Your Solution for complying with California SB 253 and SB 261

The SEC released a proposed rule on climate disclosure in March 2022 affecting listed companies in the United States. The rule would bring in new requirements for greenhouse gas emissions tracking and climate risk reporting. It sets out to make reporting practices consistent and comparable to meet investor demand for decision-useful information.  

The proposed rule is built around the Task Force for Climate-Related Financial Disclosures (TCFD) recommendations across the themes of Governance, Strategy, Risk Management, Metrics and Targets, as well as the Greenhouse Gas (GHG) Protocol for emissions reporting.  

Listed companies in the U.S. would need to report their physical climate risks under various scenarios as well as scope 1 and scope 2 emissions, with scope 3 being phased-in for material sources.  

The proposed rule sets out that SEC registrants would be mandated to include the climate-related disclosures in a separate section of Form 10-K annual reports. Finally, the requirements would apply to registration statements such as initial public offerings.  

In December 2023, finalisation of the proposal was delayed  until Spring 2024. 

As of April 2025, the SEC ended its defence of climate-related disclosure rules. 

Task Force for Climate-Related Financial Disclosures. The TCFD has developed a framework to enable companies to effectively disclose climate-related risks and opportunities through their existing reporting processes. 

In GHG reporting and accounting, a year chosen as a basis against which future emissions are compared. 

There are three emissions scopes, based of the Green House Gas Protocols (GHG) Corporate Standard. Scope 3 are indirect emissions which result from all other activities and sources that occur in the value chain of the reporting company not covered in scope 2. This includes business travel, commuting, waste, and 3rd party deliveries.  

Reporting of all scope 3 emissions is typically not mandatory, unless the organisation is subject to a regulation such as the CSRD in the EU. This may become mandatory under the proposed SEC climate ready and SEC greenhouse gas emissions disclosure rules. They will become mandatory for companies that must comply with California SB 253 and SB 261 in 2027.