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California proposes $22 million for climate disclosure law

May 17, 2024
in General
California proposes $22 million for climate disclosure law
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California Governor Gavin Newsom revised his 2024-2025 state budget proposal to include $22 million to fund the state’s corporate climate disclosure laws, SB 253 and SB 261, among other climate programs. 

Specifically, the governor’s plan shifts the money from the state’s General Fund to the Greenhouse Gas Reduction Fund (GGRF). The latter is funded by the Greenhouse Cap-and-Trade Program, which charges industrial polluters for their emissions.

“It’s reasonable for us to assume CARB [the California Air Resources Board] will be doing temporary hiring of staff to actually sit down and write the rules that will implement SB 253 and 261,” said Kristina Wyatt, general counsel and CSO of Persefoni, a carbon accounting company.

Wyatt believes the funding will largely expand upon the rules broadly established in the law, referring to the laws as “chapter headers” and the rules as the detail within the pages. 

“The questions around the details of what it means, for example, to do business in California, are the ones that the administrative agencies administering the law would take on and write more detailed rules to help companies to better understand the law,” said Wyatt. 

Over the next five years, the revised budget proposes to shift a total of $3.6 billion from the General Fund to the GGRF. The money will implement the disclosure laws and other climate programs including funding for transit, clean energy, zero-emission vehicle projects and nature-based solutions programs.

Both SB 253 and 261 will mandate the corporate disclosure of emissions and climate-related risks for companies operating in California. SB 253 will mandate companies generating $1 billion in revenue per year to report their emissions, and SB 261 will require companies earning $500 million to disclose climate risks to their businesses. 

Back in January 2024, Newsom omitted funding from the upcoming budget for climate programs, prompting pushback from environmental activists and companies alike. Last month, 35 companies — including Grove, Patagonia, REI and Heirloom — signed a letter urging the governor to “secure full funding for the on-time implementation,” of the two climate disclosure laws.

The companies wanted the new bills in order to streamline their disclosure reporting, as many of them are preparing to report similar information under the European Union’s  Corporate Sustainability Reporting Directive and the SEC’s new climate-risk disclosure rules.

“We welcome the interoperability between California laws as enacted and these other disclosure regimes,” the companies said in the letter.

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