California has recently passed two landmark bills, Senate Bill 253 (SB 253) and Senate Bill 261 (SB 261), collectively forming the “Climate Accountability Package.” These bills introduce extensive climate-related disclosure requirements, affecting numerous U.S. public and private companies operating in the state. This blog provides an overview of who these legislations apply to and what businesses need to know about their obligations, aligning with global trends towards more stringent climate reporting requirements and reflecting the growing urgency of addressing climate-related financial risks.

On October 7, 2023, California governor Gavin Newsom signed into law Senate Bill 253 (“SB 253”) and Senate Bill 261 (“SB 261”), which together comprise the core of California’s “Climate Accountability Package.” Although the laws may be modified by future legislation, as they currently stand, these laws impose extensive new climate-related disclosure obligations on thousands of public and private U.S. companies with operations in California.

In a year marked by 23 separate billion-dollar disasters in the United States, including the recent landfall of Hurricane Idalia in western Florida the devastating wildfires in Maui, these bills underscore a growing acknowledgment of the need to comprehend climate-related risks and expedite effective mitigation.

These bills are a massive development in climate change disclosure and are, as I said, the first of their kind, but they don’t exist in a vacuum. While these bills primarily target U.S. companies operating within California, they are part of a larger global trend towards enacting stringent climate reporting requirements for businesses. This movement includes the SEC’s proposed climate disclosure rule in the United States and the Corporate Sustainability Reporting Directive (CSRD) in the European Union.

And back in 2021, President Biden instructed his Administration to craft a strategy for addressing climate-related financial risk in In Executive Order 14030, titled “Executive Order on Climate-Related Financial Risk”. The intent here was to promote “consistent, clear, intelligible, comparable, and accurate disclosure” of climate-related financial risks.

Additionally, the 2023 Climate Change Synthesis Report from the Intergovernmental Panel on Climate Change emphasizes the urgency of action as climate risks become increasingly severe, intricate, and challenging to manage.

All of that is to say that governments and investors alike are finally clamoring for clear, comparable climate disclosure. So- what are these specific pieces of legislation and what do you need to do about it?

California

Similar to the EU’s approach, California has adopted an inclusive stance when it comes to the companies affected. Meaning that instead of solely targeting businesses headquartered or primarily operating in California, the state will mandate climate disclosures from any company conducting business within its borders.

And for anyone thinking these bills might not land- Last week during an appearance at Climate Week NYC, Governor Newsom told the audience emphatically, “of course I will sign those bills.” When he does, many more companies will be required to improve the accuracy, completeness and rigor of their GHG reporting and climate risk disclosures.

What does SB 253 require?

SB 253, known as the Climate Corporate Data Accountability Act mandates that companies with annual revenues exceeding $1 billion must disclose their pollution data and their Scope 1, 2 and 3 greenhouse gas (GHG) emissions. This means that we’re talking about carbon accounting. Companies will be expected to conduct and then disclose the results of a carbon accounting assessment.

When will this take effect?

This law obliges the California Air Resources Board to create regulations by 2025. Starting in 2026, these companies will be compelled to publicly disclose their greenhouse gas emissions from both their operations and electricity consumption. Furthermore, they must also reveal the extent of pollution generated by their supply chains and customers by 2027.

Specifically, companies will have to disclose the following:

• Scope 1 and Scope 2 greenhouse gas emissions starting in 2026 and annually thereafter.
• Scope 3 greenhouse gas emissions starting in 2027 based on 2026 data and annually thereafter.
• Make available, and update at least annually, the emissions of greenhouse gases, criteria pollutants, and toxic air contaminants for each facility that reports to the California Air Resources Board (CARB).
• Demonstrate independent verification by a 3rd party auditor.

Over 5,000 companies doing business in California will be required to make disclosures.

What does SB 261 require?

Senate Bill 261 (SB 261) would mandate that companies generating annual revenues exceeding $500 million produce biennial reports. These reports should disclose financial risks associated with climate change and outline strategies adopted for risk mitigation and adaptation.

In addition to furnishing these climate-related financial risk reports to the California State Air Resources Board, affected companies must also make these reports accessible on their respective websites. Companies under the jurisdiction of the California Department of Insurance or engaged in insurance activities in other states would be exempt.

It’s definitely worth noting that SB 261 sets a lower revenue threshold ($500 million) compared to SB 253 (>$1 billion) so it is expected to cover a larger set of companies. Consequently, certain companies not obligated to report emissions under SB 253 would still need to fulfill reporting requirements for climate-related financial risk under SB 261.

What do you need to think about now?

It is really exciting to see regulation finally coming to fruition over climate change-related disclosures. It’s the only way we can start to truly compare performance and understand feasibility of goals and targets, let alone track progress against them.

Greenplaces can help customers prepare for these disclosure requirements from start to finish, regardless of where you are in your sustainability journey. If you’ve never collected a sustainability metric or if you’ve been reporting to a leading sustainability framework for years, we can guide you through the process and make sure that you understand what compliance looks like for your company specifically and are preparing now for the future of sustainability.

Step one would be to get a handle on your carbon footprint and we’ve got information listed on this page about how to get in touch with us to start that process.

Get in touch

hello@greenplaces.com

Now more than ever, consumers are considering sustainability practices in purchase decisions. In fact, a recent study by The Economist observed a 71% increase in sustainability-related online searches over the past 5 years. Highlighting your corporate sustainability initiatives and eco-friendly consumer offerings has multiple benefits: it improves your rankings, drives traffic and business to your online and offline channels, and positions your brand as a member of the climate-conscious community. It is essential for modern brands to implement sustainable business practices and readily share that information with consumers – via 3rd party search, digital touchpoints, and your own websites – so they can make greener, more informed choices.

But, accessing and understanding sustainability data is hard, for large, complex enterprises and boutique brands alike. Data used to calculate carbon emissions lives in disparate platforms that were never meant to sync, and interpreting the data according to accepted standards requires highly specialized talent with deep expertise in carbon accounting and sustainability practices. The world’s biggest companies have large teams and extensive resources devoted to sustainability, while the majority of us face ever-increasing business demands and don’t know where or how to start with sustainability and green data.

That’s why we’re excited to announce that Greenplaces now has an integration with Yext, a leading open and composable Digital Experience Platform that enables users to build digital experiences, and manage accurate information across any channel. With this addition to the Yext App Directory, users can leverage Greenplaces as the all-in-one sustainability platform that empowers businesses to easily meet their goals – from carbon reporting, to emission reductions, to measurable ROI. For Greenplaces and Yext clients, utilizing existing business data (across all locations) to inform consumers about your company’s sustainability practices and share green options is now easier than ever.

Two-way sustainability benefits: 

• Automatically sync location data to Greenplaces, for an accelerated launch of your sustainability program: Push existing attributes of your locations stored in Yext Content to Greenplaces via an API. This automated feed of location data to Greenplaces makes launching and managing your sustainability initiatives and emissions tracking easier and more accurate.
• Power sustainability on the Yext platform, for greener search results: Automatically pull green business operations data from Greenplaces into Yext Content, to be pushed to Listings and Pages endpoints enhancing search results and consumer perception. 

Combining the power of Yext, Greenplaces, and companies like yours, we can provide consumers with the eco-friendly information they seek to make decisions that are good for business and the planet.

Get Started

If you are already a Yext customer, follow these instructions to activate the Greenplaces app in your account.

If you would like to learn more about Greenplaces’ all-in-one sustainability platform, request a demo here. 

In addition to the App Directory partnership, Yext partners with Greenplaces to manage and meet its own sustainability goals. Yext and Greenplaces worked together to measure Yext’s footprint (total carbon emissions produced from global operations), adopt practices to reduce climate impact, and engage key stakeholders along the way. For more information, read this article about Yext’s commitment to sustainability.