Gibson Dunn’s post: “Preparing for California’s Climate Reporting Legislation – Takeaways from Recent Amendments and Early AB 1305 Reporting Trends” reveals, among other things, an overview of early disclosure practices pursuant to California’s Voluntary Carbon Market Disclosures Act (AB 1305), which, by its terms, was effective January 1, 2024, notwithstanding the bill’s author’s intended disclosure compliance effective date of January 1, 2025. The absence of a post-effective date disclosure deadline in the actual bill, coupled with the author’s stated intent (memorialized in AB 2331, which was not acted on in time to pass in the most recent legislative session), reportedly resulted in a one-year deferral of enforcement until January 1, 2025.
Of 93 reporting companies (i.e., companies that published AB 1305 disclosures as of early September 2024), nearly three-quarters are publicly traded, with the balance being private companies. Of 68 publicly traded companies, 20 range from $1 - $10 billion in market cap; however, market caps represented among reporting companies range from less than $1 billion to more than $500 billion.
Additional key takeaways from Gibson Dunn’s analysis are as follows:
· Most Acknowledge a Sample or Category of Potentially In-Scope Claims. Most companies (70, or 75%) provided some reference to potential in-scope claims they had made, whether it was noting a specific achievement or corporate goal (e.g., achieving carbon neutral operations or adopting a net zero goal) or making a generic reference to its past reporting on targets and emissions reductions.
· Few Companies Provide an Explicit Tie to Each Requirement. Only 12 companies (13%) provided an index or heading identifying their claims or supporting information side by side with each reporting requirement.
· Most Do Not Summarize AB 1305’s Requirements. More than three-quarters of the companies surveyed (72, or 77%) did not include a description of AB 1305’s reporting requirements, while the remaining 21 companies (23%) provided a full or partial description.
· Most Do Not Include an “As Of” Date or Disclaimer. Less than half of companies (37, or 40%) included a clear “as of” date for the disclosure, which must be updated no less than annually. Twenty-seven companies (or 29%) included a general disclaimer regarding the report’s contents and/or a more extensive forward-looking-statement-type disclaimer.
· Most Disclosures Focus Only on Applicable Requirements. Only a quarter of companies (23, or 25%) included an affirmative statement that some portion of the law did not apply to them (e.g., that they did not purchase or use voluntary carbon offsets). Otherwise, companies typically were silent on this but addressed only the sections of the law that were applicable to them: in other words, if they only market or sell voluntary carbon offsets, they only addressed the disclosures required for that activity.
· Most Prefer a Standalone PDF Format. Over half of the companies (53, or 57%) provided their AB 1305 disclosure in a standalone PDF available on their website. A smaller portion (28, or 30%) provided the disclosure on their websites as a standalone webpage, while 11 companies (or 12%) addressed AB 1305 as a subset or reference on an existing page. In one instance, the disclosure was available only by clicking an “AB 1305” link on the website that downloaded an Excel file.