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California Climate Law Advances, EU Delays Deforestation Rule

Tim Mohin

发布日期: 2024年10月4日

This week, the EU and the US seemed to swap roles as California advanced its climate disclosure law, maintaining the 2026 reporting deadline for large companies. On the other side of the role switch, the EU Commission proposed to delay its deforestation rule by a year.??

California Governor Gavin Newsom signed SB 219 late last week - sending a signal to US companies that mandatory climate disclosures are likely regardless of what happens in the court battle over the Securities and Exchange Commission (SEC) climate rule.??

As the state with the largest economy and population, California has long led the US and even the world in environmental action. Since 1967, when California created its Air Resources Board (CARB), the state's strict air quality and vehicle emissions rules are the most stringent in the US and are often adopted nationally.?

California's climate disclosure rules could be another example of the state’s environmental leadership and become a framework for the nation. Already, four other states are considering similar legislation (New York, Illinois, Minnesota, and Washington ).

The bill that Governor Newsom signed last week consolidated SB 253 and 261 - climate emissions and risk disclosure, respectively. The main changes in the consolidated bill were:

CARB has an extra six months, until July 1, 2025, to finalize the disclosure rules.

To lower business expenses, the reporting fees in the original bills have been eliminated, and companies can combine reporting at the parent company level.

Under the original policy, companies had 180 days to report Scope 3 emissions after submitting Scope 1 and 2 emissions data. Under the new law, CARB decides the timing for companies to report Scope 3 emissions.?

But the big news here is that despite requests from the Governor to delay the reporting deadline (he even said the deadlines were “infeasible ”), -? the original timeline is maintained. US companies doing business in California that meet certain thresholds will have to report assured Scope 1 and 2 emissions and climate risks in 2026 and Scope 3 the year after per the CARB schedule. The only hurdle left for the California climate rules is a federal lawsuit, which starts in 2 weeks (October 16th).

EUDR Delayed

Pressure has been mounting over the last few months to delay the EU’s Deforestation Regulation (EUDR). The rule would block the import of certain products (e.g., cattle, soy, palm oil, coffee) linked to deforested land. However, the countries of origin for these products expressed concerns about the effectiveness of the tools and information to determine links to deforestation.?

In response to the growing criticisms the EU Commission proposed to delay the EUDR by a year saying: “Given feedback received from international partners about their state of preparations, the commission proposes to give concerned parties additional time to prepare .”

The proposal gives large companies another year for compliance (December 30th, 2025), and smaller companies have until June 30th, 2026 . The update to the law has to be ratified by member states and the EU Parliament before December 30th, but it’s likely to sail through. The EU Commission also issued additional guidance for EUDR containing 11 chapters of clarifications on how the EUDR will work and added 40 new FAQs .

While many were thankful for this delay, activists like Julian Oram of Mighty Earth, said the delay is “an act of nature vandalism that will serve only to drive more industrial destruction of tropical forests, threatening the people and wildlife who depend on them .”

CSRD Transposition Delays Being Punished

In other news about EU green policies, the deadline for EU member states to transpose the Corporate Sustainability Reporting Directive (CSRD) into their national laws came and went back on July 6th, with few countries meeting it. Now, with only three months before reporting is set to begin, 17 of 27 EU countries have still not fully transposed the rule .?

With so little time before companies need to comply and a lot of details hinging on how each member state adopts the CSRD, The European Commission has now begun infringement proceedings . The first stage is sending the tardy member states a formal notice, triggering a two month window to transpose the policy. After that, the Commission sends a formal request to comply and refers the matter to the Court of Justice.

The Backlash Didn’t Kill ESG, Or Did It?

Image by American Public Power Association

There is so much conflicting information on the extent to which the political backlash has impacted the ESG movement over the last couple of years. On one hand, you have what some call ‘hopeism,’ which is on display in this op-ed by former Unilever CEO Paul Polman . It paints a picture that ESG investing is booming, and by some metrics , it is, but by others, not so much .?

On the other side, you have the more fatalist view with articles like this from FT , which says that corporate sustainability needs to be brought down and reimagined from the ground up, claiming those that espouse ESG hopeism are “delaying the required radical changes to markets and the policies that frame them .”

Like most things, the reality probably lies somewhere in the middle. The fourth annual “State of U.S. Sustainability Reports ” from the Harvard Business Review, which surveys 250 sustainability reports, found that ESG, although down, is not out and still featured in a quarter of reports (24%, a drop from 39% in 2023). It also found that companies are conducting more “double materiality assessments,” reports are longer, and mentions of CSRD and ISSB (ESG disclosure standards) are increasing. However, the number of companies doing press relations around their reports has plummeted to 49% from a high of 76% in 2021.?

More Civil VP Debate Reveals Policy Differences

In stark contrast to the two previous Presidential debates, Tuesday’s Vice Presidential debate was a more polite affair containing more actual policy talk and the climate question was featured quite heavily .??

Tim Walz (D-MN) and J.D. Vance (R-OH) couldn’t be more widely opposed in their views on climate action . However, in an attempt to broaden their appeal, both candidates attempted to stake out the center during the debate. Walz described “an all [of the] above energy policy ,” pointing to the Biden administration producing more oil and gas than at any time in US history. Although Vance described climate science as “weird science ,” he largely tempered his doubts about climate change, saying, “this idea that carbon emissions drive all the climate change … let’s just say that’s true, just for the sake of argument .”?

Nowhere Is Safe From Climate Change

One reason climate featured so heavily in the VP debate was the horrific and fatal floods resulting from Hurricane Helene. The hurricane was a stark reminder that no one will completely avoid the effects of climate change .?

The worst-hit areas were far inland, areas once thought to be immune from the effects of climate change. Asheville, North Carolina, the worst impacted area, was known as ‘climate haven’ – somewhere people move to escape the effects of climate change, but Hurricane Helene shows “You can’t hide from climate change .”?

A worrying trend is the swathes of Americans moving from relatively safe areas into areas prone to hurricanes, extreme heat, and floods, which are all likely to worsen in the coming decades .?

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

Other Notable News:

I was featured in an interview at New York Climate Week with the Chair of the Advisory Group (EFRAG) Sustainability Reporting Board Patrick de Cambourg, to discuss the relationship between sustainability reporting and progress .
As companies come to grips with the complexities of the CSRD, this article from Trellis gives a few examples of how they are preparing . Some are doing dry runs on their reporting and finding gaps, while others are creating dedicated transition teams.?
After 142 years of using coal power, the UK closed its last coal-fired power plant this week . Making the UK the first major power to fully phase out coal.?
Another huge company is pressuring suppliers to do more on sustainability reporting and performance . UK retail giant Asda will offer preferential financing to suppliers that report on ESG, set goals, and track their performance.?
The climate activists who threw soup over a Van Gogh painting were harshly punished by a UK judge this week, both receiving two years in prison .
This new report from my company, BCG, proposes a new methodology for more granular, accurate, and reliable Scope 2 carbon accounting .
Solar power continues to grow beyond expectations. In August, 36% more solar energy was generated than last August, and solar power is expected to make up two-thirds of all new energy generated in the rest of 2024.
China’s investment in foreign countries to manufacture its green technologies rose dramatically this year as the world’s leading producer of renewable energy attempts to circumvent EU and US tariffs .?

Notable Podcasts:?

This week’s episode of the Outrage and Optimism podcast is a New York Climate Week special . The podcast team is joined by a huge line-up of climate champions and activists to discuss how transformative climate strategies can be supercharged to form ‘positive tipping points.’
In this week’s edition of the BBC’s The Climate Question, the podcast team talks to some of the people on the frontline experiencing sea-level rises . They talk to people in Fiji and the UK who are losing their communities to the rising tides and ask what is being done to help the millions of climate migrants escaping rising sea levels.???