Here are the top takeaways for companies.

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1. Who is affected by SB 253?

• Under The Climate Corporate Data Accountability Act, or SB 253, billion-dollar companies must report their direct greenhouse gas emissions (Scopes 1 and 2) starting in 2026. This reporting must be verified by a third party, reasonably straightforward, and aligned with the GHG Protocol. Scope 3 reporting isn’t required until 2027, but by 2030, these reporting standards will be further scrutinized for reasonable assurance.

2. What about SB 261?

• Under the Climate-Related Financial Risk Act, or SB 261, half-billion-dollar companies must disclose their climate-related financial risk biennially. Unlike SB 253, this law does not require Scope 1, 2, or 3 disclosures or third-party assessments.

3. Who is CARB?

• The California Air Resources Board (or CARB) is the state’s enforcement agency tasked with enforcing these new climate laws.

4. How does a company disclose under SB 261?

• Companies should disclose their climate-related financial risks in line with the Task Force on Climate-Related Financial Disclosures (TCFD) framework, or perhaps more recently, the IFRS S2 frameworks (which replaced the TCFD in 2023).

5. What is made public?

• Both SB 253 and SB 261 require emissions reporting and climate-related financial risks to be publicly disclosed on companies’ websites. This transparency will provide consumers – not just lawmakers and financers – with insights into a company’s climate commitments.

6. Is there any flexibility?

• SB 219 (which extends the original reporting deadline) provides companies with some flexibility, allowing them to finalize their compliance efforts between January 1, 2025, and July 1, 2025. Additionally, there might be some flexibility in the initial timeline of their Scope 3 reporting.

7. Who is exempt? 

• SB 219 allows parent companies to consolidate the reports of their subsidiaries, reducing the reporting burden on sub-brands.

8. Is this absolute? 

• Despite legal pushback, which is common with landmark legislation, California is committed to implementing SB 253 and SB 261.

9. What does this mean for fashion? 

• Approximately 90 of the world’s largest apparel and textile groups would fall within the scope of the Climate Accountability Package, affecting thousands of brands and their suppliers.

10. What is the implication of these laws for the rest of the U.S.? 

• California’s climate laws set a new standard for corporate transparency and accountability, potentially influencing other states to follow suit. Some of the reporting requirements, particularly for Scope 3 emissions, exceed the SEC’s climate risk disclosure rule and the current practices of most U.S. public companies.

11. What is Cascale doing for this? 

• “California’s new regulations, SB 253 and SB 261, will challenge companies to improve visibility into not only their own – but extended supply chains. It’s imperative that companies prioritize data collection, reporting, and climate risk assessment efforts. We understand the challenge in undertaking this on their own, which is why Cascale and Worldly are focusing efforts on how the Higg Index tools, our policy and public affairs expertise, and guidance can be a necessary complement for businesses looking to get ahead of regulatory demands,” said Elisabeth von Reitzenstein, senior director of policy and public affairs at Cascale. 

12. What is Worldly doing for this? 

• “The California climate laws are part of the growing global pattern of holding businesses accountable for their environmental impacts. To understand their impact reduction opportunities and report Scope 3 emissions more accurately, businesses need primary data from across their entire supply chains. Worldly offers solutions like the Product Impact Calculator and Cascale’s Higg Index to support businesses in navigating these new regulations,” said JR Siegel, VP of Sustainability at Worldly.