Governor Newsom Proposes 2-Year Delay to California Climate Disclosure Law

Governor Newsom has proposed that the implementation of California's mandatory climate disclosure laws--which apply to all companies doing business in California and earning more than $500 million in revenue--be delayed for two years.  Specifically, companies earning more than $1 billion in revenue would not have to disclose Scope 1 and Scope 2 greenhouse gas emissions until 2028, and the disclosure of Scope 3 greenhouse gas emissions would be delayed until 2029.  Similarly, for companies earning more than $500 million in revenue, they would not need to report climate-related risks until 2028.  It should be emphasized, though, that this is merely a proposal--it has not yet been enacted by the California state legislature. 

Nonetheless, this proposed delay is meaningful.  It indicates that Governor Newsom and his administration recognize the significant burden that California's mandatory climate disclosure imposes on companies, and that they are cognizant and at least somewhat responsive to the concerns raised by businesses in connection with this law.  Further, it also serves as another illustration of how mandatory climate disclosure laws in the United States have been weakened (or may be weakened)--akin to the omission of Scope 3 greenhouse gas emission disclosures from the final SEC climate disclosure rule.  (This stands in marked contrast to the climate disclosure rules promulgated by the European Union.)

In any event, the response of the California legislature to this proposal will be illuminating--as, if enacted, this measure will significantly extend the applicable deadlines for mandatory climate disclosures under California's regulatory regime.