Last week, the California Air Resources Board ("CARB")--the agency responsible for implementing California's mandatory climate disclosures--issued additional guidance concerning these regulations. Significantly, although this guidance--in the form of an FAQ--offered additional insight into the CARB's thinking about this subject, the CARB has still not issued the regulation in question--even though it remains "committed to developing a regulation by the end of the year."
Nonetheless, the FAQ did provide certain noteworthy information. The CARB reiterated that a "goal" of the regulation is "to ensure that accurate, comparable, and decision-useful climate information is made available to investors, consumers, and other interested parties." In service of that goal, the "CARB will post a public docket for covered entities to post the location of their public link to their first climate-related financial risk report" since "[t]his public docket will help support transparency by providing one location for the public to be able to review all climate risk reports."
The CARB also provided additional guidance concerning its enforcement philosophy with respect to the imposition of penalties, emphasizing that a key consideration is "whether the violator took good faith measures to comply." The CARB also acknowledged that "climate-related financial risk disclosures . . . may be based on the best available information" during a "phase-in period for reporting," even if that information is slightly out-of-date. In other words, the CARB indicated that companies undertaking "good faith" efforts to comply would be unlikely to suffer significant penalties as a consequence for a violation of the climate disclosure regulation--at least during the initial phase of implementation. The CARB is signaling that the initial implementation of the regulation will not be unduly punitive, as long as companies undertake a certain amount of effort.
This Frequently Asked Questions document contains two sections, the first related to the California Air Resources Board's (CARB) regulatory development for the Corporate Greenhouse Gas Reporting and the Climate-Related Financial Risk Disclosure Programs, and the second related to information regarding submittal of initial reports. This guidance is intended to assist companies with initial planning, including for submitting climate-related financial risk reports by January 1, 2026. Future regulations may establish additional or alternative requirements consistent with Health and Safety Code §§ 38532 and 38533.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
