February 23, 2024

California’s New Sustainability Reporting Requirements

Green Badger's Kristin Brubaker headshot
Kristin Brubaker, Education Manager at Green Badger

In late 2023, California entered a new era of corporate responsibility with the signing of SB 253 and SB 261. These are two major components of the state’s Climate Accountability Package. California General Contractors must follow laws on carbon emissions and sustainability reporting practices if they meet criteria outlined in this blog.

California SB 253: The Climate Corporate Data Accountability Act

What companies are impacted by SB 253? Any U.S. company with annual revenues exceeding $1 billion that operates within California fall under SB 253’s scope. This encompasses over 5,000 businesses, including companies in the construction sector.

What companies must do to comply with SB 253. Companies that meet the requirements described above will have to publicly disclose their Scope 1, Scope 2, and Scope 3 carbon emissions and will be evaluated by an independent 3rd party reviewer approved by the California Aire Resources Board (CARB). As of February 2024, companies will need to start disclosing Scope 1 and Scope 2 carbon emissions in 2026 and Scope 3 in 2027. However, there may be an update to these dates sometime in 2024. 

What happens if a company doesn’t comply with SB 253? Failure to adhere to SB 253 could lead to penalties of up to $500,000, emphasizing the importance of timely and accurate reporting of carbon emissions.

California SB 261: The Climate-Related Financial Risk Act

What companies are impacted by SB 261? Corporations, partnerships, LLCs, or other business entities in any US state with total annual revenues over $500 million that operate in California.

What companies must do to comply with SB 261. Companies that meet the requirements described above will have to publicly disclose:

  • The organizations’ climate-related financial risk in alignment with the Task Force on Climate-Related Financial Disclosures (TFCD), which includes:
  • Corporate governance on climate-related opportunities and risks
  • The impact of climate-related opportunities and risks on the organization’s business, strategy, and finances.
  • The organizations’ process to evaluate climate-related risks
  • The metrics used to evaluate climate-related opportunities and risks
  • Initiates to reduce climate-related financial risks
  • Verification of reported carbon emissions by a third party

As of February 2024, companies will need to submit their first sustainability report by January 1, 2026. They will need to resubmit every two years. All sustainability reports must be published on each company’s website.

What happens if a company doesn’t comply with SB 261? SB 261 says companies must publish a report on their website or face fines up to $50,000 per year. SB 261 also requires companies to post a report on their website. 

Failure to meet these standards could result in a fine up to $50,000 per year. The amount of the fine is based on the company’s past compliance and efforts to follow the rules in good faith. These penalties reinforce the necessity of thorough and transparent sustainability excellence.

California’s Climate Accountability Package signals a paradigm shift in corporate accountability, and proactive adaptation is key. Because many general contracting companies will be impacted by SB 253 and SB 261, using technology to track all metrics will be critical for reporting. Enter Green Badger’s ESG reporting platform, tailored to assist contractors in monitoring and reporting their emissions and environmental impacts effectively.

To explore how Green Badger can simplify your sustainability efforts, schedule a demo with Kristin Brubaker, Education Manager, to explore how our platform can empower your sustainability initiatives and propel your business forward in a rapidly changing landscape.

With Green Badger, compliance becomes not just a requirement, but a strategic advantage. Schedule your demo today and embark on the path to sustainability goals.

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