California has recently established notable new GHG emission laws. On October 7, Governor Gavin Newsom signed two landmark bills, Senate Bill (SB) 253, and SB-261, into law. These bills impose strict new requirements on large companies operating in California to publicly report their annual greenhouse gas (GHG) emissions and climate-related financial risks, as reported by JD Supra.
The legislation is not constrained to publicly traded companies, instead, it is applicable on both public and private entities, expanding the reach of the law farther than the anticipated climate disclosure rule proposed by the U.S. Securities and Exchange Commission (SEC) on March 21, 2022.
This pioneering move by California reinforces state efforts to combat climate change and boost corporate responsibility in the matter. Legal professionals working with global corporations and law firms should pay close attention to this development and evaluate the need to align their environmental practices and risk disclosure reports with these new legislative expectations to ensure compliance.
The specifics of these new laws and how they integrate with existing regulatory frameworks could have significant implications for businesses operating in California. This is a clear sign that the era of voluntary climate risk reporting is ending, replaced by strict mandates requiring transparency about GHG emissions and climate-related financial risks. With such states leading the charge, other states and potentially the federal government may follow, thus possibly altering the national landscape of environmental regulation and disclosure requirements.
As the legal environment around climate disclosure changes, corporations and their advisors must remain vigilant in order to navigate through these new legal and business landscapes effectively and responsibly.