What is New York’s Climate Corporate Data Accountability Act (Senate Bill 3456)?

The Climate Corporate Data Accountability Act, formally known as New York State Senate Bill S3456, represents an ambitious legislative step forward in environmental regulation.

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Crafted to confront the looming climate crisis, S3456 propels major businesses into a new era of transparency by requiring them to disclose their greenhouse gas (GHG) emissions. Primarily sponsored by Senator Brad Hoylman-Sigal, the Act emphasizes transparency and seeks to improve environmental accountability by mandating accurate corporate emissions reporting. 

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The goal is to amend existing environmental conservation and state finance laws to establish a climate accountability and emissions disclosure fund. Let’s dive in.

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How does S3456 work?

S3456 functions as a regulatory framework, requiring businesses to report their emissions across three significant scopes:

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Annual Emissions Disclosure

Under the Act's purview, businesses must prepare an annual report detailing their scope 1, scope 2, and scope 3 emissions. Scope 1 refers to direct emissions from company-owned resources; scope 2 includes indirect emissions from purchased energy, and scope 3 covers other indirect emissions occurring in the company’s value chain.

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Verification Process

The verification process requires businesses to obtain an independent third-party verification of their disclosed emission data. Independent verification through an assurance engagement solidifies the authenticity of the reported data, ensuring businesses are held accountable for their environmental footprint.

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Public Accessibility and Enforcement

The Act mandates that all emissions data be publicly accessible via a digital platform managed by an emissions reporting organization. This transparency informs consumers and stakeholders and allows public oversight to enforce corporate accountability.

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The Attorney General reserves the right to initiate civil actions against any entities that fail to adhere to the mandates of the Act, thus adding an effective enforcement layer to the regulation.

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What are the requirements of NY’s S3456?

Businesses falling under the requirements of S3456 must adhere to several stipulations:

• Reporting Obligations: Entities must annually disclose their environmental impact in terms of scope 1, 2, and 3 greenhouse gas emissions.
• Third-Party Verification: An independent assurance provider must verify the data reported, exemplifying the commitment to transparency and authenticity.
• Compliance Standards: The emissions reporting must adhere to established standards, notably the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard for Scopes 1 and 2 and the Corporate Value Chain (Scope 3) Standard.
• Public Disclosure: Detailed emissions data must be disclosed to a designated emissions reporting organization and be accessible to the public.
• Annual Fees: Companies must pay annual fees to the Department of Environmental Conservation to facilitate the administration and implementation of these provisions.

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When does S3456 become mandatory?

As of February 26, 2025, Senate Bill S3456, also known as the Climate Corporate Data Accountability Act, is not officially a law; it is in the Senate Committee on Environmental Conservation. The bill aims to add Article 74 to the environmental conservation law and Section 99-ss to the state finance law. A similar version of the bill, A4282, exists in the Assembly. The bill would take effect 180 days after it becomes law.

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New York’s Climate Corporate Data Accountability Act (S3456) sets a phased timeline for implementation to ease businesses into compliance:

• 2027: Companies must publicly disclose their scope 1 and 2 emissions, verified at a limited assurance level.
• 2028: A mandate follows for the disclosure of scope 3 emissions. The DEC may introduce assurance requirements specific to these emissions.
• 2031: Verification standards are set to tighten, with the assurance engagement for scopes 1 and 2 being elevated to a reasonable assurance level. If previously established, scope 3 emissions verification will be conducted at a limited assurance level.

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Additionally, by December 31, 2026, the Department of Environmental Conservation will adopt regulations requiring annual disclosures encompassing scopes 1, 2, and 3 emissions, verified independently.

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Who needs to comply with the Climate Corporate Data Accountability Act - S3456?

Compliance with S3456 applies to:

• Partnerships, Corporations, LLCs, and Similar Entities: These must be formed under the laws of New York State, any U.S. state, the District of Columbia, or Congress legislation.
• Entities Conducting Business in New York: Companies must be engaged in business operations within New York and derive income from these activities.
• Revenue Thresholds: Entities with total annual revenues exceeding one billion dollars, including subsidiary operations within New York, fall under this Act. However, subsidiaries can report under their parent companies if the parent complies with reporting mandates.

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Why should you care about S3456?

Understanding and complying with S3456 is critical for several reasons:

• Environmental Impact: The Act promotes care of and understanding of a company’s carbon emissions, helping to identify where to reduce them.
• Transparency: Public disclosures enhance transparency, empowering consumers and investors with information necessary for informed decision-making.
• Regulatory Compliance: Non-compliance results in substantial penalties, underscoring the importance of qualifying businesses to adhere strictly to mandates.
• Economic Considerations: Compliance may impact business practices, potentially influencing operational efficiency and competitive positioning.
• Accountability: With New York already experiencing climate-driven challenges like rising sea levels and erratic weather patterns, the Act seeks to enforce corporate accountability and catalyze positive environmental outcomes.

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How can Arbor help you with S3456?

Arbor is available as a strategic partner for businesses navigating the complexities of S3456 compliance. Arbor offers a comprehensive carbon accounting platform to precisely measure Scope 1, 2, and 3 emissions.

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Our platform facilitates accurate, product-level emissions (Scope 3) calculations and aligns with regulatory standards, ensuring your business maintains compliance seamlessly. Arbor's focus on automation and accuracy streamlines the process, turning what might seem daunting into a manageable and efficient task.

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Summary

New York’s Climate Corporate Data Accountability Act (S3456) represents a paradigm shift in environmental regulation, emphasizing accountability and transparency at a corporate level. S3456 aims to drive meaningful action toward mitigating climate change impacts by requiring comprehensive emissions reporting and third-party verification.

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Businesses are invited to participate in this transformative journey—not merely as passive players but as active contributors to a sustainable future.

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Businesses can confidently face this new regulation with support from platforms like Arbor.

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Measure your emissions with Arbor

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