California Governor proposes two-year delay for climate reporting

California Governor Gavin Newsom is seeking to delay the implementation of his state’s climate reporting rules by two years, meaning companies would only need to comply by 2028.

In a recently published amendment proposal, Newsom suggests changing the wording of rule SB 253, known as the ‘Climate Corporate Data Accountability Act’ to give the California Air Resource Board (CARB) two more years (until 2027) to develop and adopt the necessary regulations to require companies to disclose their Scope 1, 2 and 3 emissions.

As a result, the first reporting year for the more than 5,000 public and private companies covered by the law would shift from 2026 to 2028 for Scope 1 and 2 emissions, and from 2027 to 2029 for Scope 3 emissions.

Similarly, Newsom has also proposed delaying the implementation of SB 261, dubbed the ‘Climate-Related Financial Risk Act’, from 2026 to 2028. The law requires all entities with total annual revenues in excess of US$500 million – an estimated 10,000 companies – to disclose their climate-related financial risks and measures taken to reduce and adapt to these.

Lawmakers now have until August to pass the amendment – but its success is far from guaranteed. Senator Scott Wiener, who co-authored the emissions disclosure law SB 253, is the Senate Budget Committee chair, and has told Politico he will refuse the delay, along with Senator Henry Stern, who is behind the climate risk disclosures.

Governor Newsom’s reservations around climate disclosure laws

Governor Newsom signed the two historic bills into law last October, setting the first and most ambitious mandatory climate requirements seen to date in the US. But even at the time, he expressed some reservations, noting that implementation deadlines were “likely infeasible”, and raising concerns about “the overall financial impact of this bill on businesses”.

Since then, political backlash against climate disclosure legislation has gained increasing strength and prominence, as evidenced by the numerous legal challenges to the Securities and Exchange Commission’s own climate rule – despite only including Scope 1 and 2 emissions. These have led the SEC to freeze the implementation calendar until more legal clarity is obtained.

At the California level, the climate disclosure laws are being challenged by the US and California Chambers of Commerce, the American Farm Bureau Federation and others, arguing that they violate the First Amendment by “unconstitutionally compelling speech”.