States Making US Climate Reporting Inevitable

Author

Tim Mohin
19 Jul

Last week, we shared how the implementation of California’s climate laws is likely to be delayed for two years. This week, research from Fitch Ratings revealed that California isn’t the only state moving ahead with a mandatory climate disclosure policy.

There are at least four additional states that are considering climate disclosure legislation. Most of these disclosure bills mirror the requirements in the California climate laws, with some slight nuances. 

For example, New York, Washington State, and Illinois would require companies doing business in their state with overall annual revenues of more than $1 billion to report their Scope 1, 2, and 3 emissions verified by a third party - which is identical to the California law (SB253).

There are slight differences in how each state requires companies to report, as well as slight changes in adoption timelines and their position in state legislatures:

  • Washington’s SB 6092: This bill is the same as California’s SB 253 (requiring climate emissions reporting), mandating companies with more than $1 billion in annual revenue to report Scope 1 and 2 in 2026 and Scope 3 the year after and get assurances. Washington’s bill is the furthest along, having passed multiple House and Senate committees, and is likely to become the second approved state-level climate disclosure law. However, the current suggested timeline is unlikely to be maintained, and Washington does not include a climate risk reporting mandate.

  • New York’s SB S897C and SB 5437: New York’s bills also align with the California climate laws. The only slight difference is that SB 5437 requires annual climate risk reporting, whereas California’s SB 261 requires biennial reporting. SB S897C (climate emissions) currently sits in the New York Senate Finance Committee, and SB 5437 (climate risk) sits in the Senate Insurance Committee, meaning they are in the early stages of the approval process. If either is passed, companies will have to start reporting two years later. 

  • Illinois’ HB 4268: This bill is aligned with California’s SB 253 (emissions reporting) and would require companies doing business in Illinois with over $1 billion in revenue to report Scope 1, 2, and 3 emissions. It differs from California's law in that it requires Scope 3 reporting in the same year as Scope 1 and 2, but gives companies an additional 180 days to disclose them. This bill also has a very ambitious adoption timeline with a planned but extremely unlikely January 2025 reporting deadline. The bill had its first reading earlier in the year and currently sits with the House Rules Committee.

  • Minnesota’s SF 2744: This bill will require banks and credit unions with more than $1 billion in assets to make climate risk disclosures by completing a survey by July 30th each year. The state commissioner has to provide banks and credit unions with a survey form for them to use, but that is yet to be released. The bill currently sits with the State Senate.

The significance of all of these state-level policies is that they build a sense of inevitability to climate reporting in the US, regardless of what happens with the California and SEC rules. In addition, with these states largely aligning their disclosure legislation to California’s, there will be less reporting fragmentation. Never-the-less, widespread mandatory climate reporting in the US remains uncertain with the weekly (daily?) twists and turns. We will continue to monitor and report on the landscape as it unfolds.  

Climate Absent at the RNC

Trump’s Running Mate JD Vance | Maddie McGarvey NYT

If this week's Republican National Convention (RNC) is anything to go by, a Republican administration could be a complete u-turn for climate action compared to the last four years. The party platform had no mention of climate action and encouraged more fossil fuel usage. 

Trump has questioned the scientific consensus on climate change on the campaign trail and pulled the US out of the Paris accord in his last Administration.

The announcement of Trump's running mate, Senator J.D. Vance (Rep-OH), made clear that Trump’s VP pick would back him on the climate issue. Vance, prior to becoming a Trump supporter, was an advocate of solar and clean energy. Since joining the ticket, his positions have shifted toward support of fossil fuel production and skepticism of EVs, renewable energy, and even humanity's role in climate change.

This deep dive from the NYT shows all the ways in which a new Trump government “will be able to move more quickly, and more successfully” to reverse the US Environmental Protection Agency’s climate and other environmental regulations.

An important note: Each week, we strive to report  ESG and Climate News without bias. And, while political rhetoric is heated on the topics we cover, this week’s assassination attempt and loss of life at a Trump rally in Pennsylvania was abhorrent. We unequivocally condemn any form of political violence.

EU Deforestation Rules Teething Problems

The EU’s Deforestation Regulation (EUDR) is scheduled to start implementation on December 31st this year. The rule would ban imports of palm oil, leather, wood, soy, and other products unless the importer can attest that the production did not result in deforestation. However, some countries claim the EU is using inaccurate data to base its decisions.

Australia, Brazil, and other impacted nations claim there are inconsistencies in how the EU and the international community define forested areas. These inconsistencies could ban products that are free from deforestation. 

Brazil’s ambassador to the EU, Miguel da Costa e Silva, said, “Our private sector has documented multiple cases of cocoa and coffee plantations, as well as commercially grown tree plantations, that are misidentified as forests.” Despite widespread calls for a delay to the rule until more in-depth guidance is provided, EU Environment Commissioner Virginijus Sinkevičius says there are no plans to delay the rule. 

CBAM Rolling Back China Emissions

Another EU supply chain rule, the Carbon Border Adjustment Mechanism (CBAM), is faring better. The law would impose a tariff on certain imports if their production resulted in more emissions than the same domestic commodities. 

Countries importing goods into the EU are cleaning up their heavy industries in preparation for the CBAM tax. China, for example, accelerated its green steel production and stopped all new coal-based steel projects in the first half of 2024 - a primary goal of the CBAM. 

UK Reversing Fossil Fuel Permits

Barry Lewis/In Pictures/Getty Images

The new left-leaning UK Government is wasting no time in strengthening climate policies. They announced a ban on new oil and gas licenses, reversed a recent decision to approve an oil drilling operation, and dropped the defense to a legal challenge to stop a proposed coal mine. These moves are in part due to a recent UK High Court ruling that says planners must consider the climate effects of fossil fuel projects. 

During the King’s speech (where the new UK Government outlines its plans), the government announced seven other policies that have a sustainability element to them, which included things like revolutionizing public transport, a sustainable aviation fuel bill, and the founding of a public energy company to increase investment in renewables. 

The Coal Boom That Wasn’t

Source: Systems Change Lab

When the Paris Agreement was signed in 2015, coal-fired power generation was booming, with almost 1,500 GW of coal-fired power plants in development.

Fast-forward to today: 56% of those coal-fired power projects have been canceled, and only 31% became operational. This study from WRI’s Systems Change Lab found that climate goals and mass adoption of renewables have been the main factors responsible for the cancellations of coal-fired power development. 

Despite the cancellations and a record number of coal plants being decommissioned, 2023 set a record year for emissions from coal.

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer. 

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