California Governor Newsom has signed two first-in-the-nation laws dealing with climate change risks and carbon emissions.

The first, Senate Bill 261 will require, among other things, businesses with total annual revenues over $500 million and operating in California, beginning January 1, 2026, and biennially thereafter, to develop a report on their climate-related financial risks.

In his signing statement, the Governor stated that the policy illustrates the real risks of climate change for businesses operating in California and will encourage them to adopt practices that seek to minimize and avoid these risks. However, the implementation deadlines falls short in providing the California Air Resources Board (CARB) with sufficient time to adequately carry out the requirements in this bill. The Governor directed his Administration to work with the bill's author and the Legislature next year to address this issue. He is also concerned about the overall financial impact of this bill on businesses, and instructed CARB to closely monitor the cost impacts as it implements this new bill and to make recommendations to streamline the program.

The second bill, Senate Bill 253 will require, among other things, the California Air Resources Board (CARB), by January 1, 2025, to develop and adopt regulations requiring businesses with total annual revenues over $1 billion and operating in California to disclose their greenhouse gas emissions to an emissions reporting organization. The Governor stated that this policy demonstrates California's continued leadership with bold responses to the climate crisis, turning information transparency into climate action. The Governor indicated though that the implementation deadlines in this bill are likely infeasible, and the reporting protocol specified could result in inconsistent reporting across businesses subject to the measure. Therefore, he is directing his Administration to work with the bill's author and the Legislature next year to address these issues.

Additionally, he noted he is concerned about the overall financial impact of this bill on businesses, and so instructed CARB to closely monitor the cost impact as it implements this new bill and to make recommendations to streamline the program.

We are closely monitoring developments with these new California policies and will keep you informed of developments.

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Read "The California Global Warming Solutions Act, SB 253, Approved October 7, 2023" for more detailed information on SB 253.