California governor signs climate disclosure bills

California Gov. Gavin Newsom on Saturday signed into law two climate bills that require businesses to make significant climate-related disclosures but raised concerns about implementation deadlines and the financial impact on businesses.

In two statements issued accompanying the signed laws, Gov. Newsom instructed the California Air Resources Board to closely monitor the cost impacts and to make recommendations to streamline both programs.

The governor said he looked forward to working with the legislature on these modifications.

The Climate Corporate Data Accountability Act (S.B. 253) requires companies doing business in California with annual revenues of at least $1 billion, to disclose Scope 1, Scope 2 and Scope 3 greenhouse gas emissions. Annual reporting of Scope 1 and 2 emissions would take effect in 2026, and in 2027 for Scope 3 emissions.

The Climate-Related Financial Risk Act (S.B. 261) requires companies doing business in California with annual revenues of at least $500 million to disclose climate-related risks beginning in 2026.

This policy will illustrate “the real risks of climate change for businesses operating in California and will encourage them to adopt practices that seek to minimize and avoid these risks,” Gov. Newsom said in a statement.

Unlike proposed U.S. Securities and Exchange Commission climate disclosure rules, the laws apply to both publicly traded and private companies. Legal challenges are expected, according to experts.