In a show of environmental leadership, Governor Gavin Newsom has signed Senate Bill 219 (SB-219) into law, solidifying California’s climate disclosure requirements for large companies doing business in the state.
SB-219 consolidates and amends California’s original SB-253 and SB-261 bills, which mandate reporting on greenhouse gas (GHG) emissions and climate-related financial risks. Applying to all U.S. companies doing business in the state of California that meet certain financial thresholds (more than $1B annual revenue under SB-253, more than $500M annual revenue under SB-261), these amendments include the following details:
- SB-219 does not delay the January 2026 reporting date for Scope 1 and Scope 2 emissions first proposed under SB-253 or SB-261.
- Scope 3 emissions reporting will begin in 2027.
- The timing of the required delivery of Scope 3 emissions reports will now follow a schedule specified by the California Air Resources Board (CARB), instead of the previous 180-day requirement after Scope 1 and 2 disclosures.
- Climate reporting can now be consolidated at the parent company level, removing the need for separate reports from subsidiaries.
- While companies will still have to pay a filing fee for filing SB-253 and SB-261, they will no longer be required to pay upon filing.
- The deadline for CARB to develop and adopt regulations for Scope 1, 2, and 3 emissions reporting has been extended by six months to July 1, 2025.
As the largest state economy in the U.S. and a global leader in environmental regulation, California's move signals the growing inevitability of mandatory climate disclosures across the nation; and the business community is not just taking notice, it’s taking action. According to a new DFIN survey, CFOs and finance decision-makers are taking steps to comply with California’s climate disclosure bills, with 60 percent of financial decision makers establishing an internal ESG committee and 60 percent developing an ESG reporting framework.
DFIN Can Help Ease Compliance
These regulations are a clear indication that companies across the U.S. will need to ramp up their environmental, social, and governance (ESG) initiatives and have systems in place to accurately track, manage, and report on emissions data.
This means navigating the complexities of climate data reporting, which can require significant operational changes, especially in areas of indirect emissions (Scope 3), including supply chain activities and other indirect impacts.
While it is estimated that SB-219 will affect over 10,000 large businesses today, we expect that far more small and medium-sized value-chain businesses will also be impacted and required to report climate-related information to remain competitive.
As a leader in ESG reporting and compliance, DFIN understands the challenges presented by complex business reporting requirements in an evolving regulatory landscape.
In addition to monitoring the developments coming from state legislatures and the SEC, DFIN provides ActiveDisclosure for ESG, a purpose-built solution that streamlines reporting efforts, ensuring that your company is compliant with California’s new regulations and many others in the pipeline. This includes the EU’s Corporate Sustainability Reporting Directive, which requires assured reporting of a company’s corporate activities and their impact on the environment and society, and the SEC’s climate disclosure rules, which are currently paused due to ongoing litigation. DFIN’s team of ESG experts helps companies of all sizes build effective, global ESG strategies.
Connect with DFIN today to learn how ActiveDisclosure can transform your compliance process.
