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ABA: The American Bankers Association
Letter to Congress & Regulators

Follow-up Letter to CARB on the California Disclosure Laws related to Climate Risk and Greenhouse Gas

  • From American Bankers Association, California Bankers Association
  • Published August 1, 2025
  • Updated August 1, 2025

Re: Additional comments related to CARB Information Solicitation to Inform Implementation of California Climate-Disclosure Legislation: Senate Bills 253 and 261, as Amended by SB 219
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Dear Chair Randolph:

Following up on our July 2 discussion with CARB staff members, the California Bankers Association (CBA) and the American Bankers Association appreciate the opportunity to submit additional comments in response to the information solicitation by the California Air Resources Board (CARB) to inform the board's rulemaking to implement Senate Bill 253 (Weiner 2023) and SB 261 (Stern 2023) and the questions posed during CARB's May 29 workshop.

Reporting Deadlines and Data Lags

We urge CARB to adopt the latest possible disclosure deadline for Scope 1 and 2 emissions, such as December 31, 2026, and for Scope 3 emissions at the end of calendar year 2027. These timelines are essential for financial institutions to produce accurate, complete, and assured disclosures that reflect the operational complexity of their business and the realities of emissions data availability.

Financial institutions require a minimum six-month lag to report Scope 1 and 2 emissions. These disclosures rely on operational and energy usage data collected from across global business lines and utility providers. This information is often not available until several months after the end of the reporting period. Additional time is also required for internal validation and for completion of third-party assurance. Setting an earlier deadline would compromise the quality and completeness of disclosures.

Scope 3 emissions reporting presents even greater challenges. For financial institutions, financed emissions – defined under Category 15 of the GHG Protocol – require emissions data from borrowers, investees, and third-party data providers. This information is frequently based on corporate disclosures that are released well after year-end or must be estimated using proxy data or modeling. In practice, Scope 3 emissions reporting reflects a 12-18 month data lag, and in some cases, data may not be available for even longer periods.

The Health and Safety Code grants CARB clear authority to set flexible reporting deadlines. Section 38532(c)(2)(A)(i)(I) authorizes CARB to set a date for Scope 1 and 2 disclosures, and Section 38532(c)(2(A)(i)(II) allows CARB to specify a schedule for Scope 3 disclosures. Furthermore, Section 38532(f)(2)(B) protects reporting entities from penalties for Scope 3 misstatements made with a reasonable basis and in good faith, reflecting the legislature's recognition of the data limitations associated with Scope 3 reporting.

We strongly encourage CARB to fully exercise the flexibility granted by SB 219 and to set reporting deadlines that are aligned with reporting realities. Establishing end-of-year deadlines for both Scope 1 and 2 and Scope 3 disclosures will improve the credibility, comparability, and usefulness of the reported data while reducing compliance risk for reporting entities.

Download the joint trades letter to read the full text.

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