New York Senate Passes Climate Disclosure Law – 2nd In The US

Last week the New York Senate passed a new set of environmental bills that included the previously reported on "Climate Corporate Data Accountability Act" (the "Act").

If passed, the Act will become the second set of bills passed in the United States which are aimed at requiring entities with connections to New York to report on their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning in 2027. New York would join California as the second state in the US in requiring this type of reporting for companies with over $1 Billion in revenue.

Between New York at $1.6 Trillion of real GDP and California at $2.9 Trillion of real GDP, these two states together would represent more than 17.5% of the US's real GDP being subject to Scope 1, 2 and 3 reporting requirements for greenhouse gas emissions.

California passed their version of a very similar reporting bill, SB 253, in 2023, with an effective date of January 2026. New York's Bill requires regulations to be passed by December 31, 2026 with an effective reporting requirement for entities subject to the Bill during 2027 for Scope 1 and 2 and 2028 for Scope 3. Like California who was challenged in courts, it is anticipated that the New York Bill will also be challenged.

As readers will likely recall, the SEC had pursued a similar path during 2023 and 2024, issuing proposed rules, and then final rules and then revised final rules which were then challenged and consolidated into one case in the 8th Circuit. The SEC's final rules only required reporting on Scope 1 and 2 after receiving a backlash of comments about Scope 3. The SEC has reversed its course under the Trump Administration and has let this litigation die and will not impose any of its proposed or final rules on climate disclosure.

Despite the SEC's position, it appears that states will continue to pursue their own path regarding climate disclosure. The New York Bill is very similar to the California bill and requires reporting starting in 2027 and additional reporting in 2028. It also requires a third party report of limited assurance on Scope 1 and 2 in 2027 and a reasonable assurance report starting in 2031.

Companies with limited contacts to New York will likely find themselves subject to this reporting regime and need to put in the work to measure, monitor and report on their Scope 1, 2 and 3 greenhouse gas emissions if they have sales of over $1 Billion Dollars (and those sales need NOT be in New York alone, rather they are in the aggregate and likely will include subsidiary and related entities).

Green Spouts: While it is highly likely that various parties like the US Chamber of Commerce (who sued California for implementing SB 261 and 253) will also attempt to block New York from implementing its version of SB 3456, it appears that if passed in New York, that the constitutional challenges raised by the plaintiffs are not likely to withstand New York court scrutiny and New York could join California as requiring such reporting as early as 2027.

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