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California Adopts Bill Regulating Net Zero, Carbon Offset Disclosures

SV Venture Group

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发布日期: 2023年11月2日

AB 1305 will require sellers of voluntary carbon offsets to make additional information regarding such offsets available, which may assist companies in deciding whether to use carbon offsets to achieve their emissions reduction goals.?

Effectiveness

It is effective beginning January 1, 2024, and subject entities must provide and update their disclosures at least annually.

Key Takeaways

Failure to comply with these regulations may lead to a civil penalty of up to $2,500 per day for each violation, with a maximum fine of $500,000.
No Minimum Revenue Threshold.? AB 1305 does not provide for a minimum revenue to be subject to its provisions, small companies operating in California will have to comply with AB 1305’s disclosure requirements if they purchase voluntary carbon offsets and/or make certain emissions claims.
“Operate” is not defined does it mean “doing business” in California?
Need to Monitor Emissions Claims.? more carefully monitor their net zero and other emissions claims and ….

Due Diligence of Carbon Offset Purchases.?Affected companies must be prepared to provide more specific information regarding their voluntary carbon offset programs.
Compliance Timelines Are Short.?Companies should consult with legal counsel to determine whether they are required to make the disclosures under AB 1305 as soon as possible - (January 1, 2024).
Potential for Increased Scrutiny and Heightened Litigation Risks.?The additional disclosures required by AB 1305 may draw in further greenwashing, fiduciary duty, securities or other litigation from regulators, investors, customers and other activists.

Beyond California, the EU is also moving toward a directive on green claims. In September 2023, the European Parliament and Council reached a provisional agreement on this directive, which will ban, among others, “claims based on emissions offsetting schemes that a product has neutral, reduced or positive impact on the environment,” as?reported?by the European Parliament.