December 20, 2024

What you need to know about California's new climate reporting law

In this article
You might like
No items found.
See the latest spending trends for 25k+ companies on Ramp

Benchmark your company's expenses with Ramp's data.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Spending made smarter
Easy-to-use cards, funds, approval flows, vendor payments —plus an average savings of 5%.1
|
4.8 Rating 4.8 rating
Error Message
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Get fresh finance insights, monthly
Time and money-saving tips,
straight to your inbox
|
4.8 Rating 4.8 rating
Thanks for signing up
Oops! Something went wrong while submitting the form.
Ready to partner with Ramp?
Time is money. Save both.
Ready to partner with Ramp?
Time is money. Save both.
Ready to partner with Ramp?
Time is money. Save both.
Table of contents

In 2023, California passed the Climate Accountability Package, which requires certain businesses to report on their greenhouse gas emissions and climate-related risks. Companies doing business in California need to start collecting emissions data on January 1, 2025, though reporting will begin in 2026.

The two bills in the package aim to make companies more accountable for their climate impact. However, the initial language left many businesses unsure if the new rules applied to them. In September 2024, California Governor Gavin Newsom signed amendments to clarify the confusion and extend deadlines for regulators, but there’s still some ambiguity in the reporting rules. 

ESG reporting increasingly falls under the purview of finance teams, so you may be the one responsible for compliance with the new bills. We know that legalese is complex, so we’re here to help. Read on to determine how the regulations could impact your business—and what to do next.

What the laws say

Harvard Law School has a good overview of the bills if you want to do your own reading. Here’s the gist:

  • Senate Bill 253: Companies with $1 billion+ in annual revenue that operate in California need to report their greenhouse gas (GHG) emissions:some text
  • Scope 1 and Scope 2 emissions: These are 1) direct emissions (like fuel burned on-site) and 1) indirect emissions from energy use (like electricity, even though the emissions occur at a power plant). Companies meeting the revenue threshold need to start collecting this data on January 1, 2025, and deliver their first report in 2026.
  • Scope 3 emissions: These emissions encompass the broader supply chain and product lifecycle. They’re more complex to calculate. Reporting will begin after a regulatory body called the California Air Resources Board (CARB) decides how best to do it. CARB has until July 1, 2025, to set the reporting rules.
  • Senate Bill 261: Companies with $500 million+ in annual revenue must publish reports every two years on their climate-related financial risks and how they’re addressing them, starting in 2026.some text
    • One big exception: insurance companies are excluded from this requirement to avoid double-reporting. Instead, they’ll stick to a national reporting standard.
Companies with $1 billion+ in annual revenue doing business in California need to start collecting emissions data on January 1, 2025

Do these laws apply to you?

The most important first step is to determine if these laws impact you. Here’s what to consider:

  1. Does your business have a parent company? If you’re a subsidiary, only the parent company needs to report on all of this. Check to see if they have a strategy in place.
  1. Do you meet the revenue thresholds?

You read this in the last section, but let’s make sure we’re on the same page:

  • If your annual revenue is $1 billion or more, you’ll report on greenhouse gas emissions. Importantly, you’ll need to start collecting this data on January 1—which is soon!
  • If it’s $500 million or more, you’ll report on your climate risks every two years unless you’re an insurance company. You’ll submit your first report in 2026, so start evaluating this in 2025, but there’s no firm start date.
  1. Are you doing business in California? This one’s tricky (unless you’re based in the state, which makes it pretty obvious). The climate package doesn’t clearly define what “doing business” means yet. CARB will presumably clarify this in July. Other California agencies have criteria for this, though it varies by department. Bottom line: If you have customers, employees, or real estate in California, or if you pay any taxes there, you should probably start collecting data on January 1. 

What to do now

If you’ve determined that new rules apply to you, there are a few steps you can take to get prepared:

  1. Review other climate reporting requirements. If you’re already reporting elsewhere (e.g., the EU’s Corporate Sustainability Reporting Directive), see how they overlap with California’s rules.
  2. Strengthen your internal reporting systems. Make sure your processes for tracking and reporting climate data are solid and scalable. Be ready to move on this in January.
  3. Find expert help. Consider hiring advisers, like an assurance firm, to verify your emissions data—especially for Scopes 1 and 2, which need to be reported starting with 2025 data.
  4. Finally, stay tuned. The guidelines are still nebulous, and important information will be released in the next six months. Keep a close eye on updates from CARB and the State of California—you’ve got this!
Try Ramp for free
Error Message
 
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Contributing Writer and Editor
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

FAQs

How Crossings Community Church upgraded its procurement process with Ramp

“When looking for a procure-to-pay solution we wanted to make everyone’s life easier. We wanted a one-click type of solution, and that’s what we’ve achieved with Ramp.”
Mandy Mobley, Finance Invoice & Expense Coordinator, Crossings Community Church

“An improvement in all aspects:" Why Snapdocs switched from Brex, Expensify, and Bill.com to Ramp

"We no longer have to comb through expense records for the whole month—having everything in one spot has been really convenient. Ramp's made things more streamlined and easy for us to stay on top of. It's been a night and day difference."
Fahem Islam, Accounting Associate

How MakeStickers started maximizing the value of its cash with Ramp

“It's great to be able to park our operating cash in the Ramp Business Account where it earns an actual return and then also pay the bills from that account to maximize float.”
Mike Rizzo, Accounting Manager, MakeStickers

How Align ENTA consolidated tools and gained control with Ramp

"The practice managers love Ramp, it allows them to keep some agency for paying practice expenses. They like that they can instantaneously attach receipts at the time of transaction, and that they can text back-and-forth with the automated system. We've gotten a lot of good feedback from users."
Greg Finn, Director of FP&A, Align ENTA

Why Abode's CEO, Tyler Bliha, chose Ramp over Brex

"The reason I've been such a super fan of Ramp is the product velocity. Not only is it incredibly beneficial to the user, it’s also something that gives me confidence in your ability to continue to pull away from other products."
Tyler Bliha, CEO, Abode

How The Second City expedited expense management and gained financial control with Ramp

“Switching to Ramp for Bill Pay saved us not only time but also a significant amount of money. Our previous AP automation tool cost us around $40,000 per year, and it wasn’t even working properly. Ramp is far more functional, and we’re getting the benefits at a fraction of the cost.”
Frank Byers, Controller, The Second City

“Just do it:” How Bratjen Construction modernized processes, saved time, and improved accuracy with Ramp

“Prior to Ramp, we had a handful of cards that our owners and leadership had access to, but it was more of a trust based system. Ramp has allowed us to give cards to more people, but the controls in Ramp ensure that the cards are used properly.”
Michael Irvin, Director of Operations, Bratjen Construction