By Tyler Josephson
California Governor Gavin Newsom signed the Climate Corporate Data Accountability Act (Senate Bill 253) in a step to make California more environmentally friendly on Oct. 7, 2023.
Senate Bill 253 requires any large corporation with over $1 billion in annual revenue to publish a detailed report on greenhouse gas (GHG) emissions produced by their company. This bill will be in effect on Jan. 1, 2025, with mandatory annual reports starting in 2026.
The new bill requires companies to report GHG emissions in three categories. Section 1 of SB 253 breaks down the categories as the following:
Scope 1: All GHG emissions produced from all sources owned by the reporting entity.
Scope 2: Indirect emissions including electricity and other utility consumption by the reporting entity.
Scope 3: Indirect emissions produced by sectors not owned by the reporting entity, including purchased goods, business travel or employee commutes.
California is the first state in the US to implement any form of accountability law for climate change. The state is also a leader in environmental-friendliness while being one of the largest economies in the nation.
The state legislature’s decision to implement new measures provides a ground zero in the shift to neutralize climate change. Newsom actively continues to make changes on the climate crisis, including foreign trips to meet with nations such as China to encourage eliminating GHG emissions.
Greenhouse Gas Protocol (GGP), an organization providing tools and resources to manage GHG emissions, provides a statement on Newsom’s new bill.
“This landmark legislation will have ripple effects far beyond California’s borders and can serve as a model for national and subnational governments to follow. Rigorous greenhouse gas accounting is the bedrock for achieving bold climate action,” director of GGP Pankaj Bhatia said.
These new changes may shift which corporations are supported by the consumer population. With a new label appearing on businesses, not everyone will support heavily polluting industries while other companies provide eco-friendly alternatives.
Following the approval of SB 253, Greenhouse Gases: Climate-Related Financial Risk (Senate Bill 261) was approved. This would require all companies with an annual revenue of $500,000 to publish a biennial report breaking down financial risk relating to actions taken to improve GHG emissions. The bill aims at minimizing companies’ financial risk to ensure a stable economy is maintained while shifting towards a more eco-friendly approach.
The state of California continues to lead in becoming carbon neutral while maintaining the fifth largest economy in the world. Current and future legislative steps have the potential to remove California’s ongoing carbon footprint.
