Penned by Cooley’s Beth Sasfai, Emma Bichet, Michael Mencher and Jack Eastwood, here’s a comprehensive Cooley alert that offers a snapshot of where sustainability-related regulations stand here and abroad at this point in time.
Here’s an excerpt about sustainability-focused legislation at the US state level: “As discussed in this September 2024 client alert, climate reporting continues to be a focus of state-level legislation, primarily led by California, but with similar bills having been proposed and debated in Illinois, New York and Washington. On September 27, 2024, California Gov. Gavin Newsom signed Senate Bill 219 into law, with implications for the California Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). The most significant result of SB 219 is that the California Air Resources Board (CARB) will have an extra six months (until July 1, 2025) to issue implementing regulations under SB 253. Further, recent legal challenges to these laws have been unsuccessful.
More recently, on December 5, CARB put out an enforcement notice providing leniency in the first year of reporting. In particular, CARB will allow companies to report Scopes 1 and 2 emissions in 2026 based on existing data and data collection processes, rather than needing to update based on CARB guidance. CARB also will not take enforcement actions against companies that report incomplete data in 2026, as long as companies make a good-faith effort to retain the relevant data. In addition, on December 16, CARB announced the solicitation of public comment in response to 13 questions related to SBs 253 and 261, with a comment deadline of February 14, 2025.
Topics include the definition of “doing business in California,” whether CARB should require greater standardization in areas where the Greenhouse Gas (GHG) Protocol allows flexibility, standards for third-party assurance providers, integration of external reporting standards, and the relevant time frame for information included in SB 261 reporting. Although CARB’s solicitation of public comment includes limited questions related to SB 261, unlike SB 253, CARB is not required to pass rules implementing SB 261 and has not issued guidance to date. As a result, there remains ongoing uncertainty among companies as to the degree of alignment regarding disclosure under SB 261 and all aspects of the Task Force on Climate-Related Financial Disclosures (TCFD) standards.
Although federal sustainability reporting regulations generally did not advance in 2024 and have dim prospects for the next four years, ESG-related obligations are not limited to the climate. The US Department of Homeland Security continues to increase the number of entities on the Uyghur Forced Labor Prevention Act (UFLPA) entity list, expanding the number of goods presumed to be derived from forced labor and thus prohibited from import into the US. UFLPA enforcement under the next administration is expected to be significantly influenced by broader US government trade policy. Canada also appears to be following suit, having recently announced its intention to introduce a new supply chain due diligence regime.”
Authored by
Broc Romanek