California's new "Climate Accountability Package" is set to expedite the timeline for U.S., and possibly global, emissions and climate-related financial risk reporting. This acceleration surpasses the expectations set by other reporting regimes applicable to U.S. companies. As of yet it remains uncertain whether reporting under one set of requirements would satisfy reporting obligations under other applicable regimes.
Implementing regulations in California may also change, possibly significantly, the requirements of the Climate Accountability Package. Meanwhile, the SEC has yet to finalize its climate disclosure rules which it originally proposed in March 2022. Until there is more clarity, US companies who conduct business in California and Europe may find themselves subject to several disclosure regimes.
Freshfields has published a full briefing on this topic, where we discuss California’s new “Climate Accountability Package,” including the recently signed Climate Corporate Data Accountability Act (SB 253) and the Greenhouse Gases: Climate-Related Financial Risk law (SB 261). SB 253 will require disclosure of Scope 1, 2 and 3 greenhouse gas emissions and SB 261 will require companies to prepare a biennial climate-related financial risk report. We provide a detailed overview of the new requirements of the California Climate Accountability Package, as well as the European Sustainability Reporting Standards, the ISSB standards, and the SEC proposal on climate-related disclosures. This comparison also includes a set of key observations regarding the new California climate laws and the ESRS requirements.