New California Climate Law (SB 253 & 261)
Learn the basics about the groundbreaking new legislation
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Listen up, large companies!
Both SB 253 and SB 261 stand to elevate climate action and greatly impact the food and consumer goods industries, for both large companies and their suppliers. Governor Newsom signed the bill on October 7th, 2023, making California the first state in the nation to establish emissions disclosure requirements on large companies.
Here's what went into law on October 14th:
SB 253
This bill mandates that companies with a revenue of at least $1B per year doing business in California disclose their greenhouse gas emissions annually starting in 2026. The bill demands greater transparency from large companies (approx. 5400), ensuring that they report their direct emissions (Scope 1), indirect emissions from purchased electricity (Scope 2), and emissions from their broader supply chain (Scope 3).
The Scopes 1 and 2 disclosure will be mandatory by 2026 on a date to be determined by the California Air Resources Board (CARB) and Scope 3 disclosure will be mandatory by 2027 on a date to be determined by the board. Scopes 1, 2, and 3 emissions reporting to CARB will be required annually thereafter. The addition of Scope 3 is noteworthy here as it makes up the largest portion (avg 90%) of a food or consumer goods company’s total emissions and is the most complex set of factors to measure.
We expect far-reaching impacts of this bill across the globe and supply chain. Due to the interconnectedness of the food and consumer goods industry, compliance with the reporting requirements by large enterprises will require participation and emissions reporting of upstream and downstream suppliers, processing partners, co-manufacturers, etc to the reporting companies.
SB 261
This bill focuses on the mitigation of climate-related financial risks, emphasizing the need for companies to be prepared for the financial implications of the climate crisis and to transparently report risks to investors, shareholders, employees, and other stakeholders.
This bill will require any company with total revenue above $500M annually that does business in California to submit a climate-related risk report to the CARB. Reporting will be mandatory by January 1, 2026 and will be required every other year. The financial risk report can be consolidated at the parent company level, so subsidiary companies do not need to prepare a separate climate-related financial risk report.
Beginning on or before January 1, 2026, reporting companies will need to post a publicly accessible disclosure report on their website.
We are here for you.
Planet FWD firmly stands behind the California Climate bills and we agree that investors, consumers, and other stakeholders deserve transparency from companies regarding their greenhouse gas (GHG) emissions to inform decision-making. The signing of these laws is a huge step in the right direction for climate transparency and decarbonization. We also acknowledge that widespread adoption will be challenging and will require close partnerships and collaboration across the supply chain.
Planet FWD is uniquely positioned to partner with global food companies and their suppliers to meet SB 253 and SB 261 requirements. Planet FWD helps companies calculate and report their greenhouse gas emissions, uncover the drivers of their supply chain emissions using our lifecycle database of thousands of ingredients and materials, and reduce their Scope 3 emissions. In addition, Planet FWD is positioned to enable third-party verification of results to meet the requirements of this climate legislation. In collaboration, we can get ahead of climate regulation and ensure the industry has the insights it needs to satisfy all disclosure requirements.
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