Insights

California's climate regulation is spreading beyond a local rule into a de facto ESG obligation across global supply chains. Samjong KPMG Economic Research Institute's Samjong Focus (February 2026) analyzes the latest developments around California's three climate bills enacted in 2023, their impact on Korean companies, and practical response strategies.

The core of the three climate bills. First, SB 253 (the Climate Corporate Data Accountability Act) requires companies with annual global revenue above USD 1 billion and operations in California to quantitatively report Scope 1, 2, and 3 emissions. Scopes 1 and 2 begin in 2026 (based on 2025 data, with the first deadline on August 10, 2026); Scope 3 is phased in from 2027. SB 261 (the Climate-Related Financial Risk Act) requires California-operating entities with annual revenue above USD 500 million to disclose the financial impact of physical and transition risks and their response strategies, per TCFD/ISSB standards. It is temporarily suspended due to an injunction by the Ninth Circuit Court of Appeals in November 2025, but resumption is likely. AB 1305 (the Voluntary Carbon Market Disclosures Act) imposes high transparency and supporting-data requirements on carbon-neutral and green marketing claims for products sold in the US.

Three direct hits for Korean companies. Large Korean conglomerates and mid-cap firms with subsidiaries, branches, or sales networks in the US West Coast — including IT, batteries, semiconductors, and autos — are likely to be directly in scope. As large US customers demand Scope 3 data across their supply chains to comply with SB 253, even Korean suppliers not directly regulated will face pressure to submit and verify emissions data. Violations of AB 1305 can trigger sanctions or fines from CARB (California Air Resources Board), and greenwashing issues translate directly into reputational risk.

What this means for M&A. California-led tightening of climate regulation creates three ripple effects in the M&A ecosystem. First, the strategic value of climate-tech and ESG SaaS companies with carbon data collection, verification, and reporting automation capabilities is rising fast — proactive bolt-on acquisitions in this area will be a key tool for supply-chain risk mitigation. Second, Scope 3 disclosure obligations elevate supply-chain carbon traceability to a must-have item in due diligence, structurally embedding climate-risk exposure into M&A valuations. Third, with non-compliant companies multiplying, carve-out and turnaround opportunities — acquiring assets discounted for lacking climate compliance and then injecting capability — are also likely to grow.