On October 7, 2023, California passed the Climate Corporate Data Accountability Act (CCDAA) and the Climate-Related Financial Risk Act (CRFRA), the most extensive climate disclosure laws in the United States. Now, other major states like Illinois and New York are set to follow suit with their own climate disclosure regulations.
The package is comprised of Senate Bill 253 (CCDAA) and Senate Bill 261 (CRFRA), which were signed into law as a package by Governor Gavin Newsom. These bills impose sweeping sustainability requirements on businesses operating in California which will come into effect in phases over the next several years. SB-253 is primarily concerned with mandating intensive reporting of greenhouse gas (GHG) emissions, both directly and indirectly associated with a company. SB-261 requires disclosure of climate-related financial risks. Both regulations will be administered and enforced by the California Air Resources Board (CARB).
The Climate Corporate Data Accountability Act imposes a slew of sustainability reporting requirements on companies which will come into force soon. Medium to large businesses conducting operations in the United States must be aware of a multitude of upcoming regulations on the federal and statewide levels. Companies must be adequately prepared to disclose their climate data and product-level greenhouse gas emissions. However the calculation and reporting of product-level, scope 3 emissions pose a significant challenge that must be swiftly addressed.
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