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Understanding California's New Climate & ESG Laws

On October 7, 2023, California signed into law two new bills that have far-reaching implications for compliance and sustainability owners. SB 253, also known as the Climate Corporate Data Accountability Act (CCDAA), and SB 261, the Climate Related Financial Risk Act (CRFRA), apply to organizations that conduct business in the state of California. These laws are the first of their kind in the United States and are expected to significantly impact corporate climate reporting and accountability policies and programs for organizations that conduct business in the state.

The bills mandate reporting of greenhouse gas (GHG) emissions as per the GHG Protocol. It also requires reporting of climate-related financial risks based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. These requirements are also referenced in the Securities and Exchange Commission's climate disclosure proposal, the European Sustainability Reporting Standards (ESRS), and the IFRS Sustainability Disclosure Standards. However, the scope of these bills extends beyond the SEC's proposal as they apply to public and private companies meeting revenue thresholds and doing business in California.

Scope of Impact

SB 253 and SB 261 are designed to increase transparency around corporate climate impacts and financial risks. This information can help investors, consumers, and other stakeholders make more informed decisions about the companies they support.

What Organizations Need to Know

  • If your organization meets the revenue thresholds and operates in California, you will be subject to the requirements of SB 253 and/or SB 261.

  • You should start preparing now to comply with the new laws. This includes developing a process for collecting and reporting emissions data or assessing climate-related financial risks.

  • The California Air Resources Board (CARB) and the California Secretary of State have published guidance documents to help organizations comply with SB 253 and SB 261, respectively.

What to Do Now

To ensure compliance with SB 253 and SB 261, sustainability and compliance owners should take the following actions:

  • Assess the implications. Conduct a thorough assessment of the risks and opportunities presented by the new regulations and identify areas where your company may need to act.

  • Engage with suppliers. Work with your suppliers to ensure they are also aware of the new regulations and are taking steps to comply.

  • Invest in innovation. Look for opportunities to invest in new technologies, materials, and processes that will help your company comply with the new regulations and achieve sustainability goals.

  • Collaborate with stakeholders. Build partnerships with suppliers, customers, and other stakeholders to achieve the goals of the new regulations and maximize sustainability benefits.

How Archer ESG Management Solutions Can Help

Archer ESG Management solutions can play an important role in helping organizations meet the compliance and reporting obligations outlined in these new laws. Archer ESG Management solutions are designed to address the scope 1, 2, 3 GHG disclosure requirements set forth in these laws and incorporate the TCFD, ESRS, and IFRS Sustainability Disclosure Standards.

Archer ESG Management solution represents an integrated approach to managing corporate ESG programs, eliminating the need for multiple point solutions. The solution is comprised of four major use cases that deliver an effective way of managing ESG processes all from one place. Archer’s preconfigured ESG use cases allow organizations to move from manual processes to automated and streamlined ESG management programs.

Archer ESG Management Use Cases

Archer ESG Management provides enterprise-wide assessment, mapping, monitoring, reporting, and quantification of the organization's ESG programs.

  • Archer Sustainability Reporting is a comprehensive solution addressing the growing demand for transparency in ESG reporting, providing a complete solution that aligns with the TCFD framework and GRI 2 - General Disclosures.

  • Archer Double Materiality Calculator helps you quickly and easily perform a double materiality assessment based on the ESRS requirements.

  • Archer ESG Portfolio Management enables institutional investors to efficiently gather and analyze ESG data across their investment portfolios.

Archer’s ESG Management solution enables organizations to collect and centralize ESG data into a single platform, evaluate the impact of risks and the opportunities on business strategy, understand 3rd party ESG risks, set ESG goals, and produce auditable reporting all from one integrated platform. If you would like to learn more about how Archer ESG Management Solutions can help your organization meet its ESG obligations.

If you would like to learn more about how Archer ESG Management can help your organization achieve its ESG goals and objectives, we invite you to our webinar hosted by Verdantix and Archer titled "California's Climate Change Legislation: What Your Business Needs to Know."

In this webinar, we will discuss:

  • Gain an understanding of the key provisions of California's new regulations and how they impact your organization's compliance and sustainability reporting.

  • Discover the broader implications of these groundbreaking California laws on corporate climate reporting, accountability, and sustainability programs.

  • Learn about technology that can help you manage and advance your ESG program.

We hope you can join us for this informative webinar.


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