July ’24 at-a-glance … environment

SEC disclosure rule for climate-related risks on hold 

Following numerous legal challenges, the Securities and Exchange Commission (SEC) stayed its final rule requiring most publicly traded companies (and potentially those with public debt) to disclose climate-related risks in their registration statements and annual reports. If eventually approved as issued, the rule would require companies to disclose Scope 1 direct emissions and Scope 2 indirect emissions. The requirement to report Scope 3 emissions from companies’ supply chains and users of their products was removed from the final rule.  

California climate disclosure bills could impact members  

California is in the process of implementing three climate disclosure bills. Impacted companies include those that operate and/or sell in the state and meet other requirements highlighted below:  

1. AB 1305, Voluntary Carbon Market Disclosures, applies to public and private companies operating in the state that make emissions claims or buy/sell carbon offsets within the state. These claims were to be included on company websites by Jan. 1, 2024. 

2. SB 253, Climate Corporate Data Accountability Act, applies to public and private companies with annual revenues of $1 billion or more that do business in California. Companies are to report Scope 1 and 2 emissions in 2026 and Scope 3 emissions in 2027. 

3. SB 261, Greenhouse Gases: Climate-Related Financial Risk, applies to public and private companies with annual revenues of $500 million or more that do business in California. Companies are to complete the Task Force on Climate-Related Financial Disclosures and post to their websites before Jan. 1, 2026. 

Gas stove debate simmers in California

Since the Ninth Circuit Court of Appeals declined to rehear the April 2023 decision to overturn the Berkeley, California, ban on natural gas hookups in new buildings, environmental activists in the state have switched approaches: 

• A legislative proposal would require warning labels on products encouraging people to use gas stoves with good ventilation. Similar bills in New York and Illinois are getting far less traction than the California bill. 

• In November, voters in Berkeley, California, will decide whether the city should tax large buildings that use natural gas. The proposed tax is estimated to raise $23 million annually that, if approved, would be dedicated to building electrification.  

In May, Berkeley halted enforcement of its gas ban, and other cities in the San Francisco Bay Area have done the same. The New York ban on natural gas and other fossil fuels in most new buildings remains. The ban applies to new buildings shorter than seven stories by 2026, and taller buildings by 2029. More than 100 U.S. cities have moved to restrict gas-powered appliances. Most of these bans focus on new construction. Members are advised to check local requirements as this issue continues to evolve.