Updated April 11, 2024
For sustainability managers striving to enhance corporate accountability and transparency, understanding the evolving landscape of U.S. climate disclosure laws is essential.
With regulations like California's SB 253 and SB 261 and the SEC Final Rule, large companies are now required to provide detailed emissions and climate risk reporting.
We´ve summarized the most important laws below to shine a light on these mandates, aiding sustainability managers in navigating compliance, meeting reporting standards, and mitigating risks. We answer the questions below:
• Which companies are effected?
• What are the reporting standards required?
• When are the reporting deadlines due?
• What are the penalties for non-compliance?
By understanding these points, you can enhance your company's sustainability efforts, avoid penalties, and drive impactful change.
US SEC Final Rule: The Enhancement and Standardization of Climate Related Disclosures for Investors | California SB 253: Climate Corporate Data Accountability Act
| California SB 261: Greenhouse Gases; Climate Related Financial Risk
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Status: Enacted March 6, 2024 Voluntarily stayed April 4, 2024, pending review by the US Court of Appeals for the Eighth Circuit | Status: Enacted October 7, 2023
| Status: Enacted October 7, 2023 |
Companies effected: United States public companies, with required disclosures based on registrant category:
[See below for definitions] | Companies effected: United States entities with annual revenue exceeding $1 billion and doing business in California
| Companies effected: United States entities with annual revenue exceeding $500 million and doing business in California |
Emissions Disclosures: Detailed report of Scope 1 and Scope 2 corporate emissions, if material. Scope 3 emissions reporting is omitted. | Emissions Disclosures: Detailed report of Scope 1, Scope 2 and Scope 3 corporate emissions. | Emissions Disclosures: NA |
Other Disclosures:
| Other Disclosures: NA | Other Disclosures: Detailed report on climate related financial risks, and measures it has taken to reduce these risks
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Safe Harbor for Disclosures Safe Harbor works like “forward-looking statements” safe harbor under US securities law and covers:
| NA | NA |
Compliance Deadlines: See below
| Compliance Deadlines: Beginning in 2026, only Scope 1 and 2 emissions must be reported. Beginning in 2027, Scope 3 emissions must be reported within 180 days of reporting Scope 1 and 2 | Compliance Deadlines: Beginning in 2026 |
Reporting standards: The SEC Rule is modeled on concepts adopted from the Greenhouse Gas Protocol (GHG) and the Task Force on Climate-related Financial Disclosures(TCFD) | Reporting standard: Greenhouse Gas Protocol (GHG), including Corporate Standard and Value Chain | Reporting standard: Task Force on Climate-related Financial Disclosures (TCFD) or similar, including the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, as issued by the International Sustainability Standards Board (ISSB) |
Assurance: See below | Assurance: 2026 Limited Assurance on Scope 1 and 2 2030 Reasonable Assurance on Scope 1 and 2 and Limited Assurance on Scope 3 | Assurance: Not required |
Reporting method: With other required SEC reporting (annual reports and registration statements) | Reporting method: Digital platform run by California and accessible to the public | Reporting method: Submit to California Climate-Related Risk Disclosure Advisory Group and post on reporting entity public website |
Reporting frequency: Annual | Reporting frequency: Annual | Reporting frequency: Biennial |
Penalties: Numerous under US securities laws | Penalties: California Air Resources Board (CARB) may impose penalties up to $500,000 in any year for violations | Penalties: CARB may impose penalties up to $50,000 in any year for violations
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SEC Final Rule – Companies Effected Definitions
The following definitions set forth public float and annual revenue requirements for each registrant category; please see applicable SEC rules and regulations for additional requirements that may apply:
LAF = Large Accelerated Filer: Pubic float ≥ $700M, no revenue threshold AF = Accelerated Filer Public float between $75-700M and ≥ $100M revenue SRC = Smaller Reporting Company Public float < $250M, no revenue threshold Public float < $700M and < $100M revenue EGC = Emerging Growth Company Revenue < $1.235B NAF = Non Accelerated Filer Public float <$75M and <$100M revenue |
SEC Final Rule – Compliance Dates
| Registrant Type | Disclosure | Disclosure | Emissions Disclosure | Emissions Assurance | Emissions Assurance | Electronic Tagging
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| Reg. SK and SX Disclosures (except as otherwise noted) | Items 1502(d)(2), 1502(e)(2) and 1504(c)(2)* | Scope 1, 2 | Limited Assurance | Reasonable Assurance | Inline XBRL | |
LAF
| FYB 2025 | FYB 2026 | FYB 2026 | FYB 2029 | FYB 2033 | FYB 2026 |
AF (non-SRC or EGC)
| FYB 2026 | FYB 2027 | FYB 2028 | FYB 2031 | NA | FYB 2026 |
| SRC, EGC and NAF | FYB 2027 | FYB 2028 | NA | NA | NA | FYB 2027 |
| *Item 1502(d)(2) relates to quantitative and qualitative disclosure on material expenditures incurred and material impacts on financial estimates and assumptions that, in management’s assessment, directly result from activities to mitigate or adapt to climate-related risks; Item 1502(e)(2) relates to quantitative and qualitative disclosure of material expenditures incurred and material impacts on financial estimates and assumptions as a direct result of any disclosed transition plan; and Item 1504(c)(2) relates to disclosure on any material expenditures and material impacts on financial estimates and assumptions as a direct result of disclosed targets or goals or the actions taken to make progress toward meeting the target or goal. |
