Abstract Three-dimensional (3D) vegetation canopy structure plays an important role in the way radiation interacts with the land surface. Accurately representing this process in Earth System models (ESMs) is crucial for the modeling of the global carbon, energy, and water cycles and hence future climate projections. Despite the importance of accounting for 3D canopy structure, the inability to represent such complexity at regional and global scales has impeded a successful implementation into ESMs. An alternative approach is to use an implicit clumping index to account for the horizontal heterogeneity in vegetation canopy representations in ESMs at global scale. This paper evaluates how modeled hyperspectral shortwave radiation partitioning of the terrestrial biosphere, as well as Sun-Induced Chlorophyll Fluorescence (SIF) are impacted when a clumping index parameterization is incorporated in the radiative transfer scheme of a new generation ESM, the Climate Model Alliance (CliMA). An accurate hyperspectral radiative transfer representation within ESMs is critical for accurately using of satellite data to confront, constrain, and improve land model processes. The newly implemented scheme is compared to Monte Carlo calculations for idealized scenes from the Radiation transfer Model Intercomparison for the Project for Intercomparison of Land-Surface Parameterizations (RAMI4PILPS), for open forest canopies both with and without snow on the ground. Results indicate that it is critical to account for canopy structural heterogeneity when calculating hyperspectral radiation transfer. The RMSE in shortwave radiation is reduced for reflectance (25%), absorptance (66%), and transmittance (75%) compared to the scenario without considering clumping. Calculated SIF is validated against satellite remote sensing data with the recently launched NASA Orbiting Carbon Observatory (OCO) 3, showing that including vertical and horizontal canopy structure when deriving SIF can improve model predictions in up to 51% in comparison to the scenario without clumping. By adding a clumping index into the CliMA-Land model, the relationship between canopy structure and SIF, Gross Primary Productivity (GPP), hyperspectral radiative transfer, and viewing geometry at the canopy scale can be explored in detail.