California Mandates Scope 3 Emissions Reporting for Large Companies

Oct. 16, 2023
Organizations with more than $1 billion in revenue will need to report supply chain emissions.

California Gov. Gavin Newsom signed a bill into law Oct. 7 that requires large companies operating in the state to report their direct and indirect carbon emissions, including those of their suppliers. The law, Senate Bill 253, covers Scope 1 (direct emissions), Scope 2 (indirect emissions like purchased energy), and Scope 3 (emissions throughout the supply chain). Public disclosures of emissions will begin in stages, starting in 2026, with independent third-party auditors verifying the emissions.

Beginning in 2026, companies with revenues that exceed $1 billion in California must disclose annually their Scope 1 and Scope 2 greenhouse gas emissions for the prior fiscal year.  From 2027 onwards, these companies must also annually report their Scope 3 emissions within 180 days of disclosing Scope 1 and 2 emissions.

While some major companies like Apple and Patagonia support the law, the California Chamber of Commerce, agricultural groups and oil giants oppose it due to the challenge of tracking Scope 3 emissions accurately, especially beyond second-tier suppliers. Even so, SB 253 limits penalties and encourages good-faith reporting.

The content referenced in this story originally ran as “Will Scope 3 Emissions See More Scrutiny?” on IndustryWeek, an Endeavor Business Media partner site.