Further proposed amendments to California climate laws
Hot Topic | August 2024
As budget negotiations continue, new proposed amendments counter the previously proposed two-year deferral.
In October 2023, the California Governor signed three climate disclosure laws that will shape climate disclosure practices beyond the state’s borders. SB-253 (GHG emissions) and SB-261 (climate risks) apply to US businesses that meet specified revenue thresholds and do business in California. AB-1305 (carbon offsets) applies to US and international companies that undertake specified activities in California or make certain claims.
Latest developments
Since the laws were originally signed in October 2023, there have been several rounds of proposed amendments.
The following proposals are discussed in our Hot Topic:
- Introduced in March 2024, AB-2331 would amend AB-1305 (carbon offsets) – most notably by deferring the effective date by one year (to January 1, 2025).
- Introduced in June 2024, the Governor’s administration proposed amendments to both SB-253 (GHG emissions) and SB-261 (climate risks) – most notably by proposing to defer the effective dates by two years (to 2028).
On August 13, proposed SB-219 was introduced, which would amend SB-253 and SB-261, and which counters certain of the proposals made by the Governor’s administration in June 2024. Our Hot Topic will be updated once budget negotiations are complete (by August 31):
- SB-219 would maintain the 2026 effective date for reporting GHG emissions and climate risks – i.e. diverging from the Governor’s proposed two-year delay.
- The date for CARB to adopt regulations would be deferred by only six months to July 1, 2025 – i.e. diverging from the Governor’s proposed two-year delay.
Consistent with the Governor’s proposal, SB-219 would permit reporting at the consolidated parent company level for GHG emissions – i.e. extending the relief in SB-261.
Applicability
- The Climate Corporate Data Accountability Act (SB-253) and proposed amendments (SB-219)
- Climate-Related Financial Risk Act (SB-261) and proposed amendments (SB-219)
- Voluntary Carbon Market Disclosures Act (AB-1305) and proposed amendments (AB-2331)
Relevant dates
- The laws were signed by Governor Newsom in Oct 2023
- SB-253 and SB-261 are effective for reporting in 2026; the latest proposed amendments would not change the reporting year of 2026
- AB-1305 was effective Jan 1, 2024; a proposed amendment would change that date to Jan 1, 2025
Key impacts
There has been mounting pressure from governments and shareholders for companies to disclose their GHG emissions, describe their use of carbon offsets and report on climate-related risks. For most US companies, the current approach for such disclosures relies largely on voluntary reporting.
This is changing, as evidenced by reporting requirements on the national level (the SEC’s climate rule, now stayed) and international developments (standards from the International Sustainability Standards Board (ISSB) and European Sustainability Reporting Standards). The California laws represent a new dimension, with state-level requirements that have national and international implications.
In the movement to improve transparency and standardize climate-related disclosures, California passed three laws that apply to both public and private US companies (and other business entities) that either undertake in specified activities in California or do business in California – whether or not they are physically present in the state.
Report contents
- Fast facts, impacts, actions
- Background
- A broad scope
- Targeted disclosures
- Effective dates set to be delayed
- Assurance required from the outset
- Comparison to the SEC’s climate rule (now stayed)
- Other US states progressing similar laws
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