CLEE-Proposed Climate Risk Disclosure Laws Passes CA Legislature
SB 261 results from CLEE report advice
The California Legislature passed two path-breaking climate risk disclosure bills this week. Each bills now go to Governor Gavin Newsom’s desk where he has until October 14th to sign them.
Senate Bill 261 (Stern) requires major corporations to reveal climate change related financial risks, using a framework consistent with that of the Task Force on Climate Financial Disclosures Framework (TCFD).
CLEE’s Climate Risk Initiative first advisable that California require financial institutions and other corporations to reveal financial risks related to climate change using the TCFD Framework in our California Responsible Investment Roadmap which we published in 2020 in partnership with the United Nations Principles for Responsible Investment (PRI).
We convened legislative leaders, agency leaders and financial experts to share the advice and further refine it. We then drafted state laws to require disclosure of climate change-related financial risks, which was introduced by California State Senator Henry Stern as SB 449 (Stern) within the 2021-2022 session. We also convened environmental organizations and investor coalitions concerned concerning the financial risk of climate change to share our advisable laws.
While SB 449 was held within the Appropriations Committee in 2022, Senator Stern re-introduced the bill with amendments as SB 261 in 2023. Due to the exertions of Senator Stern, his co-authors, CERES (which sponsored SB 261 and its predecessor SB 441), and a protracted list of supporters, SB 261 was passed by each houses of the California Legislature this week despite strong opposition from the California Chamber of Commerce.
The second major climate disclosure bill to pass this week is SB 253 (Wiener), which requires major corporations to reveal their Scope 1, 2 and three greenhouse emissions. This bill, like SB 261, could be the primary of its kind to be enacted anywhere in the US.
Each bills now await the Governor’s signature. Governor Gavin Newsom has the chance to reveal leadership once more with regard to combating climate change and sign into law two critically vital climate disclosure bills. Should he achieve this, he will likely be setting a national standard for greenhouse gas emissions disclosure in addition to climate-related financial risk disclosures, at the identical time that the SEC continues to be considering what standard to set for disclosures by public corporations and while other federal financial regulators proceed to lag behind their European and Asian colleagues with regard to requiring corporations and financial institutions to reveal each greenhouse gas emissions and climate-related financial risks
