On October 07, 2023, Governor Gavin Newsom signed two bills related to climate legislation into law. One of the bills was SB 253, also known as the Climate Corporate Data Accountability Act (CCDAA).
What is the CCDAA?
Under the CCDAA, companies doing business in California are required to disclose their scope 1, 2 and 3 emissions.
The various scopes are different categories of greenhouse gas emissions that a business or organization outputs. They are:
- Scope 1: This refers to the direct emissions a company produces as it operates the assets it owns or controls. It can be the emissions made by a factory producing products, the vehicles used by the company, the energy expended to power the company’s computers, and so on.
- Scope 2: This is the “indirect” emissions indirectly released from electricity purchased by the company.
- Scope 3: This comprises all indirect emissions produced by the company’s supply chain.
Reporting these emissions data starts in 2026. However, companies won’t be required to report Scope 3 emissions until 2027.
Which companies must comply?
SB 253 affects all public and private companies doing business in California with annual revenue of over $1 billion. That’s more than 5,000 companies in the state.
What happens if companies violate?
The CCDAA gives authority to the State Board to launch civil actions against companies that violate the law through misstatements in the reports. Offenders must pay up to $500,000 in fines per the rules.
In summary, the CCDAA will require companies in California to make emissions disclosures. Violators will pay hundreds of thousands of dollars if they misrepresent their reports. Companies might want to consult with a legal professional experienced in environmental law to minimize their environmental liability. A legal professional can also help to ensure compliance with the new bill.