California’s SB 219: Key Delays and Changes in GHG and Climate Risk Reporting Laws

In 2023, California enacted two significant laws aimed at enhancing transparency around greenhouse gas emissions and climate-related financial risks. The Climate Corporate Data Accountability Act (CCDAA), SB 253, mandates that all public and private corporations with annual revenues exceeding $1 billion and operating in California report their greenhouse gas emissions. Additionally, the Climate-Related Financial Risk Act (CRFRA), SB 261, requires companies with gross revenues over $500 million to disclose global climate-related financial risks. Notably, SB 261 affects over 10,000 companies but excludes insurance firms from its scope. 

 On August 31st, the state legislature passed SB 219. This bill proposes amendments to SB 253 and SB 261. Specifically, SB 219 would extend the California Air Resources Board’s (CARB) rulemaking deadline for SB 253 to July 1, 2025. If enacted, SB 219 would also eliminate the filing fee requirement for organizations reporting greenhouse gas emissions under SB 253. Additionally, it would give CARB the discretion—rather than the obligation—to engage a third-party organization to develop a public disclosure program. SB 219 would also permit disclosures to be made at the parent-company level. 

 SB 219’s proposed changes to SB 261 include adjusting disclosure filing fees and allowing CARB the option to collaborate with third-party organizations on preparing disclosure reports. Further modifications to these disclosure laws are anticipated in future legislative sessions. Governor Newsom has until September 30, 2024, to sign or veto SB 219. Should Governor Newsom choose to sign SB 219, the bill will go into effect on January 1, 2025. 

In pending litigation on the California rules, briefing has begun.  On August 19th, California industry group petitioners submitted a brief in the U.S. District Court for the Central District of California in the case of Chamber of Commerce of the United States of America, et al. v. Liane M. Randolph. They argue that both SB 253 and SB 261 are unconstitutional, claiming that these bills infringe upon free speech by compelling mandatory disclosures. 

As California navigates updates to its greenhouse gas and climate risk disclosure laws, businesses operating in the state should stay informed about evolving regulations. The proposed amendments to SB 253 and SB 261 outlined in SB 219 signal a shift towards extended deadlines, reduced costs, and some flexibility in reporting requirements, but also involvement from unnamed third-parties in the administration of the program. With further modifications anticipated and potential impacts from California industry and the SEC climate disclosure litigation, companies should proactively develop adaptation plans to ensure they meet both state and federal standards. It is difficult to predict when the California rules will impact businesses, but they will likely be more onerous than a federal rule, should that rule ever be enacted.