Davis Polk counsel David Zilberberg was quoted in OPIS on the Voluntary Carbon Market Disclosures Act, a law recently signed by California Governor Gavin Newsom intended to combat greenwashing by requiring disclosure on net zero, carbon neutrality and emissions reduction claims, as well as voluntary carbon offsets purchased, used, marketed or sold in California.

When asked about the scope of the law, David noted that for “the narrowest interpretation, you would have to actually make sales in California for the law to apply to your business. At its broadest, it could apply to companies that market voluntary carbon offsets on a marketplace that is available to California residents.”

Given that the law would apply to entities operating within California, David added, “I think that the realistic and reasonable interpretation that companies should take is that it’s going to require some kind of actual business presence in California. That would mean you have regular sales in California, you have some kind of physical footprint in California.”

David anticipates that the law may further the trend of companies walking back their emissions reductions claims. “I think companies might become even more guarded in their climate disclosures and net zero claims,” he explained. “They may not have really thought through whether those claims relate to Scope 1, Scope 2 or Scope 3 emissions or what those claims and commitments actually entail. We’ve seen some companies pull back from those claims and there might be a continuation of that trend.”

“Stakeholders Divided Over Impact, Scope of California Voluntary Carbon Law,” OPIS (October 30, 2023) (subscription required)

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