The Climate Corporate Data Accountability Act is a pioneering legislative endeavour within the United States. This trailblazing legislation positions California at the forefront of climate accountability, setting a precedent that could inspire other states to follow suit. History illustrates that impactful state laws often serve as models for broader federal regulations. For instance, the California Clean Air Act of 1947 was a precursor to the federal Clean Air Act of 1970. In a similar vein, California’s Global Warming Solutions Act of 2006 catalysed a nationwide movement towards clean energy policies, contributing to the formulation of federal initiatives such as the Clean Power Plan. SB-253, has the potential to ignite a domino effect, encouraging other states to adopt comparable legislation and, eventually, laying the groundwork for a unified, federally mandated approach to corporate climate accountability.

In fact, this momentum aligns with ongoing efforts by the Securities and Exchange Commission (SEC), the US regulator for stocks and markets, which has been actively developing similar federal requirements for companies to report emissions and climate-related risks for over a year. The SEC’s proposed rules would only apply to publicly traded companies, while the Act applies to both publicly traded and privately held companies. Additionally, the SEC’s proposed rules are narrower with respect to which companies will be required to disclose the broader Scope 3 emissions.  This convergence of state and federal initiatives underscores a burgeoning consensus on the urgency and necessity of comprehensive climate reporting within the corporate sphere.