~~This update summarizes key takeaways and considerations from this year’s developments, including the trends from our review of nearly 100 companies’ public AB 1305 reports.~~Last year, California adopted a trio of laws requiring certain public and private companies to provide climate-related disclosures. As a quick refresher:~~More background SB 253 and 261 is detailed here, and AB 1305 is further discussed here.~~The California Legislature and Governor Gavin Newsom proposed varied amendments to these laws in 2024, and certain largely administrative amendments have now been signed into law. Litigation challenging SB 253 and 261 is also ongoing (as described here), though the laws have not been stayed while the litigation proceeds. As a result, companies are now facing a mostly unchanged—though uncertain—reporting landscape in the state.~~To help companies prepare for reporting under these laws (including SB 253 and SB 261, if they ultimately go into effect), we have summarized below our key takeaways and considerations from this year’s developments, including the trends from our review of nearly 100 companies’ public AB 1305 reports.~~SB 253 & 261: Amendments Adopted (But Little Changed For Reporting Companies).~~In June 2024, Governor Newsom proposed a trailer bill that would have delayed the initial reporting deadlines for SB 253 and 261 by two years, from 2026 to 2028, and provided the California Air Resources Board (“CARB”) more time to adopt implementing regulations (delaying the deadline from January 1, 2025 to January 1, 2027), among other changes. These proposals echoed the Governor’s previously expressed concerns over the bills’ financial impacts on covered companies and timing of the original reporting deadlines.~~The California Legislature did not adopt the trailer bill and, rejecting any reporting delay for companies, instead proposed its own amendments (SB 219), which the Governor signed into law on September 27. SB 219 did not remove the SB 253 or 261 filing fee payments, but did remove the requirement that the payments be made at the time the reports are disclosed or submitted. It also makes clear that companies can report at the parent level on a consolidated basis for both reports (this was previously clear only for SB 261 reporting).~~The remainder of SB 219’s changes impact CARB, including:~~With Additional Guidance Almost A Year Away, What Can Reporting Companies Do Now
. Although the fate of SB 253 and 261 is unclear given the pending litigation, companies can consider the following steps, as appropriate depending on their circumstances, as they prepare for potential SB 253 and 261 reporting:~~AB 1305: No Pending Changes, But A Wealth of Examples.~~AB 1305 does not specify the first reporting deadline for required disclosures: instead, it requires that the disclosures be updated no less than annually. The resulting uncertainty as to whether the first reporting deadline would be January 1, 2024—when the law first became effective—or January 1, 2025, resulted in some companies providing responsive disclosures late in 2023 and early 2024. To address this question, in January 2024, the author of AB 1305 published a statement of legislative intent reflecting his expectation that the first responsive disclosures be posted by January 1, 2025.~~The California Legislature then progressed on a number of amendments to AB 1305 through AB 2331, including to push the first reporting deadline further (to July 1, 2025), carve out certain renewable energy credits (“RECs”) from the definition of voluntary carbon offsets, and substantively revise the information required under the law, particularly for the marketing or sale of voluntary carbon offsets. AB 2331 was not passed by the California Legislature prior to the close of the general session in August, leaving the original reporting requirements in place for now. However, the California Attorney General has issued a formal legal opinion concluding that RECs used by reporting companies outside of California’s regulatory programs would not be considered voluntary carbon offsets for purposes of AB 1305.~~Early Filers Provide a Range of Reporting Approaches.
AB 1305 does not contain specific formatting or presentation requirements. This is a notable contrast to other more prescriptive California website reporting requirements and has resulted in a variety of approaches to AB 1305-related reporting across the more than 90 reports that have been published as of early September 2024. Key takeaways from our review of these reports include:~~~~Considerations for Preparing (or Updating) AB 1305 Disclosures
. In addition to the reporting trends noted above, reporting companies preparing or updating their AB 1305 disclosures should also consider:~~The following Gibson Dunn attorneys assisted in preparing this update: Aaron Briggs, Elizabeth Ising, Cynthia Mabry, Michael Murphy, Lauren Assaf-Holmes, and Meghan Sherley.~~Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments. To learn more, please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Securities Regulation and Corporate Governance or Environmental, Social and Governance practice groups, or the following authors:~~Aaron Briggs – San Francisco (+1 415.393.8297, abriggs@gibsondunn.com)
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, eising@gibsondunn.com)
Cynthia M. Mabry – Houston (+1 346.718.6614, cmabry@gibsondunn.com)
Michael K. Murphy – Washington, D.C. (+1 202.955.8238, mmurphy@gibsondunn.com)~~Please also view Gibson Dunn’s Securities Regulation and Corporate Governance Monitor.~~© 2024 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.~~Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.~~Download PDF~~
Oct 23
Deal Summary
