California’s Senate Bill 253 (SB 253), also known as the Climate Corporate Data Accountability Act, marks one of the most ambitious state-level climate disclosure requirements in the United States.
For businesses operating in California or even just earning significant revenue from the state, the time to prepare for compliance is now. This blog post explores everything your business needs to know about SB 253, from its key requirements and timelines to practical steps for compliance and the role of ESG software in streamlining your approach.
What is the SB 253? – a recap
SB 253 is a California law passed in 2023 that mandates large businesses to disclose their greenhouse gas (GHG) emissions. It applies to public and private businesses that operate in California and have over $1 billion in annual revenue, regardless of where they are headquartered. The law is part of a wider legislative push to ensure transparency, accountability, and climate action within the private sector. This legislative effort is crucial for tracking and reducing statewide greenhouse gas emissions.
Under SB 253, affected businesses must report their Scope 1, Scope 2, and Scope 3 GHG emissions annually, following the internationally recognised Greenhouse Gas Protocol (GHGP). These reports must also be verified by an independent third party and made publicly accessible as part of the reporting entity’s public disclosure. Non-compliance with the reporting requirements can result in administrative penalties, with fines reaching up to $500,000 per reporting year based on the violator’s compliance history. This level of disclosure makes SB 253 one of the most comprehensive state-led climate laws globally.
The law is enforced by the California Air Resources Board (CARB), which is also responsible for developing implementation rules, assurance standards, and enforcement mechanisms.
It complements another California law, SB 261, which focuses on disclosing climate-related financial risk (more on this in the FAQ section). A
Additionally, the emissions reporting organization plays a critical role in ensuring that businesses properly report their emissions data and obtain necessary assurance engagements. The assurance process involves independent verification of emissions data across different scopes, thereby enhancing accountability and transparency in emissions reporting.
