Overview
Introduced: January 2023
Effective from: October 7, 2023
Last modified: June 2024
Region(s): California, United States
See the latest updates to California’s climate laws in our blog.
About
The California Climate Accountability Package includes two critical pieces of legislation—SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act). These laws impose significant reporting requirements on large public and private companies operating in California. SB 261 requires companies to disclose climate-related financial risks and the strategies they have adopted to mitigate these risks. Meanwhile, SB 253 mandates the disclosure of comprehensive greenhouse gas (GHG) emissions data across Scopes 1, 2, and 3. Collectively, these laws aim to enhance corporate transparency, ensure alignment with California’s ambitious climate goals, and provide investors and the public with reliable information on climate impacts and risks.
Criteria for compliance
Entities covered
U.S.-based partnerships, corporations, limited liability companies, and other business entities with total annual revenues exceeding $500 million that operate within California.
Financial risk reporting
- By January 1, 2026, and biennially thereafter: Companies must compile and publicly disclose a climate-related financial risk report detailing the financial risks posed by climate change and the measures taken to address them.
- Reports must be accessible on the company’s website and submitted to the California Air Resources Board (CARB).
Compliance timelines
- January 1, 2026: The first climate-related financial risk report is due, with subsequent reports required biennially.
Disclosure requirements
- Financial risk reporting: Disclose physical and transition risks related to climate change and the measures taken to mitigate these risks.
- Public accessibility: Reports must be published on the company’s official website.
Third-party auditing
While third-party auditing is not explicitly required for financial risk reports, robust internal controls are implied to ensure data integrity.
Penalties for non-compliance
Penalties may be imposed for failure to publish the required financial risk report or for publishing an inadequate or insufficient report. The maximum penalty is $50,000 per reporting year.
