In a significant move towards transparency in climate action, California’s Governor, Gavin Newsom, signed into law on October 7, 2023, a comprehensive corporate climate disclosure legislation considered to be the most extensive in the United States so far. The legislation includes Senate Bill 253 (SB 253), Senate Bill 261 (SB 261), and Assembly Bill 1305 (AB 1305), and it is of high relevance to any large private or public companies active in California. The reach of these laws also extends to companies aiming for net-zero or carbon-neutral targets and those involved in buying or selling voluntary carbon offset credits.
The full legislation was detailed by the law firm Orrick, Herrington & Sutcliffe.
These new measures indicate that any organisation doing business in the state will now be required to comply with more rigorous regulations regarding the disclosure of their climate-related activities and initiatives. Specifically, the laws require these entities to disclose the emission of greenhouse gases from their operations and their strategies for reducing such emissions.
From a practical viewpoint, it’s vital for any company with dealings in California to understand and implement the necessary measures in order to comply with the new rules. This requires not only accurate data reporting of greenhouse gas emissions, but also bold and effective strategies for their reduction. Companies pursuing net-zero or carbon-neutral goals are particularly relevant to these developments. Their activities, which often include the purchase or sale of voluntary carbon offset credits, are now subject to new disclosure obligations.
In light of these laws, all companies operating in California may want to
- Assess their current emission reporting practices and make necessary adjustments to comply fully with the legislation
- Formulate strategic plans outlining their intents and actions toward achieving lower greenhouse gas emissions
- Communicate these intentions and actions transparently to all stakeholders
This underscores the importance of open, honest, and proactive communication in the face of these climate challenges. Looking ahead, we eagerly await the practical impacts these laws will have on corporate action against climate change in the US, particularly within the state of California.