California has ushered in a new era of climate disclosure with SB 253 and SB 261, going beyond the SEC’s draft guidelines. These laws mandate that many businesses in the state, both public and private, disclose their greenhouse gas emissions and climate-related financial risks. Specifically, they call for detailed Scope 1, 2, and eventually, Scope 3 emissions reporting and are rooted in established protocols like the Greenhouse Gas Protocol and TCFD. For PE firms, this could mean added reporting responsibilities for portfolio companies doing business in California. While larger firms might have direct reporting obligations, even smaller entities could feel the ripple effects, especially those in the supply chains of reporting entities.
Actionable ESG for PE
The ESG landscape is largely being developed in relation to the activities and interests of the largest companies, the largest institutional investors, and the largest PE firms and subsequently applied across entire markets. This creates a dynamic wherein what is being expected and requested of you and your portfolio companies is not necessarily fully-aligned with your own operations and interests. We are dedicated to helping bridge this gap.