Today's Law As Amended


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SB-449 Climate-related financial risk.(2021-2022)



As Amends the Law Today


SECTION 1.
 The Legislature finds and declares all of the following:
(a) Climate change is affecting California’s environment, communities, and economy with impacts including wildfires, sea level rise, extreme weather events, extreme droughts, and associated impacts to the global economy.
(b) These impacts are expected to accelerate in coming decades unless aggressive action is taken both to reduce greenhouse gas emissions and to adapt California’s environments, communities, and economy.
(c) Global economic and climate policy leaders have conclusively established that the long-term strength of global and local economies will depend on their ability to withstand the climate change-related risks including physical impacts, economic transitions, and policy and legal responses.
(d) Failure of economic actors to adequately plan for and adapt to climate change-related risks to their businesses and to the economy will result in significant harm to California and to individual residents and investors, in particular to financially vulnerable Californians who are employed by, live in communities reliant on, or have invested in or obtained financing from these institutions.
(e) California is a global leader in addressing climate change causes and impacts, including the landmark emission reduction target of Senate Bill 32 (2016), the statewide carbon neutrality goal of Senate Bill 100 (2018), the requirement for state public pension funds to analyze and report material climate-related financial risks of Senate Bill 964 (2019), and the state climate investment framework directed by, and Climate-Related Risk Disclosure Advisory Group established pursuant to, Executive Order No. N-19-19.
(f) Leading voluntary initiatives have begun to develop frameworks for disclosure of climate change- and sustainability-related information, including the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures and the Sustainability Accounting Standards Board.
(g) Other jurisdictions have begun to require private and public entities to develop and disclose sustainability policies, including Illinois’ Sustainable Investing Act and France’s Energy Transition Law Article 173.
(h) Given business and financial institutions’ contributions to climate change and vulnerability to its impacts on California and the broader economy and the state’s leadership in analyzing, addressing, and mitigating climate risks, it is in the interest of the state to require disclosure of climate-related risks and risk-reduction strategies.

SEC. 2.

 Title 5 (commencing with Section 40000) is added to the Corporations Code, to read:

TITLE 5. Climate Risk Disclosures

40000.
 As used in this division:
(a) “Advisory group” means the Climate-Related Risk Disclosure Advisory Group established pursuant to Executive Order N-19-19.
(b) “Climate-related financial risk” means material risk of harm to immediate and long-term financial outcomes due to climate change, including, but not limited to, risks to corporate operations, provision of goods and services, real estate, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, insured assets, consumer demand, and financial markets and economic health.
(c) “Climate-related financial risk report” means a report required by Section 40001.
(d) “Covered entity” means a corporation, partnership, limited liability company, or other business entity incorporated, formed, or issued a license to operate or certificate of authority under the laws of the state that had annual gross revenues of at least five hundred million dollars ($500,000,000) in the prior calendar year.
(e) “Office” means the Office of Planning and Research.
40001.
 (a) On or before December 31, 2022, and annually thereafter, a covered entity shall prepare a climate-related financial risk report disclosing both of the following:
(1) Its climate-related financial risk, in accordance with the recommended framework and disclosures contained in the Final Report of Recommendations of the Task Force on Climate-Related Financial Disclosures (June 2017) or any successor thereto.
(2) Its measures adopted to reduce and adapt to climate-related financial risk disclosed pursuant to paragraph (1).
(b) On or before December 31, 2022, and annually thereafter, a covered entity shall do both of the following:
(1) Submit to the Secretary of State, and make available to the public on its own internet website, a copy of the report required by this section.
(2) Submit to the Secretary of State a statement affirming, not under penalty of perjury, that the report prepared and filed pursuant to this section discloses climate-related financial risk in accordance with paragraph (1) of subdivision (a).
(c) On or before January 31, 2023, and annually thereafter, the Secretary of State shall deliver to the advisory group copies of all climate-related financial risk reports received pursuant to this section in the prior calendar year.
40002.
 The advisory group shall do all of the following:
(a) Collect and review climate-related financial risk reports received in the prior calendar year.
(b) Annually prepare a public report that contains all of the following elements:
(1) A review of the disclosure of climate-related financial risk contained in climate-related financial risk reports.
(2) Analysis of the systemic and sector-wide climate-related financial risks facing the state based on the contents of climate-related financial risk reports, including, but not limited to, potential impacts on economically vulnerable communities.
(3) Identification of inadequate or insufficient reports.
(4) Proposals for regulatory actions, policies, or reforms needed to mitigate climate-related financial risks, including, but not limited to, legislative recommendations in order to implement current best practices regarding the disclosure of financial risks resulting from climate change.
(c) Regularly convene representatives of sectors responsible for reporting climate-related financial risks, state agencies responsible for oversight of reporting sectors, investment managers, academic experts, and other stakeholders to offer input on current best practices regarding the disclosure of financial risks resulting from climate change, including, but not limited to, proposals to update the definition of “climate-related financial risk,” the framework or disclosure standard of “climate-related financial risk reports,” and the membership of the advisory group.
40003.
 (a) The office shall make available to the public, on its internet website, all climate-related financial risk reports obtained by the advisory group.
(b) The office shall serve as the administrative staff for the advisory group.