Overview

The California Climate Corporate Data Accountability Act mandates that public and private entities operating in California report their emissions in full. It is designed to drive corporate transparency and accountability in greenhouse gas (GHG) emissions reporting. By requiring large companies (over $1 billion in revenue) operating in California to disclose their full emissions, including Scope 1 (direct emissions), Scope 2 (indirect emissions from energy use), and Scope 3 (supply chain and product lifecycle emissions).

Target:

Businesses in the US with revenues exceeding $1B USD and operating in the state of California.

Intended Impact:

Enhance corporate transparency and accountability by requiring large companies operating in California to disclose their full greenhouse gas (GHG) emissions, including Scope 1, 2, and 3. By standardizing emissions reporting and mandating third-party verification, the law reduces greenwashing and ensures reliable climate impact assessments. Public disclosure creates pressure from investors, consumers, and regulators, incentivizing companies to implement sustainability measures and reduce their carbon footprint. Ultimately, SB 253 drives corporate responsibility and aligns businesses with global climate action efforts.

Implication for Heath&Beauty Industry:

Many beauty companies, especially large multinational corporations, meet the revenue threshold and have operations in California, making them subject to SB 253. The beauty industry's supply chain is complex, involving raw material extraction, manufacturing, packaging, distribution, and retail. Each stage contributes to GHG emissions, particularly Scope 3 emissions, which encompass upstream and downstream activities such as purchased goods and services, transportation, and product use and disposal. Non-compliance with SB 253 can result in penalties of up to $500,000 per reporting year. Beyond financial penalties, failure to comply may lead to reputational damage, especially as consumers increasingly demand environmental responsibility from beauty brands.

Timeline

How to Prepare/Engage

To comply with SB 253, beauty companies will need to:

Assess Emissions Across the Value Chain

• Conduct comprehensive Life Cycle Analysis (LCA) to quantify GHG emissions at each stage of their products' lifecycle.

Implement Data Collection Systems

• Establish robust systems to gather accurate emissions data from suppliers, manufacturers, distributors, and retailers.

Engage in Supplier Collaboration

• Work closely with suppliers to ensure transparency and obtain necessary emissions information, which may involve assisting smaller suppliers in developing their reporting capabilities.

Invest in Emission Reduction Strategies

• Develop and implement strategies to reduce emissions, such as sourcing sustainable materials, optimizing manufacturing processes, and improving energy efficiency.