Emissions Reporting Legislation for Business
3 min readSustainability is a growing trend impacting both individuals and businesses, with over 23,000 companies disclosing their carbon reduction performance to the Carbon Disclosure Project and 6,000 companies committing to science-based targets. Beyond voluntary disclosures, there has been an increase in legislation from the federal, state and local levels that has led businesses to assess and evaluate their emissions and energy consumption. Constellation’s Sustainability Management Group and Constellation Navigator division held a webinar discussing the impacts that this legislation has on businesses.
Green City Mandates
Constellation’s sustainability experts kicked off the webinar discussing the ever-growing list of Green City Mandates. Given the increasing severity of the climate crisis, the Federal U.S. Government has committed to achieve a net zero goal by 2050 under the Paris Agreement. In response, many large cities in the U.S, where commercial and industrial buildings account for about 40% to 80% of a city’s emissions, have also begun to develop climate action plans to reduce their carbon footprint. A common initiative among these cities is the implementation of building emission mandates or ordinances, often referred to as “Green City Mandates.” The team discussed a handful of cities that have made climate plans as aggressive as the federal government. They also discussed how cities are benchmarking large buildings’ Energy Use Intensity (EUI), different strategies that buildings can leverage and the potential financial penalties for non-compliance.
California State Senate Bills 253 and 261
Beyond localized, building-level mandates, other regulations, such as California Senate Bill 253 and 261, made California the first U.S. state to introduce statewide legislation specifically targeting greenhouse gas (GHG) emissions reporting at the organizational level. California State Bills 253 and 261 impose stringent new requirements on large companies doing business in California to publicly report their annual GHG emissions and climate-related financial risks. Senate Bill 253 requires entities with total annual revenues of $1 billion or more that do business in California to report their GHG emissions annually. The bill does not define what it means to “do business in California,” but the state tax code defines this term as engaging in any transaction for financial gain within California, being organized or commercially domiciled in California, or having California sales, property or payroll that exceed specified amounts. Senate Bill 261 requires companies with over $500 million to prepare a climate-related financial risk report biennially and make it publicly available on their websites.
The California Air Resources Board (CARB) will be developing final requirements for disclosure, and reporting entities must publicly disclose their prior fiscal year’s Scope 1 and 2 GHG emissions with limited third-party assurance starting January 1, 2025. By January 1, 2026, entities must also prepare a climate-related financial risk report and make it publicly available, with third-party assurance evaluation for Scope 3 emissions being discussed currently.
The webinar emphasized that Senate Bill 253 and 261 require third-party auditors to verify and certify the data reported by organization. This verification process ensures the accuracy and reliability of the reported energy consumption, carbon emissions and other building characteristics.
Take Action Today
Constellation offers solutions tailored to different cities’ mandates, as the requirements can vary significantly. For example, a solution that is effective for a building in Boston may not produce the same results for a building in Chicago. Constellation’s expertise in navigating these differences and providing customized solutions can be a significant advantage for businesses looking to comply with emissions reporting legislation.
Gain valuable insights from Constellation’s expert panel and the audience Q&A in the webinar below.
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