- Enforcement Relaxed: California Air Resources Board (CARB) will not penalize companies for incomplete emissions reports in 2026, provided good faith efforts are made.
- Guidance Gap Addressed: Businesses may use existing data for FY 2025 reporting until final guidelines are released in July 2025.
- Preparation Opportunity: Companies are encouraged to document current policies and plan for full compliance while awaiting finalized rules.
The Story:
California has delayed full enforcement of its climate reporting requirements, originally set to begin in 2026. The California Air Resources Board (CARB) announced it would use “enforcement discretion,” allowing companies more time to implement systems for Scope 1 and Scope 2 emissions reporting.
CARB stated, “Entities demonstrating good faith efforts to comply with the law will not face enforcement actions for incomplete reporting in the first cycle.”
What’s Changing:
The legislation, Senate Bill 253, mandates that companies with over $1 billion in revenue disclose direct (Scope 1) and electricity-related (Scope 2) emissions by 2026, and broader value chain (Scope 3) emissions by 2027. Senate Bill 261 requires biennial climate risk reporting for companies with revenues above $500 million.
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Governor Gavin Newsom, when signing the Climate Accountability Package in 2023, warned, “The implementation deadlines in this bill are likely infeasible,” urging for practical timelines.
Why It Matters:
- Companies need at least six months to establish new accounting systems. CARB’s guidance now gives them breathing room to refine processes without risking penalties.
- Firms should document their policies as of December 5, 2024, while awaiting CARB’s finalized rules in mid-2025.
The Bottom Line:
This flexibility allows businesses to avoid rushed compliance efforts while aligning with California’s long-term goals for robust, transparent climate reporting.
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The post California Delays Full Enforcement of Climate Reporting Rules for FY 2025 appeared first on ESG News.
