Issue link: https://resources.tangoanalytics.com/i/1535915
Mandatory Climate & Sustainability Disclosure Sustainability Reporting Regulation in 2025 2 Copyright © 2025 Tango. All rights reserved. California Climate Rules In late 2023, California enacted two landmark bills that together represent the most expansive climate disclosure mandate in the country: the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). SB 253 targets large public and private companies operating in California and requires them to report their greenhouse gas emissions across all scopes—Scope 1 (direct), Scope 2 (indirect from purchased energy), and Scope 3 (indirect from upstream and downstream activities). This is a significant escalation in climate reporting, particularly given the complexity of tracking Scope 3 emissions across value chains. SB 261, meanwhile, requires companies to publicly disclose their climate-related financial risks in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) framework. It also mandates a description of how those Climate disclosure regulations, like California's SB 253 and SB 61, EU's CSRD, and IFRS S1 & S2, are laws that require companies to report on scope 1, 2, and 3 emissions. risks are being mitigated or managed. The bill broadens climate risk accountability beyond emissions to include broader financial resilience in a warming world. While enforcement for both laws will not begin until 2026, with possible delays pending rulemaking by the California Air Resources Board (CARB) and potential legislative adjustments, companies should not wait to prepare. These laws are expected to impact thousands of businesses and will likely set a precedent that other states may follow. Every corporation must comply, whether headquartered in California or simply operating there, and now with the ruling extending requirements to private companies, the range of disclosure impacts is tremendous.