For businesses involved in the marketing, selling, or purchasing of voluntary carbon offsets in California, new disclosure obligations have been established. California Governor Gavin Newsom signed the Voluntary Carbon Markets Disclosures Act (VCMDA) into law on October 7. These disclosure standards also extend to businesses that announce net-zero or carbon-neutral claims. The new regulatory measures are set to go in effect as of January 1, 2024.
The changes come as part of a wider push to increase transparency around business involvement in voluntary carbon markets. These markets are a crucial part of global strategies to reduce carbon emissions, but require definite regulatory frameworks to ensure that carbon offset claims are legitimate and can contribute effectively to global emission reduction goals. The California VCMDA was signed into law with these considerations in mind.
Given that their implementation deadline is just over two years in the future, these new obligations place a time-sensitive responsibility on businesses in this sector. Firms will need to familiarize themselves with the upcoming disclosure requirements as quickly as possible and adjust their business practices accordingly. The same goes for any business making net-zero or carbon-neutral claims. Early adaptation to these changes will be instrumental for enabling seamless transition closer to the implementation date.
For a comprehensive review and more detailed information of these new obligations, professionals can refer to “New Disclosure Obligations for Businesses Transacting Carbon Offsets in California” provided by Morgan Lewis via JD Supra.
The VCMDA will undoubtedly have a wide-reaching impact on the global carbon market, and it will be interesting to watch how legislation in other jurisdictions develops in response. As always in the world of law, preparation will be key. It behooves corporate legal advisors, wherever they are based, to keep a close eye on developments in California, as these may be precursors to changes in their own markets.