All eyes are on California as we patiently await the outcome of the numerous challenges to the U.S. Securities and Exchange Commission's Climate-Related Disclosure Rules.

In October 2023, California Gov. Gavin Newsom signed into law Senate Bill 253 (SB 253), which will require companies with annual revenues exceeding $1 billion to disclose their Scope 1, 2, and 3 greenhouse gas (GHG) emissions on a phased-in timeline beginning in 2026.

Governor Newsom previously called the implementation deadlines for SB 253 likely infeasible and indicated when signing the bills last year that he would seek changes. In July of 2024, Newsom proposed amendments to the laws that would delay reporting of Scope 1 and 2 GHG emissions until 2028 and Scope 3 GHG emissions until 2029.

News of the delay did not come as a complete surprise given that the California Air Resources Board must finalize regulations by January 1, 2025, but have yet to begin formally drafting the regulations specifying how the disclosure rules will work. The bill’s author, state Senator Scott Wiener (D), has opposed a delay in reporting.

The challenge of meeting the statutory timeline established by SB 253 has now been called into question. On August 6, Carbon Accountable, a climate data initiative dedicated to corporate transparency in greenhouse gas emissions reporting, released “CA SB 253: A Regulations Roadmap." The document offers a detailed guide for achieving on-schedule implementation of SB 253. The guide identifies key policy principles and provides model regulations based on the GHG Protocol Standard. It also seeks to minimize compliance burdens by allowing for multiple reporting formats and simplifying assurance requirements.

Proponents of SB 253 hope the model regulations will provide a roadmap for implementing SB 253 on a timely basis and demonstrating how the law should work in practice. We shall see. The law is currently being challenged in court.

"This report clearly shows that the Governor's Office - with its request for a two year delay for implementing the law - grossly overstates the work required by the ARB to develop the necessary regulations and prepare for timely reporting. We are out of time, we have to move with the urgency that the climate crisis demands.”

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