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What California’s SB 253 Climate Law Means for Your Business

In October, California signed SB 253 into law, which requires disclosure of direct and indirect greenhouse gas emissions from companies that do business in the state. Although it’s directed at large companies, its inclusion of Scope 3 emissions means that its impact can be felt by businesses of all sizes and industries. Here’s what you need to know about SB 253 California law and how you can ensure that you’re prepared.

What Is The Climate Corporate Data Accountability Act (SB 253)?

The Climate Corporate Data Accountability Act (CCDAA), signed into law in October 2023, outlines requirements for reporting Scope 1, 2, and 3 emissions. It directly affects publicly traded and private companies with revenue over $1 billion that do business in California. It doesn’t require greenhouse gas emissions reductions. It simply requires disclosure.

Although there is some overlap between the SEC’s Climate Disclosure Rule and the CCDAA, there are a few key differences. While the SEC only requires disclosure from publicly traded companies, California requires data from both private and public businesses. However, the SEC requires a more comprehensive disclosure of climate-related impact, while SB 253 is focused on greenhouse gas emissions. Perhaps most notable is the inclusion of Scope 3 emissions in California’s disclosure rule. This means that companies that do business in California must publicly disclose their supplier’s carbon emissions as well as their own. Conversely, the SEC’s rule only requires the disclosure of Scope 3 emissions in certain instances.

The purpose of the law is to create transparency surrounding climate claims, limit greenwashing, and make stakeholders aware of climate related financial risks associated with greenhouse gas emissions. It acknowledges that companies’ actions can impact the state’s economic and climate-related risks. By standardizing the greenhouse gas emissions disclosure process with CCDAA, it hopes to mitigate those risks for continued economic and environmental success.

Learn more about how climate change laws are impacting ecommerce businesses.

How Ecommerce Businesses Are Impacted By SB 253

Even though SB 253 only requires disclosure from large businesses, its implementation echoes across industries and business sizes due to its inclusion of Scope 3 emissions. Therefore, companies of all sizes and across sectors must be aware of the new law so that they can make changes to prepare for its implementation.

Even if your company doesn’t meet the revenue threshold for SB 253, it should still be noted for several reasons.

  • The law requires disclosure of Scope 3 emissions. This means if your business is a supplier for companies that do meet that threshold, they will need to ask for your emissions data so that they can include it in their report. The inability to do so could mean the loss of that client.
  • Since California has the fifth-largest economy in the world and is set to become the fourth-largest, California laws carry a global impact. It’s anticipated that SB 253 will be internationally felt. Such an impactful law demands attention.
  • This law reflects an international push for climate disclosure. Even if your company isn’t immediately impacted by CCDAA or the SEC’s Climate Disclosure Rule or other similar pieces of legislation, you should still pay attention. It’s likely that you won’t remain unaffected for long.
  • To prepare for SB 253, you should start creating strategies for data collection that follow the GHG Protocol, as per the CCDAA. Although this law focuses solely on greenhouse gas emissions, it’s not a bad idea to develop robust and comprehensive ESG data collection strategies, as more ESG disclosure laws are predicted for the future.
  • Besides developing data collection strategies, prudent companies should explore ways to reduce their carbon footprints. Stakeholders want to support companies that can display climate-conscious behavior. If you are a supplier to a big company, and your emissions are high, it will negatively impact the Scope 3 emissions of the larger company. Now that greenhouse gas emissions must be disclosed to the public, companies will likely pay more attention to their suppliers’ carbon emissions. You need to do what you can now to minimize your emissions to help improve your bigger clients’ Scope 3 emissions. 

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Tracking your greenhouse gas emissions is a good business decision regardless of whether or not you’re impacted by California’s SB 253. Companies that haven’t started tracking their sustainability impact already can take this as an impetus to begin.

When Do Companies Need To Be Ready?

In 2026, companies will be required to report their 2025 Scope 1 and 2 emissions. Scope 3 emissions must be reported in 2027 for 2026 data. Therefore, ecommerce businesses that work with larger companies should begin exploring options for sustainability reporting now so that they are prepared for data collection in 2027. 

Although it may seem like you have time, corporate carbon emissions accounting under the GHG Protocol is a challenge. It requires a comprehensive assessment of emissions and specific reporting standards. All companies would benefit from investing in greenhouse gas emissions reporting strategies as soon as possible so that they can be ready.

Even if you don’t work with billion-dollar companies that do business in California, you should still develop strategies that align with SB 253. California’s laws tend to pave the way for similar legislation elsewhere. For example, its Advanced Clean Cars II guided a similar law in New York. 

It’s expected that the Climate Corporate Data Accountability Act will not be the last of its kind, and greenhouse gas emissions disclosures will soon become a business norm. Businesses that prepare themselves now will set themselves up for success in the future.

Here are some ways that you can prepare.

  • Invest in sustainability management software: Data collection software that integrates with your tech stack simplifies the disclosure process. ESG reporting software that follows established frameworks will track and measure your carbon emissions and environmental impact so that you can more easily provide the data that you need.
  • Pursue ESG certification: Although gaining ESG certification will not ensure compliance with these laws, seeking a high-level green certification will require a sustainability audit that tracks and measures your GHG impact. So, through this process, not only will you gather relevant data, but you’ll also get certification, which can be attractive to stakeholders.
  • Create a comprehensive strategy to collect GHG data: California’s disclosure rule follows the GHG Protocol. This framework is quite extensive, which means that you’ll have to be thorough in your data collection. Invest in things like an environmental product declaration, life-cycle analysis, and more.
  • Partner with experts to help you with this process: Although GHG data collection is challenging, you don’t have to do it alone. Companies like EcoCart offer essential tools to aid ecommerce businesses in achieving their sustainability KPIs and collecting relevant data about their indirect and direct greenhouse gas emissions.
  • Support carbon removal projects: Now that the CCDAA requires Scope 3 emissions disclosure, suppliers need to work toward a smaller carbon footprint to remain competitive. As you develop strategies to lower your emissions, you can take responsibility for the emissions that you can’t yet address by supporting projects that remove carbon from the atmosphere. EcoCart offers plenty of projects for ecommerce companies looking to minimize the carbon footprint of deliveries.

Want to know where your business stands? Get your sustainability scorecard with our quiz:

Options For Emissions Reporting By Ecommerce Business Size 

Your strategies for gathering data surrounding carbon emissions will depend on your business size. Smaller ecommerce companies carry a smaller carbon footprint, and therefore, their emissions are much easier to track. Here are our recommendations for data collection based on your business size and how EcoCart can be a solution regardless of your monthly revenue.

Up to $50K in total monthly revenue 

Ecommerce companies making $50,000 per month or less can take a more DIY approach using carbon accounting software. In this case, their impact is a lot easier to track and measure, so there’s no need to make it complicated. Companies of this size can use EcoCart’s Product Emissions Calculations and sustainability scorecard to gauge where they stand and develop a plan from there.

$50K-$100K in total monthly revenue 

Mid-sized ecommerce companies that see $50,000 – $100,000 monthly revenue can still take a DIY approach, but they should use tracking software that integrates with their existing tech stack for a more comprehensive data collection methodology. EcoCart’s carbon emissions dashboard allows you to track and measure your carbon footprint in real-time so that you can get a 360-degree view of your impact. We also offer resources to help you share your sustainability journey with your customers so that they can share in your successes.

sustainability insights dashboard for ecommerce businesses

Over $100k in total monthly revenue 

Larger companies that make over $100,000 in monthly revenue should partner with a sustainability expert to help them track their ESG impact and make improvements. When you reach a certain level, it becomes difficult to take responsibility for your impact on your own. By partnering with a sustainability consultant, you can manage your data more effectively and feel secure in your sustainability approaches.

Partner With EcoCart To Prepare Your Business For SB 253

Although disclosure legislation like the Climate Corporate Data Accountability Act is much needed to support climate transparency, it tends to shake up the business world as companies seek compliance. When your company begins its strategy to prepare for the CCDAA, it doesn’t have to go about it alone. EcoCart offers plenty of resources to help track your carbon footprint and mitigate your impact. Interested in learning more? Reach out to our team for a demo today.

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