California Climate Acts SB-261 & SB-253: What does it mean for your business?
On October 14th, both SB-261 and SB-253 were signed into California law. By our estimates, there are over 15,000 businesses in the state that will be immediately and directly impacted, and many others that will need to consider the changes.
To help navigate how your business can be impacted, we've created a brief summary of the new legislation and a few ways to prepare.
Summary of the Proposals:
Both SB-261 and SB-253 are California legislative measures aimed at increasing transparency and accountability regarding climate-related risks and greenhouse gas emissions for large businesses operating in the state. SB-261 focuses on the financial risks associated with climate change, while SB-253 centers on the disclosure of a company's GHG emissions.
What Changed:
SB-261: Introduces requirements for businesses to disclose their climate-related financial risks and how they plan to address them.
SB-253: Mandates the annual disclosure of all three scopes of GHG emissions by large companies.
How Businesses Will Be Affected:
- Comprehensive Reporting: Businesses will now have to provide detailed reports on both their climate-related financial risks and their GHG emissions.
- Financial and Operational Transparency: There will be a need for a more transparent presentation of how climate change may affect financial outcomes and the specifics of a company's emissions.
- Administrative Load: Both laws will result in increased administrative efforts to comply with reporting, verification, and disclosure requirements.
- Financial Burden: The requirement to pay fees for both SB-261 and SB-253, along with the potential for penalties, will have financial implications for the businesses.
- Third-Party Engagement: Companies must engage with independent third-party assurance providers to verify their disclosures under SB-253.
- Public Disclosure: The requirement to make these reports public may affect the reputation and stakeholder relationships of a company.
- Strategic Adjustments: Companies may need to develop or improve strategies to mitigate both financial risks related to climate change and to reduce their GHG emissions.
Recommendations for Businesses:
Start Early:
Begin preparations to comply with these reporting requirements now.
mplement Management Systems:
Invest in systems or services for managing climate risks and GHG emissions reporting.
Engage Stakeholders:
Communicate clearly with stakeholders about how the business is managing climate risks and emissions.
Explore Reduction Measures:
Look for opportunities to reduce emissions through sustainable business practices.
Monitor Regulatory Landscape:
Stay updated on any changes to reporting standards and regulations.
In Conclusion
By adhering to new regulatory requirements, you will not only avoid compliance issues but you have a chance to position your business as a leader in sustainability and corporate responsibility.
If you have any issues or questions regarding the chances, the Tempus team can always assist you with your specific business concerns.
Reach out today for a sustainability consultation!