1. California enacted laws that require companies doing business in the state to disclose greenhouse gas emissions and carbon reduction goals.
2. These laws apply to companies with various revenue thresholds and also require disclosure of financial risks from climate change impacts.
3. Compliance deadlines for these laws are set for 2025 and 2026, and noncompliance penalties can be substantial, indicating a need for businesses to start taking action now to comply.
California has passed three laws that require businesses to disclose greenhouse gas emissions and climate-related financial risks if they operate in the state. These laws will require companies with varying revenue levels to report on their emissions and sustainability efforts starting in 2025.
The new laws have far-reaching impacts, requiring businesses to analyze and report on direct and indirect emissions, as well as financial risks related to climate change. Compliance will involve multiple teams within a company, including operations, finance, legal, and marketing teams.
The laws apply not only to companies physically located in California but also to those conducting business in the state. The disclosure requirements may also extend to parent or subsidiary companies, raising questions about their obligations under the new laws.
Compliance deadlines for these laws are approaching, with reporting requirements set to begin in 2025 and 2026. While there is some uncertainty surrounding the implementation of these laws, companies should start preparing now to avoid penalties and litigation risks associated with non-compliance. Compliance efforts will require resources and a multidisciplinary team to meet the reporting requirements.