As of February 11, 2025, the SEC’s acting Chairman, Mark Uyeda, said that the Commission will pause litigation of its climate disclosure rule in the 8th Circuit. This effectively ends, for now at least, the SEC’s pursuit of federal rules focusing on climate disclosure of Scope 1 and Scope 2 greenhouse gas emissions for reporting companies. Because there was concern about how many companies would collect this data, many felt relieved by this action. However, it is important to note that states have begun to create their own requirements around climate disclosure.
California SB 253, the Climate Corporate Data Accountability Act, was passed in 2024. It requires US-based entities with more than $1 billion in annual revenue doing business in California to annually report all Scope 1 and Scope 2 greenhouse gas (GHG) emissions starting in 2026, with Scope 3 added to the reporting requirement in 2027. Failure to report, late filings or not meeting the reporting requirements could result in fines of up to $500,000 per reporting period. However, there are some provisions around Scope 3 such that, if a company makes a good faith effort to report Scope 3, it will not be fined for any inaccuracies for reporting years of 2027 to 2030.
Although the US Chamber of Commerce, the California Chamber of Commerce, and other business groups sued the State of California and the California Air Resources Board (CARB) on January 31, 2024, alleging that SB 253 and another climate disclosure bill, SB 261 were unconstitutional because the laws: (1) violate the First Amendment by compelling speech; (2) violate the Supremacy Clause by regulating greenhouse gas emissions, which is the federal government’s responsibility and (3) violate the Dormant Commerce Clause by imposing burdens on interstate and foreign commerce. However as of February 3, 2025, the US District Court for the Central District of California dismissed these claims without prejudice. This means that the plaintiffs can refile as an amended complaint.
Additional states are looking at the California bill and creating their own versions of it.
On January 27, 2025, bill SB 3456 was introduced in the Environmental Conservation Committee of the New York State Senate as a companion bill to Assembly Bill A 4282. If enacted, New York will become the second state to require entities with more than $1 billion to disclose their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning in 2027.
On February 3, 2025, bill S4117 was introduced in the New Jersey State Senate and referred to the Environment and Energy Committee. If enacted, the New Jersey Climate Corporate Data Accountability Act would require all companies with over $1 billion in annual revenue to report on their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning 3 years from the effective date of the bill, which could be as soon as 2028.
On February 18, 2025, bill HB 3673 was introduced in the Illinois House and referred to to its Rules Committee. If passed, it would require entities with over $1 billion in revenue to report on their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning 3 years from the effective date of the bill, which could be as soon as 2028.
If all these bills pass, it would mean that more than 25% of the US’s real GDP would be subject to Scope 1, 2 and 3 reporting requirements for greenhouse gas emissions. Additionally, there are other states like Massachusetts, Vermont and others that are considering creating emissions reporting regulations.
It is important to note that all these bills are written so that the reporting entity just needs to have some sort of tie to that respective state, not necessarily achieving $1billion in revenue within that state. This means that if an entity or company has an office, or a product within that respective state, they will need to comply.
What is also significant about these bills is the inclusion of Scope 3 Emissions (which consists of 15 different categories). The impact of the inclusion of Scope 3 is that companies and entities that need to comply within these states will need to collect information from their vendor partners under the Scope 3 requirements. This means that even an accounting firm that provides service to an entity doing business in one of these states could be tasked with providing their emissions data.
