Input Stories

Companies are getting ready to report to California on their greenhouse gas emissions and climate risk in 2026—but the regulations are not even finished (The Wall Street Journal, subscription).

What’s going on: “The California Air Resources Board, the state’s agency primarily tasked with overseeing pollution, said last week it changed its rulemaking timeline to the first quarter of next year because of the amount of public comments its staff received on its proposed requirements. The rules were originally due to be published this month.”

• Though CARB has issued guidance documents detailing what firms must report next year, some attorneys for the companies say their clients will still be forced to wing it when it comes to some of their reporting due in January.
• Businesses “may need to make judgment calls on what it means to ‘do business’ in the state and … will have to navigate this uncertainty in order to comply with forthcoming deadlines,” law firm Vinson & Elkins said, according to the Journal.

The background: The law requiring the upcoming emissions disclosures was signed into law by Gov. Gavin Newsom in October 2023 and applies to companies with annual revenues over $1 billion by 2025.

• Under the legislation, the companies will need to disclose their Scope 1 and 2 emissions by June 30, 2026, and their Scope 3 emissions (those attributable to their supply chains) by 2027.
• A related measure passed at the same time mandates disclosure of “climate-related financial risks.” That requirement applies to companies with at least $500 million in annual revenues. The first risk reports are due by Jan. 1, 2026.

Why it’s important: The regulations apply to both public and private companies “doing business” in California, but they have a potential global reach, as CARB has defined “doing business” very broadly.

• California estimates that approximately 2,600 companies will have to report their emissions, while about 4,100 companies will have to prepare climate risk reports.

The NAM’s take: The NAM recently urged the Justice Department—which in August sued CARB over its stringent emissions rules for trucks—to safeguard federal Clean Air Act authority from “a growing patchwork of inconsistent state laws … that increase costs, compliance risks and inefficiencies that jeopardize the sector’s ability to invest, grow and lead.”