Skip to content

menu

Reed Smith LLP logo
HomeAboutOur ServicesSubscribeTopicsContact
Search
Close

EHS Law Insights

Comment and analysis by Reed Smith lawyers on the latest developments in Environmental Health & Safety

Full Value Chain Emission Disclosures – A California ESG Bill Resurrected

By Todd O. Maiden, Sara M. Eddy & Eric Schmoll on 28 March 2023
Print:
Email this postTweet this postLike this postShare this post on LinkedIn

The California Climate Corporate Data Accountability Act (“SB 253”) was recently introduced and passed the state’s Senate Environmental Quality Committee on March 15, 2023. SB 253 aims to broaden Environmental, Social, and Governance (“ESG”) state disclosure requirements, targeting high earning companies. A similar emissions disclosure bill, the Climate Corporate Accountability Act, failed to pass the Assembly last year by just one vote. Proponents of SB 253 feel that the legislation has a higher likelihood of passing this year.

SB 253 would mandate all companies earning at least $1 billion in annual revenue and doing business in California to disclose:

  • Direct emissions (Scope 1);
  • Indirect emissions, like those from the generation of electricity consumed by the company (Scope 2); and
  • All other indirect emissions not accounted for in Scope 2 (Scope 3).

Scope 3 emissions are more controversial in that they include “full value chain emissions,” which stem from entities not owned or controlled by the reporting company, making them more difficult to calculate. The current U.S. Securities and Exchange Commission (“SEC”) proposed rules (released in March of 2022 and not yet finalized) only mandate the disclosure of Scope 3 emissions where material or where the company has set a greenhouse gas emissions reduction target that includes Scope 3 emissions. However, SB 253 would mandate Scope 3 emissions disclosures for all companies meeting the revenue threshold in California, regardless of their materiality or the company’s goals.

California operates one of the world’s largest economies with nearly every U.S. corporation conducting business within its borders. Even if the SEC does not fully mandate Scope 3 emissions disclosures, most companies will still be obligated to report to the state of California. If passed, SB 253 reporting obligations would begin in 2026. Scope 3 emissions disclosures must be made no later than 180 days from the date Scope 1 and Scope 2 emissions information is provided. Disclosures would be made annually to the California Air Resources Board, which would manage the information in a public database.

We are monitoring SB 253 as it proceeds through the state legislature, along with other ESG initiatives across the globe and U.S. Future updates will be provided as we analyze SB 253’s significance for California businesses and other stakeholders.

Posted in Environmental, Social & Governance
Tags: California, climate change, disclosure, Emissions, Environmental, ESG
Photo of Todd O. Maiden Todd O. Maiden
Read more about Todd O. Maiden
Photo of Sara M. Eddy Sara M. Eddy
Read more about Sara M. Eddy
Photo of Eric Schmoll Eric Schmoll
Read more about Eric Schmoll
Related Posts
RMP and PSM highly hazardous chemical regulations are back on the agenda
May 27, 2022
Boron: Increase in domestic production for important mineral on the horizon
April 28, 2022
Scope 1 and 2 Emissions Attestation Requirements under SEC’s Proposed Climate Disclosure Rule
March 25, 2022

Subscribe to EHS Law Insights

Updates direct to your inbox
Subscribe by Email

EHS Law Insights

View Our Network of Blogs
Published by
Reed Smith LLP logo
RSS Twitter Facebook LinkedIn YouTube
Privacy PolicyDisclaimer

About Our Firm

Reed Smith represents many of the world’s leading companies in complex litigation and other high-stakes disputes, cross-border and other strategic transactions, and crucial regulatory matters. With lawyers from coast-to-coast in the United States, as well as in Europe, Asia and the Middle East, Reed Smith is known for its experience across a broad array of industry sectors.

Read More...

Topics

Archives

Copyright © 2023, Reed Smith LLP. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo