Climate legislation

California Climate Policy 2024: What Every Company Should Know

California recently passed new climate laws requiring companies doing business in California to disclose their Scope 1, 2, and 3 greenhouse gas emissions and/or climate-related financial risk information, with first reports due January 1, 2026. Here’s what companies need to know.

California SB253 and SB261 Climate Laws Launched in 2023
Not sure which disclosure requirements apply to you?

What are the California climate policies for 2024?

In October 2023, California SB 253 and SB 261 became law as the Climate Corporate Data Accountability Act (CCDAA) and the Climate-Related Financial Risk Act (CRFRA), respectively. According to the three Senators who introduced the legislation—Sen. Scott Wiener (D-San Francisco), Senator Lena Gonzalez (D-Long Beach), Senator Henry Stern (D-Los Angeles)—the bills work together to “improve transparency, standardize disclosures, align public investments with climate goals, and raise the bar on corporate action to address the climate crisis.”

FAQs about California climate laws

The acts have two different thresholds: while both companies impact US companies that do business in California, CCDAA (formerly SB 253) impacts companies with more than $1 billion in total annual revenue while CRFRA (formerly SB 261) impacts those with more than $500 million.

How to prepare for California's new climate policies in 2024

Check your reporting obligations


Understand your obligations

Before you start collecting data, make sure you understand your company’s obligations: what data you’ll need to disclose, how you’ll need to format and publish it, and what types of verification or assurance you need.

Gross emissions over time


Gather your data

Most companies will need to gather data from many different internal stakeholders, as well as external parties—then reformat and validate the data before reporting. With 60+ pre-built integrations and built-in project management tools, Watershed speeds and streamlines this process so you’ll be done in a fraction of the time.

Review and finalize data


Verify your numbers

You’ve gathered the data; now how do you ensure it’s accurate? Watershed automatically scans your data to uncover gaps and anomalies to ensure you’re filing the audit-grade disclosures regulators require.

Prepare for reporting


Prepare your report

Once your data is ready, Watershed guides you through the process of formatting it to align with the right regulatory requirements, such as TCFD. We’ll also benchmark your disclosures against more than 10,000 other companies so you know ahead of time where you stand.

Taskforce on climate-related financial disclosures


Submit disclosures

When you’re ready to file your disclosures, double-check on the format and location where you’re required to file. Some regulators call for publishing ESG data as part of existing financial reports, while others may require standalone reports published on your website or a government or agency portal.

Carbon footprint


Take action

When it comes to sustainability disclosure, reporting is just the beginning. Many oversight bodies also require companies to set targets and show meaningful progress toward reducing greenhouse gas emissions and mitigating climate risk.

Watershed helps leading companies measure, report, and act on sustainability data.

Learn how we can help you meet climate disclosure requirements in California—and beyond.

California climate policy requirements timeline

March 2022

US Securities & Exchange Commission proposes new rules requiring all publicly listed companies to disclose carbon emissions, climate-related risk, and their plans for reducing emissions and mitigating risk

January 2023

California Senators Scott Wiener (D-San Francisco), Senator Lena Gonzalez (D-Long Beach), Senator Henry Stern (D-Los Angeles) introduce the Climate Accountability Package, which includes SB 252, SB 253, and SB 261

September 2023

California State Assembly passes SB 253 and SB 261

October 2023

California Gov. Gavin Newsom signs SB 253 and SB 261 into law

January 2025

Companies need data collection set up to be able to report on 2025 data in 2026

January 2026

Companies subject to the California bills must begin disclosing greenhouse gas emissions and climate-related risks

Climate-related risk can be hard to understand—and even harder to quantify. In this brief explainer, we’ll help you navigate the different definitions of climate-related risks so you can make an informed decision about what you’ll need to report.

Illustration of windmill and power plant smoke stack balancing on a plank

Transition risks
Risks related to the transition to a lower-carbon economy

Physical risks
Risks related to the physical impacts of climate change

Transition risks include:

  • Policy risk, such as carbon pricing mechanisms or shifting energy use toward low-emission sources
  • Legal risk, such as litigation brought for failing to mitigate or adapt to climate change
  • Technology risk, such as the costs incurred when technological advances disrupt current practices or alter the competitive landscape
  • Market risk, such as shifts in supply or demand due to the transition to a lower-carbon economy
  • Reputational risk, such as the brand implications of a company’s being perceived as environmentally irresponsible

According to the Task Force on Climate-related Financial Disclosures (TCFD), physical risks can impact organizations both directly—such as damaging assets or disrupting supply chains—and indirectly, by creating economic uncertainty or resource scarcity that impacts an organization's financial performance. Physical risks fall into two main categories:

  • Acute risk, driven by specific events such as hurricanes, wildfires, or flooding
  • Chronic risk, driven by the longer-term effects of climate change, such as rising sea levels or chronic high temperatures

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