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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On September 27, California Governor Gavin Newsom yielded to political pressure to provide workable frameworks for the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261) when he signed into law a bill amending both provisions, <a href="https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB219" target="_blank" rel="noreferrer noopener">SB 219</a>. We summarized the impact of the California climate disclosure legislation package in a <a href="https://www.thompsonhine.com/insights/future-uncertain-for-california-climate-disclosure-laws-set-to-take-effect-in-two-years/" target="_blank" rel="noreferrer noopener">previous issue of ESG Collaborative Update</a>. SB 219 is a moderate version of the amendments Governor Newsom proposed in June 2024, which were rejected by the California legislature. Whether his efforts to keep the legislation package on track will be successful remains unclear, as litigation challenges against both SB 253 and SB 261 continue in the U.S. District Court for the Central District of California (U.S. Chamber, et al., C.D. Cal., Case 2:24-cv-00801 (Jan. 30, 2024). Later this month, the court will hear oral argument on dispositive motions in the case.

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Despite the litigation uncertainty, the key takeaway is that the first reporting deadlines will still begin in 2026. Entities that do business and sell products in California would be wise to begin preparing now to comply with the nation’s most extensive mandatory disclosure reporting requirements on greenhouse gas emissions.

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The following tables summarize the key changes implemented by SB 219.

Deadline for promulgation of CARB regulations

Set to begin in 2026 on or by a date to be determined by CARB, then annually thereafter

Set to begin in 2027 and annually thereafter; no later than 180 days after an entity’s reporting of Scope 1 and 2 emissions

Reporting will still begin in 2027, but CARB is now tasked with developing a phased-in schedule

Exempts subsidiaries of covered entities from separate reporting; can file a consolidated report at the parent company level

Limited/reasonable assurances for Scope 1 and 2 emissions

Amount undisclosed, but due at time of filing disclosure

Amount still undisclosed, but no longer due at time of filing; no deadline is specified

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Publication of climate-related financial risk report

Must be published on the covered entity’s website, on or before January 1, 2026, and biennially thereafter

Allows subsidiaries of regulated entities to submit consolidated reporting at parent company level

CARB will contract with a climate reporting organization to prepare reports on climate-related financial risk disclosures

CARB can choose to assume these duties or engage a third party to perform them

Due on or before January 1, 2026, and biennially thereafter, upon filing disclosure

No longer due at time of filing of disclosure, but due on or before January 1, 2026, and biennially thereafter

To comply with these requirements, covered entities will need to assess and develop internal controls around accounting, planning, operations, and governance practices to ensure successful and accurate disclosures. We previously provided some <a href="https://admin.thompsonhine.com/wp-content/uploads/2024/07/Insights-Practical-Suggestions-When-Reviewing-ESG-Disclosures-August-2024.pdf" target="_blank" rel="noreferrer noopener">practical suggestions</a> for ensuring ESG disclosures are specific and accurate. Careful planning and review of ESG disclosures will be central to minimizing compliance and litigation risks associated with ESG-related litigation.

Members of our <a href="https://www.thompsonhine.com/services/esg-collaborative/" target="_blank" rel="noreferrer noopener">ESG Collaborative</a> will continue to follow developments in the California climate disclosure litigation and legislative developments related to pending climate accountability legislation in other states.

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This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2024/10/ESG-Collaborative-Update-New-Deadline-Set-for-California-Climate-Disclosure-Rules.pdf

New Deadline Set for California Climate Disclosure Rules

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