US State-Level ESG Laws

Overview

While federal ESG regulation remains uncertain, US states are taking the lead with climate and ESG legislation. California in particular has passed significant laws affecting large companies.

California Climate Laws

SB 253: Climate Corporate Data Accountability Act (2023)

Requirements:

• GHG emissions disclosure (Scope 1, 2, 3)
• Annual reporting to CARB
• Third-party assurance

Scope:

• US companies with revenue >$1B
• Doing business in California
• Starting 2026

SB 261: Climate-Related Financial Risk Act (2023)

Requirements:

• Climate-related financial risk disclosure
• Biennial reporting
• Aligned with TCFD

Scope:

• US companies with revenue >$500M
• Doing business in California
• Starting 2026

SB 343: Climate-Related Financial Risk (2023)

Requirements:

• Enhanced climate disclosure
• Uses ESRS framework
• Science-based targets (if set)

Scope:

• Large companies (similar to SB 253/261)

AB 1305: Greenwashing (2023)

Requirements:

• Disclosure of net-zero claims
• substantiation requirements
• Liability for false claims

Scope:

• Companies making environmental claims

Other State Developments

New York

• Climate Leadership and Community Protection Act
• GHG reduction targets
• Climate disclosure (proposed)

Washington

• Climate Commitment Act (cap-and-trade)
• Corporate GHG disclosure

Massachusetts

• Climate Disclosure Act (proposed)
• GHG reporting requirements

Colorado

• Climate Accountability Act
• GHG emission reduction requirements

Anti-ESG Movements

State Actions

Several states have passed anti-ESG laws:

• Prohibiting ESG investing for state funds
• Restricting ESG considerations
• Anti-boycott provisions

Implications

• Fragmented regulatory landscape
• Conflicting state requirements
• Compliance complexity

Practical Guidance

For Companies

1. Assess applicability: Which state laws apply?
2. Collect data: GHG emissions data
3. Prepare disclosure: California first
4. Monitor: Other state developments
5. Engage: Legal counsel

Key Considerations

• Multi-state compliance
• Third-party assurance
• Supply chain data
• Reporting frameworks

Key Takeaways

• States leading ESG regulation in US
• California laws most comprehensive
• Significant compliance burden
• More states expected to follow
• Federal vs. state tensions continue
• Multi-jurisdictional compliance needed