Tired of Waiting on the SEC, California Adopts Extensive Climate Disclosure Laws

On January 1, 2024, the first of three California climate disclosure laws go into effect that will effect many businesses across the country.  California’s AB 1305 is aimed at combatting greenwashing.  AB 1305 imposes disclosure requirements on businesses that make net zero, carbon neutrality, or similar claims such as through the use of voluntary carbon offsets as well as requiring disclosures from companies that market or sell voluntary carbon offsets. AB 1305 applies to any business entity that operates in California and makes claims in California. Accordingly, any business that makes such claims in California — even a small company with a minimal presence in California — will be subject to the disclosure requirements. In general, any type of claim that is published on the internet should be considered as being made in California.  AB 1305 is further explained in the attached Client Alert which also discusses California’s other two climate disclosure laws that take effect in 2026.

California recently has passed three climate disclosure laws, with yet another still pending. These new laws are aimed at increasing transparency and consistency in climate-related disclosures, including greenhouse gas (GHG) emission and carbon offset disclosures, and to encourage climate risk mitigation including decarbonization.

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