California’s SB 219: Key Amendments to Climate Disclosure Acts SB 253 and SB 261
Author: Destiny Aigbe
October 10, 2024
On September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219 (SB 219) into law, introducing significant amendments to the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). These two bills, passed earlier in 2024, impose strict reporting requirements on U.S. companies with business operations in California, depending on their financial thresholds. SB 253 applies to companies generating over $1 billion in revenue, requiring disclosure of greenhouse gas (GHG) emissions (Scopes 1, 2, and 3), while SB 261 mandates that companies with more than $500 million in revenue submit a biannual climate-related financial risk report to the California Air Resources Board (CARB).
Key Amendments Introduced by SB 219:
- Rulemaking Extension: CARB’s deadline for finalizing the rulemaking process for SB 253 has been extended from January 1, 2025, to July 1, 2025.
- Schedule for Scope 3 GHG Emissions: CARB is granted the flexibility to set the disclosure schedule for Scope 3 GHG emissions, which will still begin in 2027, instead of requiring disclosure within 180 days after Scope 1 and 2 reporting.
- Consolidation of Disclosures: SB 219 allows companies to consolidate their climate disclosures at the parent-company level, exempting subsidiaries from separate reporting under SB 253 and SB 261.
- Climate-Related Financial Risk Reporting: CARB is now permitted, but not required, to contract with a third-party organization for preparing climate-related financial risk reports under SB 261.
- Elimination of Reporting Fees: SB 219 removes the initial requirement for companies to pay a filing fee when submitting their disclosure reports under SB 253 and SB 261.
Litigation Status and Implications: Both SB 253 and SB 261 are currently involved in litigation in the U.S. District Court for the Central District of California, with motions for dismissal and summary judgment pending. However, unlike the SEC's climate disclosure rules, California’s regulations have not been stayed pending the litigation outcome. A hearing is scheduled for October 15, 2024, with several other states closely watching this case as they consider implementing similar state-level disclosure laws.
Action Steps for Companies: Given the complexity and scope of the new climate disclosure requirements, companies subject to SB 253 and SB 261 must start preparing their accounting, governance, and operational mechanisms to collect and disclose the required data by the respective 2026 and 2027 deadlines.
About the Author
Destiny Aigbe
Managing Partner
Aigbe Law PLLC | Dark Alpha Capital
A Corporate and Securities Law Firm
With a robust foundation in law and finance, Destiny Aigbe has carved a distinguished career, underpinned by his pivotal role in orchestrating and managing complex transactions that have propelled companies to significant growth and market prominence. As a seasoned attorney and strategic advisor, Destiny has been instrumental in facilitating over $75 million in capital raises, demonstrating a keen acumen for securing funding and fostering investor confidence.
Destiny's leadership in the execution of six successful public listings, through meticulously structured reverse mergers and registration statements, showcases his adeptness in navigating the intricacies of the public markets and his capacity to guide companies through transformative growth phases. His involvement in five mergers as an operator further illustrates his versatile skill set, extending beyond legal expertise to include hands-on management and operational strategy, though these ventures did not involve funding.
Destiny's professional journey is marked by a commitment to excellence and a diverse range of experiences, from representing a wide spectrum of clients including public and private companies, and investment firms, to holding significant roles within the US government. His tenure with the US Department of State and the National Institutes of Health highlights his adaptability and his contribution to the advancement of entrepreneurial ventures in sectors like biotechnology and nanotechnology through strategic funding initiatives.
An alumnus of Vanderbilt University Law School, Destiny focused on Finance and Mergers & Acquisitions, further honing his expertise with a certificate in Law and Business. His foundational education in Finance was obtained with honors from the University of Maryland's Robert H. Smith School of Business, which laid the groundwork for his subsequent achievements in investment banking and legal practice.
Residing in the Washington, D.C. area, Destiny Aigbe continues to leverage his extensive experience and insightful leadership to drive innovation, growth, and success for his clients and the ventures he is involved with.
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