How California’s New Emissions Reporting Law Impacts Large Corporations

Published on
Oct 16, 2023
Contributed by

On October 7th, 2023, California Governor Gavin Newsom signed Senate Bill 253. Some are calling this a “national bill” as we wait for the same type of guidance from the SEC. For companies doing business in California and who have annual revenues of $1 billion or more, this law matters to you.

What’s expected?

  • Companies who qualify will need to disclose Scopes 1, 2, and 3 emissions on a government-sponsored online platform.
  • Scope 1 and 2 emissions reporting begins in 2026 covering fiscal year 2025, and Scope 3 reporting begins in 2027.
  • Penalties for not meeting reporting criteria include fines up to $500,000 per year.

Why does this matter?

So, what is all this talk about Scope 1, 2, and 3? The Greenhouse Gas Protocol is the global emissions reporting standard, and they define the scopes as follows:

  • Scope 1 emissions are direct emissions from owned or controlled sources.
  • Scope 2 emissions are indirect emissions from the generation of purchased energy.
  • Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. They also tend to be the largest source of greenhouse gas emissions for a company.

Scope 1 and 2 emissions tend to be the simplest to track, because they come from fueling your company-owned vehicles, burning fuel at your facilities, and your purchased energy. Scope 3 is the most complicated piece of this emissions reporting puzzle because it includes transportation of raw and finished goods, use of sold products, and all aspects within a company’s value chain; it requires tracking and managing a considerable amount of variables.

How Flock can help you.

As a vendor, Flock Freight falls under the Scope 3 umbrella. And, not only that – Flock’s core offering, FlockDirect®, is the most sustainable way for our customers to ship their freight, resulting in a reduction of up to 40% of shipping emissions compared to traditional methods.And, it gets better. Customers who sign up for our Frequent Flocker program and reach a threshold of 60 total shipments (based on pickup date) for one calendar month will unlock carbon neutrality for all FlockDirect® shipments the following month at no extra cost. Being a member of the program entitles Flock customers to receive quarterly emissions data which can help supplement your Scope 3 dataset and advance your company’s emissions reporting.