In September 2024, California’s Governor Newsom signed the latest of the State’s climate-related bills – SB 219 – into law. SB 219 will require organizations to disclose their climate-related financial risks, as well as later obtain limited assurance for Scope 1 and 2 emissions later, in 2026.
While SB 219 is a newer bill, and currently open for public comment, the content of the legislation largely reflects two climate-related bills passed in 2023, known as SB 253 and SB 261. There were several concerns about the future of SBs 253 and 261, and SB 219 seeks to provide some clarity. It has several key elements consistent with the previous legislation, including similar implementation timelines, consistent applicability determinations and comparable assurance requirements.
However, SB 219 also includes several modifications to SBs 253 and 261, including:
- Additional time for CARB to implement the legislation. Under SB 219, the California Air Resources Board (CARB) has until July 1, 2025 to develop and adopt regulations governing carbon emissions disclosures – a six-month delay from the requirements in SB 253. CARB, however, released an enforcement notice in December 2024 indicating that it will exercise “enforcement discretion” for firms’ first emissions reports, allowing organizations more time to achieve full compliance with the regulation.
- More relaxed timeframes on Scope 3 emissions reporting. SB 219 indicates that firms will be required to disclose their Scope 3 emissions in 2027, but on a schedule to be determined by CARB. By contrast, SB 253 initially required Scope 3 emissions to be reported within 180 days of Scope 1 and 2 disclosures.
- Ability for firms to consolidate reports at the parent company. Unlike the prior legislation, SB 219 gives firms the option to consolidate these reports at the parent company level, which could reduce the financial burden for reporting firms.
By passing SB 219, the California Senate and Governor Newsom are signalling that they are pushing ahead with an aggressive climate-related agenda, in the face of potential resistance in President Trump’s upcoming second term. Firms that have not yet prepared for these regulations will need to scramble to comply over 2025. The first step? Working to establish appropriate internal governance structures and data collection processes. Then, decision-makers should consider investment in both software and services to ease the reporting burden.
