States Making US Climate Reporting Inevitable

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

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 Sinkevi?ius 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

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

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.?

Other Notable News:

• ESG is being wiped from job titles and fund names on Wall Street . While some banks are staunchly staying with ESG, others are changing role names to sustainability, and others, like Bank of America, have moved their ESG teams into clean energy and other functions.?
• UN Climate Chief Simon Steill asked countries to up their climate action after the effects of climate change hit close to home as his grandmother's house on the Caribbean island of Carriacou was completely destroyed by Hurricane Beryl .
• This new article from my company, BCG, looks at what fuel retailers can do to prepare for an EV future in which there will likely be fewer gas stations and more charging stations .
• Another article from BCG looks at what alternative protein providers can learn from EV companies . The parallels between these two disruptive technologies are huge, and there is a lot to be learned from the challenges and triumphs of EV adoption for alternative protein producers.
• A new independent report on the climate risks facing London found that the floods, droughts, and wildfires that will increasingly threaten the city are a ‘national threat’ for the UK . Climate adaptation must be included in national growth strategies to avoid ‘catastrophic’ impacts.
• The NYT mapped the heat of roads and sidewalks in three US cities and found temperatures reaching above 130(F), increasing the risks of contact burns from touching surfaces .?
• A new survey of public companies with more than $500 million in revenue found that 99% will increase their disclosure requirements next year, and 74% will invest in sustainability software .
• A new study has revealed that climate change is making the days longer . Melting ice caps are slowing the earth's rotation, which could have knock-on effects on global satellites and other technologies.

Notable Podcasts:?

• The most recent episode of the Harvard Business Review’s Climate Rising podcast is all about decarbonizing fashion materials . It features an interview with Bolt Threads CEO Dan Widmaier , who describes Mylo, a substitute for leather that’s derived from mushrooms.
• In the most recent edition of Bloomberg’s Zero podcast, host Akshat Rathi interviews voting rights advocate Stacey Abrams and Ari Matusiak of the nonprofit Rewiring America . Together, they discuss domestic household emissions and how they are on a mission to connect low and middle-income families with home electrification tax breaks.?

Notable Jobs:

• Sustainability Senior Lead, Braze, Austin, TX
• Sustainability Analyst, Macquarie Group, Philadelphia, PA
• Associate Consultant, Sustainability, Energy and Climate Change, WSP, New York
• Sustainability Analyst - Facilities, Nvidia, Santa Clara, CA
• Sustainability Consultant, Introba, Austin, TX, Hybrid
• Associate Consultant, Sustainability, Energy and Climate Change, Arlington, VA, Hybrid
• Specialist, Global Sustainability - Reporting, Tiffany & Co., New York, NY
• ESG Analyst, Invesco, Atlanta, GA
• Environmental and Social Governance (ESG) Coordinator, Culver City, CA, Hybrid