2 days ago
New York Fails To Adopt Climate Reporting Requirement In 2025 Session
The New York state Assembly Chamber is seen on the opening day of the 2023 legislative session at ... More the state Capitol Wednesday, Jan. 4, 2023, in Albany, N.Y. (AP Photo/Hans Pennink)
When California adopted climate reporting requirements in 2023, it opened the door to a potential wave of state level regulations relating to sustainability and climate change that could build on federal requirements. With Trump winning the 2024 elections and the U.S. Securities and Exchange Commission ending the climate-related risk rule, activists shifted focus to Democrat controlled states. In early 2025, the New York State Senate introduced legislation that mimicked California's requirement. However, when the legislative session closed on June 12, those proposals had failed to make it out of committee, closing the door on mandatory sustainability reporting until 2026.
Climate reporting, sustainability reporting, and environmental, social, and governance reporting experienced a surge of interest starting in 2019. These reporting requirements are designed to work in tandem with regular financial reports to provide information to investors on other activities of the company not directly related to finances.
Climate reporting, or climate-related risk reporting, is the main driver of new reporting requirements. It stems from the Paris Agreement and the goal to reduce greenhouse gas emissions to 'net zero' by 2050. During the 2019 United Nations Conference of Parties in Glasgow, the International Financial Reporting Standards Foundation announced the creation of the International Sustainability Standards Board to create global reporting standards.
In March 2022, the SEC announced they would begin the rulemaking process to create a climate-related risk rule requiring publicly traded companies to report GHG emissions and climate risks. In the European Union, the Corporate Sustainability Reporting Directed was adopted in September 2022, mandating the creation of European Sustainability Reporting Standards.
The IFRS Sustainability Reporting Standards were released by the ISSB in June 2023, with a focus on GHG emissions and climate action. The next month, the European Union adopted the ESRS, incorporating the IFRS standards for environmental issues, while adding human rights and governance issues for a broader ESG reporting requirement under the CSRD.
After years of delays, in March 2024, the SEC adopted a climate-related risk rule, but it was promptly met with legal challenges and implementation was postponed. Following the election of President Trump to a second term, the SEC began taking steps to rollback the reporting requirement.
With the certain death of sustainability reporting at a federal level, advocates shifted focus to states to get them to follow California's lead. Given its international reputation as the business hub of the U.S., New York was a major focus for this changes. As the second largest Democrat controlled state, behind California, it was more likely that they would follow California's lead.
New York's proposal were introduced in the Senate in the form of Senate Bill 3456, titled the Climate Corporate Data Accountability Act, and Senate Bill 3697, titled the Climate-Related Financial Risk Reporting Bill. The proposals mimicked the California legislation, requiring GHG emission reporting for Scope 1 and Scope 2 starting in 2027, for FY 2026, and Scope 3 starting in 2028, for FY 2027.
For most state legislatures, they are considered part time. As a result, they only meet for limited periods annually, or in some cases biennially, to conduct business in a 'legislative session.' The New York legislature meets for approximately 60 days every year. The 2025 legislative session started on January 8 and concluded on June 12.
Within the respective chamber, bills must work through a committee process that requires approval from committees that are deemed to have an interest in the legislation. Once approved by the committees, the bills are sent to the floor for a vote by all members, then sent to the other chamber for their approval.
New York's climate reporting bills were originally sent to the Senate's Environmental Conservation Committee and passed unanimously. That is as far as they got. Both bills were then sent to the Finance Committee, where they never called for a vote.
The bills have, for all intents and purposes, died in committee. This is even more surprising when you consider the make up of the Senate. The New York State Senate is composed of 63 members. Currently, 41 are Democrats and 22 are Republicans. The Democrats have a super majority of the Senate, giving them near full autonomy to pass what legislation they deem fit. That climate reporting bills failed to make it out of committee is significant.
It should be noted that the New York legislature never officially ends session. Unlike Florida that typically only meets for 60 days, then holds a ceremony signalling the official end of the legislative session, New York does not officially gavel the session closed. Instead, they go into recess. It is a procedural technicality that allows them to re-adjourn without the intervention of the Governor. However, they only meet outside the typical legislative session in exceptional circumstances. What isn't passed by June 12 will not pass.
As climate activists are facing major setbacks on sustainability reporting requirements internationally, including a current debate to reduce the reporting requirements in the European Union's CSRD, the failure of New York to consider the proposal is a signal of a broader, bipartisan pushback. A similar failure in Democrat controlled Colorado further highlights the issue. It was assumed that what was lost at the federal level would be gained at the state level, that appears to be a fallacy. The question is shifting from what states will join California, to whether California will continue to stand alone.
