Early reporting trends for California’s AB 1305

Here’s a memo from Gibson Dunn that – among other things – notes these early reporting trends for California’s new disclosure law about voluntary carbon offsets – disclosures under this new law are not yet mandated. AB 1305 does not contain specific formatting or presentation requirements. This is a notable contrast to other more prescriptive California website reporting requirements and has resulted in a variety of approaches to AB 1305-related reporting across the more than 90 reports that have been published as of early September 2024. Here are observations from the memo:

 

• Most Filers are Public Companies. We identified at least 68 public company reports and 26 private company reports across a range of industries. As one public company subsequently took down their report, we have excluded it from the following statistics, for a total sample of 93 companies. Below, we have summarized the market capitalization for reporting public companies.
• Most Acknowledge a Sample or Category of Potentially In-Scope Claims. Most companies (70, or 75%) provided some reference to potential in-scope claims they had made, whether it was noting a specific achievement or corporate goal (e.g., achieving carbon neutral operations or adopting a net zero goal) or making a generic reference to its past reporting on targets and emissions reductions.
• Few Companies Provide an Explicit Tie to Each Requirement. Only 12 companies (13%) provided an index or heading identifying their claims or supporting information side by side with each reporting requirement.
• Most Do Not Summarize AB 1305’s Requirements. More than three-quarters of the companies surveyed (72, or 77%) did not include a description of AB 1305’s reporting requirements, while the remaining 21 companies (23%) provided a full or partial description.
• Most Do Not Include an “As Of” Date or Disclaimer. Less than half of companies (37, or 40%) included a clear “as of” date for the disclosure, which must be updated no less than annually. Twenty-seven companies (or 29%) included a general disclaimer regarding the report’s contents and/or a more extensive forward-looking-statement-type disclaimer.
• Most Disclosures Focus Only on Applicable Requirements. Only a quarter of companies (23, or 25%) included an affirmative statement that some portion of the law did not apply to them (e.g., that they did not purchase or use voluntary carbon offsets). Otherwise, companies typically were silent on this but addressed only the sections of the law that were applicable to them: in other words, if they only market or sell voluntary carbon offsets, they only addressed the disclosures required for that activity.
• Most Prefer a Standalone PDF Format. Over half of the companies (53, or 57%) provided their AB 1305 disclosure in a standalone PDF available on their website. A smaller portion (28, or 30%) provided the disclosure on their websites as a standalone webpage, while 11 companies (or 12%) addressed AB 1305 as a subset or reference on an existing page. In one instance, the disclosure was available only by clicking an “AB 1305” link on the website that downloaded an Excel file.