Manufacturers brace for California’s scope 3 emissions mandate
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California is pressing forward with landmark climate regulations that will soon force major companies to disclose their full greenhouse gas footprints. For the manufacturing sector, this represents a shift not just in reporting obligations but in how entire supply chains are structured and monitored.
Under the Climate Corporate Data Accountability Act, known as SB 253, companies earning more than $1 billion annually and operating in California must begin reporting direct emissions from their facilities and purchased electricity in 2026. One year later, they will need to disclose scope 3 emissions, a broader category that includes everything from supply chain transport and packaging to product end-of-life impact.
Tracking the entire value chain
Scope 3 emissions are often the largest source of carbon output for manufacturers. These emissions come from sources not directly owned or controlled by a company, such as raw material suppliers, contract manufacturers and logistics partners. According to the Greenhouse Gas Protocol, there are 15 defined categories under scope 3, but most firms will only report on those relevant to their operations.
The initial challenge lies in determining material categories and finding reliable data. Industry experts advise companies to start with rough estimates using procurement spend and gradually improve the granularity of data over time. While voluntary reporting standards have existed for years, California’s mandate brings legal weight and timelines that are already influencing boardroom strategies.
Software companies and consultancies are moving quickly to support manufacturers. Tools designed to automate emissions tracking, normalize vendor data and prepare disclosures for third-party assurance are becoming critical. Firms like Persefoni and UL Solutions are tailoring platforms for SB 253 compliance, and global suppliers are beginning to respond to data requests from downstream customers.
Supply chains under review
Manufacturers now face pressure to audit their full procurement pipelines. This is altering dynamics between buyers and suppliers. In some cases, emissions transparency is becoming a prerequisite for doing business. Suppliers that fail to track or reduce their own emissions may risk losing contracts.
There are already examples of companies inserting emissions clauses into vendor agreements or requiring emissions intensity benchmarks. For suppliers that produce carbon-intensive inputs like virgin plastics, metals or resins, the consequences are more immediate. In one case, Amcor, a global packaging manufacturer, worked with the Rocky Mountain Institute to trace upstream methane emissions in resin production, revealing previously hidden hotspots in its footprint.
As a result, procurement teams are beginning to treat carbon metrics with the same seriousness as cost, lead time or quality. This is particularly relevant for manufacturers with global supply networks where emissions vary widely depending on regional energy sources, transportation modes or waste handling practices.
Reputational value and compliance risk
While the new rules do not mandate emission reductions, they do require public disclosure and will be subject to third-party verification by 2030. That assurance layer is expected to raise the standard of data quality over time, giving institutional investors, regulators and the public a clearer view of how companies are managing climate risk.
For some manufacturers, the new disclosures offer an opportunity. Companies that can demonstrate lower supply chain emissions may gain an edge with customers or investors. Orbis, which produces reusable bulk packaging, shares emissions data with its customers to show life-cycle advantages over single-use packaging. The company even prorates its scope 1 and 2 emissions for customers based on facility use.
Still, the playing field is uneven. Larger firms with robust sustainability teams are better positioned to meet the requirements, while smaller suppliers may be overwhelmed. That creates a risk of market consolidation or fragmentation in supplier bases, particularly in sectors where data infrastructure is limited or margins are tight.
A shift in operations strategy
Within factories, the focus is also changing. Manufacturers are beginning to measure embodied emissions in materials and examine process-level impacts more closely. This has led some to rethink production schedules, facility energy mixes and even product design.
Technologies such as digital twins and real-time carbon tracking are helping manufacturers align operations with decarbonization goals. Firms that already invest in smart factories and connected systems will find it easier to integrate emissions management into daily workflows.
Over time, carbon data will inform decisions not just at the executive level but on the factory floor. For many, SB 253 is not just a compliance requirement but a catalyst to evolve business models, product strategies and supplier engagement.
California’s move may be the beginning of a broader shift. As one of the world’s largest economies, the state’s rules could become a reference point for national or international efforts. For now, manufacturers are preparing for what may become the new baseline in corporate climate accountability.
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