CARB solicits feedback on implementation of California climate-disclosure legislation
The California Air Resources Board (“CARB”) issued an information solicitation regarding implementation of California Senate Bills (“SB”) 253 and 261, as amended by SB 219 (collectively, the “California climate-disclosure legislation”). The legislation establishes various climate-related reporting requirements for US-based entities doing business in the state of California that meet certain revenue thresholds.
The solicitation seeks public feedback on 13 questions relating to CARB’s potential implementation of the California climate-disclosure legislation. Questions concern, among other things:
- Defining the term “doing business in California”;
- Identifying covered entities;
- Reporting processes; and
- Scoping of reported data.
Additional context: The California climate-disclosure legislation, enacted in 2023 and amended in 2024, requires business entities formed under the laws of California, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States (“US-based entities”) to report specified greenhouse gas emissions and climate related financial risks.
SB 253, as amended, requires US-based entities with more than $1 billion in annual revenue doing business in California to annually report scope 1, 2, and 3 emissions. SB 261, as amended, requires US-based entities with more than $500 million in annual revenue doing business in California to biennially report any climate-related financial risks they have identified and any measures they have adopted to reduce and adapt to those risks. SB 219, enacted in 2024, amends various aspects of both bills – most notably the timing of scope 3 emissions reporting under SB 253.
Timeline: Comments in response to the solicitation are due by February 14, 2025.
Australian regulator consults for regulatory guidance on sustainability reporting
The consultation paper outlines the Australian Securities and Investment Commission (ASIC)’s approach to managing the sustainability reporting regime. It provides guidance for entities with sustainability reporting obligations on how to fulfill these responsibilities effectively.
Summary: CP 380 Sustainability reporting was released 7 November for public comments until 19 December 2024. This consultation paper seeks feedback on:
- ASIC’s proposals to issue a regulatory guide for entities required to prepare a sustainability report under Ch 2M of the Corporations Act
- ASIC’s proposals to facilitate sustainability reporting relief for stapled entities (an arrangement where two or more entities that are commonly owned (at least one of which is a trust) are bound together, such that they cannot be bought or sold separately), and
- broader questions, issues or uncertainties that may inform ASIC’s approach to any future guidance.
Next steps: Reporting entities must have the report audited and the audit requirements are being phased in between 1 January 2025 and 30 June 2030.
EBA publishes its final Guidelines on the management of ESG risks
The European Banking Authority (EBA) has published its final guidelines on the management of Environmental, Social and Governance (ESG) risks following a consultation it launched on the issue last year.
In detail: The guidelines set out requirements for institutions to identify, manage, measure and monitor ESG risks, including through plans aimed at ensuring their resilience in the short, medium and long term.
Management processes: The EU Commission mandates the EBA in the Capital Requirements Directive (CRD6) to specify internal processes and ESG risk management arrangements. These arrangements are aimed at ensuring the safety and soundness of institutions as ESG risks intensify and the EU transitions towards a more sustainable economy.
Transition plans: Banks will also have to develop prudential transition plans for portfolios or exposures deemed materially exposed to environmental risks (i.e. considering both transition and physical risks). These plans will support the preparedness of institutions for the transition and should be consistent with transition plans prepared or disclosed by institutions under other pieces of EU legislation.
Timing: The guidelines will apply from 11 January 2026 for large institutions and from 11 January 2027 for small and non-complex institutions.
Qatar consults on rules for Corporate Sustainability Reporting
The Qatar Financial Centre Regulatory Authority (QFCRA) has announced proposed amendments to the General Rules 2005 (GENE) to enhance corporate sustainability reporting.
Summary: These changes aim to align with the International Sustainability Standards Board (ISSB) Standards, focusing on the IFRS S1 General Requirements for Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures.
- The amendments will apply to all Category A firms and any firm designated by the Regulatory Authority for corporate sustainability reporting.
- They also introduce proportionality mechanisms and transition reliefs to facilitate the adoption of IFRS S1 and IFRS S2 standards.
- To support effective implementation, the Regulatory Authority has prepared a draft guidance document offering an educational overview for firms starting to apply these standards.
Next Steps: The updated GENE rules are set to commence on 1 January 2026, and stakeholders are invited to submit their comments by 25 March 2025.
