California Requires Reporting on Voluntary Carbon Offsets and Climate-Related Claims

California became the first state to regulate the voluntary carbon market and climate-related claims after the Voluntary Carbon Market Disclosures Act (AB 1305) became effective on January 1, 2024. AB 1305 aims to address corporate “greenwashing” by increasing transparency into the voluntary carbon market and requiring public disclosure of substantiating evidence for climate-related claims.

AB 1305 introduced new disclosure requirements for entities operating in California that engage in the following:

Participate in the voluntary carbon market by: 

• Marketing voluntary carbon offsets
• Selling voluntary carbon offsets
• Purchasing voluntary carbon offsets

Make climate-related claims (regardless of whether the entity uses or purchases carbon offsets), such as: 

• Net zero claims
• Carbon neutrality claims
• Other claims of significant emissions reductions

While AB 1305 has been overshadowed by media coverage of California’s Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261), entities operating in California need to be aware of AB 1305’s requirements, as the law is much broader in scope than SB 253 or SB 261. Unlike SB 253 and SB 261, AB 1305 does not specify a revenue threshold and applies to both U.S. and international companies.

To support you in understanding AB 1305, G&A Institute prepared this Resource Paper, which details key requirements under the law and identifies next steps your organization should take in order to meet compliance.

Want to read the rest of the research?

Related

AB 1305: Voluntary Carbon Market Disclosures Act

Build your sustainability strategy.

Founded in 2006, Governance & Accountability Institute (G&A) is a New York–based sustainability consulting and research firm advising corporate leaders and investors at the intersection of strategy, governance, and regulation. For two decades, we have partnered with executive teams and boards to translate sustainability strategy into durable enterprise value — helping organizations navigate shifting market expectations, evolving policy landscapes, and increasing capital markets scrutiny. Set up a call to learn more about how we can help your company.

G&A Institute

Founded in 2006, Governance & Accountability Institute (G&A) is a New York–based sustainability consulting and research firm advising corporate leaders and investors at the intersection of strategy, governance, and regulation. For nearly two decades, we have partnered with executive teams and boards to translate sustainability strategy into durable enterprise value — helping organizations navigate shifting market expectations, evolving policy landscapes, and increasing capital markets scrutiny.