On September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219, the Greenhouse gases: climate corporate accountability: climate-related financial risk (SB 219) after the California Assembly and Senate each approved SB 219. SB 219 amends Senate Bill 253: the Climate Corporate Data Accountability Act (SB 253) and Senate Bill 261, Greenhouse gases: climate-related financial risk (SB 261), which were signed into law in October 2023.¹ Notably, SB 219 did not delay the compliance deadlines for reporting companies under either SB 253 or SB 261, as proposed by certain lawmakers. Additionally, proposals to amend Assembly Bill 1305, Voluntary carbon market disclosures (AB 1305) did not reach a final vote, so AB 1305 remains unchanged for now.

SB 219 enacts the following changes:

SB 253:

• Reporting Delay: SB 219 requires the California Air Resources Board (CARB) to adopt regulations requiring “reporting entities” to publicly disclose their greenhouse gas (GHG) emissions on an annual basis before July 1, 2025, delaying the original adoption deadline of January 1, 2025, by six months. Pursuant to SB 253, reporting entities, or entities with more than $1 billion in total annual revenue, are now required to disclose their scope 1 and scope 2 GHG emissions beginning in 2026 or by a date set by CARB. So, while CARB has more time to adopt SB 253 implementing regulations, the reporting entity compliance period has not been extended.
• Scope 3 Disclosure Timeline: SB 219 requires CARB to set a schedule for reporting entities to publicly disclose their scope 3 GHG emissions, as opposed to the prior requirement that reporting entities publicly disclose their scope 3 GHG emissions no later than 180 days after publicly disclosing their scope 1 and scope 2 GHG emissions.
• Emissions Reporting Organizations: Previously, SB 253 required CARB to contract with an emissions reporting organization (ERO) to develop CARB’s GHG emissions reporting program. SB 219 now permits, rather than requires, CARB to contract with an ERO.
• Consolidation of Reports: SB 219 allows GHG emissions reports to be reported on a consolidated basis at the parent-company level, so that if a reporting entity’s subsidiary is a “reporting entity,” it is not required to prepare a separate report of its scope 1, scope 2, and scope 3 GHG emissions. This aligns SB 253 GHG emissions reporting with the consolidated reporting allowed under SB 261 for climate-related financial risk reports.

SB 261:

• Reporting Timing: As a reminder, SB 261 requires that a “covered entity,” or entities with more than $500 million in total annual revenue, prepare and complete a climate-related financial risk report by January 1, 2026. This compliance deadline remains unchanged by SB 219.
• Climate Reporting Organizations: Similar to SB 253, SB 261 required CARB to contract with a climate reporting organization (CRO) to prepare a biennial public report on the climate-related financial risk disclosures required by SB 261. SB 219 now permits, rather than requires, CARB to contract with an CRO.

Next Steps

Though the promulgation of reporting rules under to SB 253 has been delayed until July 1, 2025, companies that will be required to make GHG emissions disclosures pursuant to California law should continue to prepare for the upcoming—and unchanged—reporting deadlines. While there are pending challenges to both SB 253 and SB 261, which claim that the laws are, among other things, unconstitutional,² emissions and environmental reporting laws continue to proliferate globally. Moreover, investors continue to ask companies about their environmental impacts, risks, and opportunities, particularly when such environmental risks and opportunities affect financial statements and business strategy.

We expect that companies of all sizes and across all industries will have questions as they continue to familiarize themselves with SB 253, SB 261, and AB 1305. For more information on the these topics or any related matter, please contact any member of the firm’s sustainability and ESG advisory or public company representation practices.

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[1] See our Wilson Sonsini Alert on SB 253 and SB 261 published on September 14, 2023, here: https://www.wsgr.com/en/insights/california-legislature-passes-climate-bills.html.

[2] Chamber of Commerce of the United States of America et al v. California Air Resources Board et al.