US firms not waiting for new deadline to prepare for California climate laws

Despite a proposal to postpone implementation, a wide majority of large US companies are taking active steps to prepare for California climate regulations, according to a new survey.

California will soon require about 10,000 corporations operating in the state to report on their greenhouse gas emissions across Scope 1, 2 and 3, as well as their climate-related financial risks and measures taken to mitigate them. 

Implementation was initially scheduled to start in 2026, but Governor Gavin Newsom recently proposed a two-year delay to give firms more time to prepare. However, it seems as though these companies are not waiting for the implementation date to be confirmed, with 85% already actively preparing.

This is according to a recent survey of C-suite executives at US-based firms with US$500 million or more in annual revenue, conducted by software company EcoOnline.

Asked how exactly they are preparing, 41% of respondents said they have a dedicated team “thoroughly investigating relevant laws and building internal competencies”, 37% have assigned individual employees to investigate the legislation, and 28% have asked consultants and business partners to lead the preparations.

As for specific actions, 77% are collecting data and building processes using existing tools, 66% are deploying or searching for a software solution to streamline data collection and reporting, and 39% are conducting a readiness assessment.

"Our survey highlights a critical tipping point where US companies are boldly moving beyond reactive compliance and penalty avoidance, embracing sustainability as a powerful engine for growth,” said Tom Goodmanson, CEO of EcoOnline. 

Importantly, all of the companies surveyed suggested that even without California’s upcoming climate disclosure requirements, they would continue to build up their sustainability programmes and strategies for value creation.

Sustainability reporting budgets are growing

In addition to assigning employees or teams to investigate the new climate disclosure regulations, US companies are also investing in sustainability reporting – with 93% having a dedicated budget.

Among respondents, 42% indicate that extra budget has been set aside for new requirements and more than a quarter (26%) say their board or C-level are funding any headcount and technology needs. Meanwhile, just 25% of firms are working within existing budgets.

Almost all firms (99%) are planning to increase investment in sustainability reporting, either within the next 12 months (30%), within two to three years (55%) or in three years or more (14%).

While only 16% of the companies surveyed have set a net zero target year (generally around 2040), another 72% are currently developing strategies and assigning accountability to potentially commit to net zero at a later date. Just 12% of respondents have taken no action to work towards net zero emissions.