California Climate Bills to Boost Efforts in NY, Other States

October 6, 2023 – Media Mention
Bloomberg Law

Partner and chair of Herrick's Corporate Department, Morris DeFeo, was quoted in Bloomberg Law discussing California's first-in-the-nation measures requiring companies to disclose financial risks associated with climate and to report their greenhouse gas emissions and how other states could be influenced to pass similar measures to address climate change.

According to the article, the two bills approved by California lawmakers "come as states have differed in their approaches to regulating the use of environmental, social, and governance factors by businesses. Red states have enacted laws this year barring ESG considerations in pension and other government decisions while blue states have focused largely on transparency and reporting measures."

The article noted that the California measure is anticipated to apply to thousands of public and private companies. These measures go further than the disclosure requirements under consideration by the US Securities and Exchange Commission. Starting in in 2026, any company doing business in California with more than $1 billion in revenue will have to report their direct emissions from operations and indirect emissions from energy use under the emissions reporting bill. Additionally, reporting on emissions from a company’s supply chain and other sources outside its direct control would start in 2027.

“That’s where it gets to be very, very complicated,” said Morris.

The risk disclosure bill would apply to companies doing business in California with more than $500 million in revenue. They would report climate-related financial risks every two years starting on or before Jan. 1, 2026.

Some of “the more activist states” will likely follow California’s approach, Morris explained, but it’s unlikely “that every state or even a majority of states will follow suit.”

“Some states will take the point of view that they don’t want to go down that road because they want to differentiate themselves from the regulatory burden imposed by states like California,” Morris continued. “I also think that there are going to be some states that would say we don’t want to necessarily incur the costs at the public level of having to monitor compliance with all this.”

Read the full article in Bloomberg Law here. Access may require a subscription.