California Climate-Related Financial Risk Disclosure Bill Advances
I have been writing about a bill, SB 261, that would would require businesses to prepare and submit climate-related financial risk reports. See California Greenhouse Gas Emissions Bill Advances Despite Substantial Opposition And Constitutional Concerns. On May 30, 2023, the bill passed out of the Senate on a 27-8 vote.
The bill would apply to any corporation or other business entity formed under the laws of California, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States with total annual revenues in excess of $500,000,000 and that does business in California. According to the Senate floor analysis, there are more than 10,000 companies that meet this threshold. I am skeptical of this number in part because the bill fails to define what constitutes doing business in California.
The Senate floor analysis did take note of the Securities and Exchange Commission's proposal to require companies subject to the Exchange Act's reporting requirements to provide certain climate-related information in their registration statements and annual reports. However, the analysis claims that only 20% of the companies that would be subject to SB 261 would also be subject to the SEC's proposed requirements.
SB 261 has a long list of supporters and opponents. The source of the bill was Ceres, which describes itself as "a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges".
