President Trump signed a number of executive orders on January 20 changing course on federal climate policy including withdrawing the US, again, from the Paris Agreement, declaring a national “energy emergency”, pausing all wind power development, and suspending all funding disbursements related to the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law. A week later, New York reintroduced a pair of bills calling for climate risk and greenhouse gas (GHG) emissions disclosures from large companies doing business in the state.
On January 27, New York State Senator Brad Hoylman-Sigal introduced Senate Bill 3456, while Senator James Sanders Jr. introduced Senate Bill 3697 on January 29. Neither bill advanced when first introduced in 2023. Both climate bills were presented to the State Senate’s Environmental Conservation Committee, and are generally aligned with climate disclosure laws adopted by California in October 2023. However, the New York bills offer varying reporting timelines, and if approved, they would mandate climate-related disclosures from large companies operating in New York as early as 2027.
Climate Corporate Data Accountability Act (SB 3456)
This bill would require entities with revenue exceeding $1 billion in the prior fiscal year to disclose their carbon footprint if they conduct business or acquire receipts from business activities in New York State. This revenue includes, but is not limited to, income received by subsidiaries of an entity doing business in New York. Reporting entities would be required to disclose their Scope 1, 2, and 3 GHG emissions annually. Scope 1 and 2 emissions data would be required starting in 2027, for the prior fiscal year, with Scope 3 emissions data required the following year. The proposed bill requires that emissions be measured and reported using the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, along with the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The emissions reporting must be assured by an independent third-party assurance provider with Scope 1 and 2 emissions data at a limited assurance level beginning in 2027, and at a reasonable assurance level beginning in 2031.
Under the Act, the New York Attorney General would be able to bring a civil action against a reporting entity seeking civil penalties of up to $100,000 per day for willful failure to comply with the requirements of the Act or the regulations adopted thereunder, including for non-filing, late filing, or other failure to meet the requirements of the Act. However, the civil penalties could not exceed $500,000 in a reporting year, and penalties relating to Scope 3 reporting could only occur for non-filing through 2031.
Reporting of Climate-Related Financial Risk (SB 3697)
This bill focuses on climate-related financial risk reporting, requiring disclosures from any entity formed under US law and doing business in New York with total revenues exceeding $500 million in the prior fiscal year. By January 1, 2028, and every 2 years thereafter, a covered entity must prepare a climate-related financial risk report disclosing:
- Its climate-related financial risk, in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) framework or an equivalent reporting requirement
- The measures it has adopted to reduce and adapt to the disclosed climate-related financial risk
If a covered entity is not able to complete a report with all required disclosures, it must provide the disclosures to the best of its ability, provide a detailed explanation for any reporting gaps, and describe the steps it will take to prepare complete disclosures. Reports would be able to be consolidated at the parent company level, in which case a subsidiary that is a covered entity would not be required to prepare a separate climate-related financial risk report. In addition, a covered entity would be required to make its report available to the public on its website.
Next Step for Companies
While these bills are in their early stages, companies should monitor them, but taking compliance steps beyond that is premature as the predecessor bills were not adopted. It is unclear whether the current bills will gain traction, especially since they cover largely the same companies already required to report under California’s climate disclosure laws. If the New York bills are adopted in their current form, and given their significant overlap with California’s climate disclosure laws (assuming those laws survive the current court challenge), they will not require a substantial incremental compliance effort from most companies.
Companies should consider if and when to engage with these bills, either directly or through their trade associations.
The general consensus is that the California climate disclosure legislation would have benefited from more and earlier input from the business community. Some companies complying with California’s climate-risk and GHG emissions disclosure laws will be expected to make disclosures as early as 2026.
If your company needs help understanding and navigating the increasingly complex regulatory and compliance landscape for climate-related disclosures, please contact Canopy Edge to schedule a complimentary consultation and initial assessment.
