California’s Climate Regulations: What You Need to Know Now

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The State of California has been a trailblazer in adopting and passing new climate regulations. Just last year, the state signed two important bills into law – the Climate Corporate Data Accountability (SB 253) and the Climate-Related Financial Risk Act (SB 241). These bills are part of a climate accountability package, designed to enhance transparency and accountability regarding companies’ greenhouse gas emissions.

Now, a new bill has entered the ever-changing landscape – one that aims to reduce greenwashing and increase accountability. Bill AB 1305: The Voluntary Carbon Market Disclosures Business Regulation Act (VCMDA), was signed on October 2023 and as the name suggests, it is focused on those organizations participating in the carbon offsets market.

Effective January 2024, this bill applies to a range of California-operating organizations and entities who market or sell voluntary carbon offsets or make claims about achieving net zero emissions through carbon offsets. Now, these entities will be required to disclose detailed information on the status of their projects on their organization’s websites. Not disclosing this information on their websites can now result in fines up to $2,500 USD/day.

There are three key parts of the bill:

1. Marketing & Selling Carbon Offsets

For those organizations marketing or selling carbon offsets, they will now need to disclose details on their website, including (but not limited to):

  • Project-based information – what specific protocols are used, locations for the project, associated timelines, start & end dates, trends over time (emission reductions/year and when will removals begin), type of projects, what standards it meets, third-party verifications completed, and more.
  • Details on if the project was not completed or if the projected results & reductions were not met

2. Purchasing & Using Carbon Offsets

For those organizations purchasing or using voluntary carbon offsets and claiming that they achieve net-zero emissions or are ‘carbon neutral’ because of them will need to include information including (but not limited to):

  • The entity selling the offset
  • Project name, type, and identification number
  • Protocols used to estimate reductions
  • Third-party verifications completed

3. Net-Zero and Carbon Neutrality

For those organizations claiming to achieve net-zero emissions or are ‘carbon neutral’, they will now need to include details on their website including (but not limited to):

  • Documentation on how this ‘net-zero’ or ‘carbon neutral’ claim is accurate or accomplished – what third-party verification was done and what methodologies were used.

How to Prepare for AB 1305

As we enter 2024 reporting season, it is important to remember what information regulations and frameworks require and how you can be proactive in meeting them. Oftentimes, organizations are reactionary to new legislation being passed, which can create increased administrative work and time required to get organized. However, if you have the necessary processes in place within your organization from the start, it will be easier to move forward with confidence, knowing that you will already have access to accurate, verified, high-quality data captured within your organization.

Organizations should consider the following steps:

  1. Establish a robust data collection and management strategy, complete with audit trails and documentation to support. Centralizing all your emissions data in one place through a software tool can help to manage version control, create automations, and mitigate risk.
  2. Leverage reporting tools and intuitive dashboards to understand emissions trends over time. Through this, make data-informed claims in external-facing materials, which can be supported by clearly documented metrics.
  3. Seek guidance from trusted advisors and third-party consultants to get tailored advice on how this bill will impact your organization and what the best next steps are.

How Cority Can Help You Navigate These New Climate Rules

With decades of technology and advisory experience, Cority is here to assist your organization in not only meeting but excelling in this new compliance landscape. Our tailored sustainability solutions and services are specifically designed to help companies like yours navigate these new GHG reporting requirements seamlessly and with confidence. Contact us to explore how our solutions and advisory services can support you on your sustainability strategies.