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2023 Key US Regulatory Updates

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2023 Key US Regulatory Updates

2023-Key-US-Regulatory-Updates Scrubbed

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Before the year ends, take note of key regulatory updates in the US that may affect your business, particularly those effective January 1, 2024.

California’s Climate Accountability Package

In October 2023, the State of California enacted a landmark climate disclosure accountability package — the California Corporate Data Accountability Act (Senate Bill No. 253 or SB 253), Climate-Related Financial Risk Act (Senate Bill No. 261 or SB 261) and Voluntary Carbon Market Disclosures (Assembly Bill No. 1305 or AB 1305).

California Corporate Data Accountability Act and Climate-Related Financial Risk Act

SB 253 and SB 261 are the first general US regulations that mandate the corporate reporting of GHG emissions and climate risks in the United States.

Below is an overview of the two Senate bills:

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¹The term “doing business in California” is not clearly defined in either bill. Further clarification regarding the definition of the term is expected in the future. However, it is defined by the State here.

²Revenues are not required to be earned exclusively in California.

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Take note of the revenue threshold required by the two laws. Some companies are not required to disclose GHG emissions under SB 253 but must report climate-related financial risks under SB 261.

Spotlight: Scope 3 Disclosure Requirements

Voluntary Carbon Market Disclosures

For businesses operating in California, it’s important to highlight the commencement of the Voluntary Carbon Market Disclosures mandated by Assembly Bill No. 1305. AB 1305 is intended to combat the greenwashing of climate-related emission claims.

Certain disclosures on information covering the fiscal year starting January 1, 2024 are mandatory. This information should be reflected on the company’s website on or before January 1, 2025 and must be refreshed on an annual basis.

Mr. Jesse Gabriel, the author of AB 1305 sent a letter to the Chief Clerk of the Assembly to clarify his intent related to the timing of the disclosures required under AB-1305. The letter stated that “While the bill does not specify the date on which the first set of disclosures must be posted to a company’s Internet website, it was my intent that the first annual disclosure be posted by January 1, 2025.

A summary of AB 1305 is as follows:

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Unlike SB 253 and SB 261, which have revenue thresholds, AB 1305 is applicable to all private and public entities regardless of revenue.

Penalties

A company that violates AB1305 is subject to a civil penalty of $2,500 for each day that information is not available or is inaccurate on the person’s website, but the total penalty is not to exceed $500,000.

Corporate Transparency Act of 2021

The Corporate Transparency Act