Sustainability & Diversity

California's SB 253 and SB 261: Prep for Climate Accountability

Companies with revenue exceeding 1 billion USD are expected to report their 2025 direct emissions by 2026, but also their Scope 3 emissions from 2026 onwards according to SB 253. Are you ready?

Tell Me More

Updated: Oct 5, 2023

California is pushing towards a greener future with its latest legislative move. With the introduction of the Climate Accountability Package, the Golden State sets a benchmark for companies to advance towards sustainable development.  

In this blog, we'll cover the basic requirements of SB 253 and SB 261 and show how you can prepare with carbon analytics.

 

Want to dig in to sustainable procurement? Read our full guide to get started.


What Does SB 253 Require from Your Emissions Reporting? 

The Climate Corporate Data Accountability Act, also known as Senate Bill 253, mandates numerous public and private U.S. companies operating in California to disclose their annual greenhouse gas emissions publicly. 

Companies with revenue exceeding 1 billion USD are expected to report their 2025 direct emissions by 2026, but also their Scope 3 emissions from 2026 onwards.

Scope 3 emphasizes a broader footprint from indirect emissions that come from the production and consumption of goods and services. Given that the supply chain accounts for 80% of a company’s emissions, this will drive them toward a more profound sustainability commitment. 

The tight timeline set for reporting underscores the pressing need for companies to establish their emissions data collection processes without delay. Before the end of 2023, organizations must have a plan for gathering auditable emissions data. Companies proactively adapting to this shift stand to lead in an increasingly green corporate world. 

 

How is it done? 

Companies are required to submit their emissions data through a dedicated digital platform, ensuring accessibility for everyone, from residents to global investors. They must also engage independent auditors to confirm the accuracy of their reporting.

Additionally, all submissions must align with the Greenhouse Gas Protocol (often called the GHG Protocol), the widely known standard for calculating emissions. 

The California Air Resources Board plays an overseeing role, ensuring that data is verified. Non-compliance can result in penalties by the state's attorney general and potential backlash from stakeholders and investors. 

Here’s a short video on how to tackle Scope 3 emissions!  

 

What Does SB 261 Mean for Financial Risk Management? 

The Climate-Related Financial Risk Act, or SB 261, crafts a roadmap for California's businesses to merge resilience with sustainable growth. By January 1, 2026, companies operating in the state with revenues exceeding $500 million must publicly issue biennial reports highlighting financial risks due to climate change and their counteractive strategies. 

At the heart of this act is the ambition to strengthen businesses and communities against environmental threats. Following global standards, the reports should align with the Task Force on Climate-Related Financial Disclosures (TFCD) guidelines. Any claim regarding GHG emissions or mitigation efforts mandates third-party validation. 

 

How to prepare for SB 253 and SB 261

When it comes to emission calculations, data quality is something many companies are worried about. When calculating the carbon emissions of a material, category, or service, several different methods or approaches can be used – depending on the data and information available.   

Companies have enough data to start creating impact:

  • Begin with a spend-based analysis to understand emissions from different business units.

  • Perform a quantity-based approach for specific categories and materials if they have additional data points available, like units of measurement.

  • Finally, utilize supplier-specific factors if these are available from the suppliers.   

The GHG Protocol endorses this hybrid approach that enables a holistic view of a company’s carbon footprint.   

The push for sustainability in California is an opportunity for businesses to develop their global impact. Through carbon analytics, companies have a tool that enables informed, strategic decisions. These analytics allow firms to measure, track, and reduce their carbon footprint, turning an obligation into an asset. 

 

How Sievo can help

As emissions solidify their role as the new corporate currency, we're here to guide businesses in leveraging this to their advantage, ensuring they thrive in an age of sustainability-driven success.

Sievo CO2 Analytics empowers businesses in this journey, offering a comprehensive solution that helps them navigate the demands of the evolving legislative landscape and harness the opportunities that come with it.  

Contact us and learn more about how Sievo CO2 Analytics can help you prepare for reporting under the Climate Accountability Package. 

 

Ilona Kivimäki

Ilona has vast experience working with sustainability and product development in early-stage tech companies. She works with Sievo CO2 Analytics solution to help companies worldwide measure and reduce carbon emissions to achieve the Net Zero target.

Sustainable Procurement Playbook

Turn your sustainability goals into an action plan with this playbook. Walk the talk of sustainable procurement.