California sets national standard for corporate climate disclosure as governor signs landmark legislation

Ceres today celebrates California’s new climate disclosure policy, as Gov. Gavin Newsom signed a suite of climate legislation into law that included the landmark bills SB 253 and SB 261. 

“Today marks an historic moment for corporate transparency, risk management, and responsible investing,” said Mindy Lubber, president and CEO, Ceres. “A dangerously warming climate poses immense risks to the economy and the wellbeing of both people and the planet. That’s why leading investors have for many years pushed for better information about how companies are working to prepare for and address climate-related financial risks. 

“Representing the world’s fifth largest economy, California policymakers have taken this challenge to heart. By adopting its new climate disclosure framework, the state will provide unprecedented, actionable, and economywide information for stakeholders across the country and around the globe. 

“Ceres is grateful for the leadership of state Senators Scott Wiener and Henry Stern in introducing and championing these two bills. And we thank Gov. Newsom for signing them, re-affirming California as the nation’s pioneer in ambitious policies and ensuring that capital markets have material information needed to confront climate risk.” 

A longtime supporter of corporate climate disclosure requirements, Ceres was a co-sponsor of SB 253 and SB 261, which both passed in the California State Assembly in September. SB 253 will require companies that do business in California and earn at least $1 billion annually to report climate pollution across their supply and value chains. SB 261 will require companies with revenue over $500 million to report on their climate-related risks. SB 253 is expected to apply to more than 5,300 companies, while SB 261 will cover more than 10,000 companies. 

Throughout 2023, Ceres rallied company and investor support for SB 253 and SB 261. More than 30 companies, institutions, and industry groups publicly advocated for one or both bills, demonstrating significant corporate support for standardized and consistent reporting requirements; companies including Microsoft, Sierra Nevada Brewing, Adobe, Atlassian, IKEA USA, Palo Alto Networks, and REI Co-op each signed at least one letter. Salesforce, Apple, and Google also issued their own statements in support of SB 253, as did clothing industry groups including the American Apparel & Footwear Association.  

For decades, Ceres has worked with investors to advance climate disclosure efforts to ensure the information is complete, consistent, and standardized. In 2022, more than 500 investors representing nearly $40 trillion in assets under management called for governments around the world to strengthen climate disclosure standards, including by requiring mandatory reporting. 

The California legislation is timely, coming as capital markets await the finalization of the U.S. Securities and Exchange Commission’s federal climate disclosure policy for public companies. California’s new policies will complement the SEC’s proposed rule, as well as global standards expected to be finalized this year by the International Sustainability Standards Board, because they apply to both public and private businesses over certain revenue thresholds. That will broaden the coverage of companies required to provide information beyond the SEC’s proposed standards. Both the SEC and ISSB rules have strong investor support. 

In addition to the disclosure bills, Gov. Newsom signed significant climate and clean energy legislation relating to transportation electrification planning (SB 410), offshore wind energy (AB 3), building energy strategies (SB 48), zero-emission school buses (AB 579), and a funding extension to the Clean Transportation Program (AB 126). 

About Ceres

Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.