California's Legislature passed two disclosure bills - the Climate Corporate Data Accountability Act (CDAA) and the Climate-Related Financial Risk Act (CRFRA)- requiring entities to calculate and disclose their carbon footprint and climate risk. The CDAA will apply to US entities doing business in California with annual revenues over $1 billion to disclose particular scopes of Greenhouse Gas emissions, beginning in 2026. This report will also include reporting indirect emissions by the company and finding better ways to gather this data from third parties in the near future. The other act, CRFRA, also applies to US public and private entities in California that will have to publish climate-related financial risk reports, which include risk of harm to financial outcomes due to risks such as operations, supply chains, and employee health. Even if the company's own emissions are low, the susceptibility of potential climate-change risks will be analyzed. This law is monumental as it is the first legal requirement for many entities to gather and report on Scope 3 emissions, including that from third parties and will require planning and the potential litigation that could ensue.
