Legal professionals across the globe are closely observing recent developments in American environmental regulation, particularly the new climate laws enacted in California. As part of the broad Climate Accountability Package, the California legislature, under Governor Gavin Newsom, has ratified two substantial bills that are poised to reshape the manner in which corporations disclose their carbon emissions and climate-related financial risks.
The two new laws, namely Senate Bill No. 253 (SB 253) and Senate Bill No. 261 (SB 261), enjoin corporations to enhance and expand their public climate-related disclosures over the coming years. This could have far-reaching implications for companies not just in California, but potentially for corporations across the United States and beyond who do business in the state. An understanding of these bills is, therefore, crucial for legal counsellors whose clients must comply with these regulations.
SB 253 is particularly noteworthy in that it obliges corporations to make known their greenhouse gas emissions. This transparency ensures greater awareness and understanding of the companies’ impact on climate change, thereby mandating them to mitigate their carbon footprint.
SB 261, on the other hand, insists on companies exposing their climate-related financial risks. This new law empowers investors, customers and other stakeholders with the critical information they need relating to the exposure and risk companies face in relation to climate change. Thus, SB 261 can provide invaluable information that stakeholders will need to consider in their decision-making processes.
The enactment of these bills signifies that California continues to lead in pioneering environmental legislation in the US. The implications of these laws should not be underestimated by the legal community, specifically for those involved in corporate and environmental law. The ramifications of the new requirements will certainly become clearer as corporations start publishing significantly more granular information about their environmental impacts and related financial risks.
You can find more information about these new laws here.