INTRODUCTION
Gauging readiness for California’s upcoming sustainability regulations
The last decade has seen corporations make strategic, financial, and organizational changes to contribute to a more sustainable future. These efforts, driven by both internal commitments and external pressures, are increasingly shaped by legislative and regulatory actions that compel businesses to act.
In late 2023, California enacted two measures to accelerate change. Senate Bill (SB) 253—the Climate Corporate Data Accountability Act—requires companies with annual revenues of over $1B doing business in California to disclose Scopes 1, 2 and 3 greenhouse gas (GHG) emissions. Reporting for Scope 1 and 2 emissions will start on January 1, 2026, and for Scope 3 in 2027, with fines for non-compliance reaching $500K.
Senate Bill (SB) 261—the Climate-Related Financial Risk Act requires companies with revenues over $500M to report climate-related financial risks and take necessary steps to mitigate them, with penalties up to $50K per incident. Reporting is set to start on or before January 1, 2026. However, per a recent amendment, the reporting requirements for both bills will likely be postponed by two years to give the California Air Resources Board more time to develop and implement rules.
In June 2024, EcoOnline conducted a survey of companies with annual revenues over $500M. The survey aimed to assess how prepared companies are for the new California laws and the steps they are taking to comply. It also sought to understand the current efforts and future plans of these companies in achieving climate change goals, which are influenced by a variety of systems and factors including operational practices, organizational structures, and technology.
The following pages of this report will answer key questions:
- What are sustainability champions doing to change these systems?
- What are companies thinking, planning, and doing?
- How are they integrating sustainability into their core business strategies, and what investments are they prioritizing?
Based on responses, it’s clear the following takeaways have emerged:
- Sustainability has earned serious boardroom attention and investment.
- Innovators have learned that sustainability can be a powerful growth engine.
- Sustainability is viewed as core to branding and growth strategies — and even in the absence of regulatory requirements, companies would pursue their sustainability efforts.
- Companies are requesting sustainability data from their suppliers, creating pressure for reporting even on smaller companies.
- Business leaders have begun investing in technologies that enable sustainability reporting.
"Sustainability isn’t just a trend; it is a fundamental shift in consumer behavior and business practices. Investing in sustainability is an investment in our brand’s long-term viability."