

In addition to the internationally accepted protocols for Scopes 1, 2 and 3, Jones explained that the climate risk and financial disclosures required by SB 261 are based on a framework put in place in 2017 that’s already used by approximately 80 percent of the 1,000 largest publicly-traded companies in the United States. 

Business support for California’s climate disclosure bills

“We were really heartened by the business support that built over time, and I think we've really sort of hit an inflection point,” Atkin said of the progress made over the course of passing the legislation. “We saw a lot of things shifting, and I think some of those were leading companies recognizing that they needed to be stewards for the broader business community as well.”

The California Chamber of Commerce is in favor of the proposed delay, along with other changes to SB 253, many of which are addressed by SB 219. But leading companies still support the reporting requirements, Atkin said. The same trend is noticeable globally, which is encouraging despite the pushback from business lobbies, she said.

“There was widespread business and financial institution support for both bills,” Jones said. “And those businesses that supported the bills are opposing the delay.” 

Uniform reporting standards garner support and make California a leader

“What companies said to Senator Wiener, and what I heard during this process was, ‘What we don't want is … a special flavor of California ice cream,’” Atkin said.  “These largest companies, as you know, are subject to other reporting regimes globally, as well. Many of them will be subject to [the Corporate Sustainability Reporting Directive], either now or in the future in the European Union. They may be voluntarily reporting in other jurisdictions, or be subject to [the International Sustainability Standards Board] as that gets adopted by countries. So really, what we heard from them was … ‘We want to have confidence and security in knowing that the rules are going to be the same.’”

Using the standard greenhouse gas reporting protocol was therefore imperative. And with the U.S. Securities and Exchange Commission delaying its climate disclosure rules — which are currently tied up in court — California’s are more important than ever. Atkin is hopeful they’ll go into effect in 2026 as originally proposed. Despite Governor Newsom’s push for the bills’ delay, his work championing low carbon fuel standards, cap and trade systems, and standing up to the oil and gas industry are examples of how the state is a pioneer in the fight against climate change, Atkin said.

“This is just another amazing demonstration of California's global leadership,” she said. “The world is watching California right now, so we need to step up to the plate and deliver on this promise for the benefit of Californians but also the rest of the country and the world.”

Delaying SB 253 and 261 would be a huge setback for the state’s leadership in the climate space and the commencement of emissions and risk reporting, Jones said.

Sticking to the original timeline is good for business

All too often, progress on climate regulations seems to be followed by government backtracking and an overall failure to meet targets. Fortunately, the public can make a difference by paying attention and holding government and business leaders accountable. Atkin credits the public with seeing through commitments and promises that don’t result in real change, specifically related to greenwashing.

“It's critically important that the public, which is paying attention to these issues, but also businesses and advocacy organizations that are concerned about the fact that the planet is literally burning, continue to support efforts in a timely and responsible way to address these issues,” Jones said. “Sadly, it is the case that when important laws like these get passed, it's not necessarily the end of the story. So it requires a continued engagement and vigilance.”

SB 253 and 261 are about transparency. Neither will require businesses to reduce their greenhouse gas emissions or climate-associated risks, Atkin said. But they will help the economy transition and grow.

“We want companies to do well, and this data is going to help them,” she said. “That, to me, is kind of the sweet spot. When we have transparency and accountability, but with an expectation that we're going to build a strong economy through this effort.”

For companies and financial institutions to transition their activities and investments, they’ll need to start by measuring and reporting their greenhouse gas emissions and climate risks, Jones said. That information is also important for the public, policymakers and financial regulators.

“Fundamentally, this is about creating a level playing field so that companies and financial institutions are both identifying and disclosing what their contribution is to climate change, as well as what risks they face from climate change,” he said. “You can't manage what you don't measure, right?”