Why Agri-food Companies Should Care About California’s Latest Climate Regulations

“As goes California, so goes the nation” is a popular refrain, and environmental regulations are no exception. As the world’s fifth-largest economy, California’s regulations have a far-reaching impact on businesses not only within the United States, but also across the globe. 

In October 2023, California Governor Gavin Newsom cemented California’s status as a climate leader by signing two new climate bills into law. These bills will require broader disclosure than the Securities and Exchange Commission’s (SEC) Climate Disclosure rule. 

Thousands of businesses are expected to be affected by California Senate Bills (SB) 253 and 261, which will require them to disclose their carbon footprints and climate financial risks. The bills apply to any public or private company doing business in California that meets certain revenue thresholds, with penalties for non-compliance. Here are four reasons why large companies, especially in the agri-food sector, should take note:

1. Broad applicability
   As long as your company is doing business in California, SB 253 and SB 261 will apply to you. While the laws don’t precisely define "doing business" in California, the threshold could be quite low based on existing standards, with legal experts suggesting it could be as minimal as having a warehouse or selling to a few customers. So if your company exceeds the 500 million USD threshold in total revenue and has some business operations in California, it will be affected by these climate regulations.
   
   
2. Indirect impact through supply chains
   Even if your business isn’t directly operating in California, it may still be affected if your customers are doing business there. The Scope 3 reporting obligation for large companies with operations in California will sweep in the GHG emissions of subsidiaries and entire supply chains. Therefore, even if your company is under the revenue threshold, chances are you will still need to provide climate-related information, including GHG emissions, to support your customers' reporting requirements.
   
   
3. Setting a global precedent for agri-food worldwide
   The enactment of SB 253 and SB 261 sets new standards for corporate climate accountability that will extend far beyond the state. And given California's role as the fifth-largest supplier of food and agricultural products globally, these regulations are anticipated to influence agri-food companies and their value chains worldwide.
   
   
4. Unprecedented transparency requirements
   California’s SB 253 and SB 261 marks a significant shift from voluntary to mandatory climate reporting, requiring large companies – including those operating in the agri-food space – to comply with some of the most comprehensive climate disclosure standards. Large publicly traded and privately held corporations in the US will be mandated to publicly disclose their environmental impact, including Scope 3 emissions, and report how climate change is affecting their bottom line. 
   
   

How Terrascope can help your company meet California's climate laws

As the regulatory landscape shifts from voluntary to mandatory climate reporting, emissions data will undergo the same scrutiny as financial data. Agri-food companies must be confident in their data and able to demonstrate its accuracy. Measuring and reporting Scope 1, 2, and 3 emissions can be challenging, but utilizing software like Terrascope to automate GHG accounting ensures greater accuracy, traceability, and transparency.

Terrascope is an enterprise-grade, end-to-end decarbonization software platform designed to help corporations reduce emissions across their operations and supply chains. By providing credible, auditable emissions data compliant with the GHG Protocol, Terrascope delivers the carbon-related analytics needed for accurate and timely disclosures.

Terrascope specialises in Scope 3 and land-based emissions, supporting both company and product carbon footprinting, reporting, and decarbonization goals. For the agri-food industry, our focus on Scope 3 emissions includes:

• Mapping emission sources across the value chain
• Moving beyond spend-based data to guide best practice data for robust calculations
• Using location-based or custom emission factors that align with your supply chain, instead of generic global factors

Terrascope also has proprietary capabilities to track data confidence, visualize emission factors in detail, and simulate changes from reduction initiatives. 

As California leads the way in climate regulation, it’s imperative for agri-food companies to stay ahead of the curve. Contact us today to learn how Terrascope can support your journey towards effective decarbonization.