What you need to know about new California Climate Bills (SB 253 and SB 261)

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. As of writing this newsletter on September 27th, we expect these bills to be signed into law. Governor Newsom announced his support and intention to sign, noting Sunday, September 17th, while speaking on a panel at Climate Week NYC that he would “of course” sign the bills, adding that there will be minor language cleanup.

Assuming there are no material changes, here's what we can expect to go into law by October 14th:

1. SB 253 mandates that companies with annual revenue of at least $1B?doing business in California disclose their greenhouse gas emissions annually starting in 2026. The bill would demand 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 global supply chain. Due to the interconnectedness of the food and consumer goods industry, compliance to 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.
2. SB 261 focuses on the mitigation of climate 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 also need to post a publicly accessible disclosure report on their website.

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 and consumer companies, and their suppliers, to precisely calculate 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 collaboration, we can get ahead of climate regulation and ensure the industry has the insights they need to satisfy all disclosure requirements.

Reach out anytime if you’d like to discuss the California bills or how Planet FWD can help your organization get ahead of disclosure requirements.