Requires reporting of climate-related financial risk by certain entities; defines climate-related financial risk to mean material harm to financial outcomes of the entity due to physical and transition risks.
STATE OF NEW YORK
________________________________________________________________________
7704
2023-2024 Regular Sessions
IN SENATE
October 16, 2023
___________
Introduced by Sen. SANDERS -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
AN ACT to amend the environmental conservation law, in relation to
reporting of climate-related financial risk
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The environmental conservation law is amended by adding a
2 new section 75-0116 to read as follows:
3 § 75-0116. Climate-related financial risk reporting.
4 1. For purposes of this section, the following definitions apply:
5 a. "Climate reporting organization" means a nonprofit climate report-
6 ing organization contracted by the department pursuant to paragraph c of
7 subdivision two of this section that both:
8 (i) currently operates a climate reporting organization for organiza-
9 tions operating in the United States; and
10 (ii) has experience with climate-related financial risk disclosure by
11 entities operating in New York.
12 b. "Climate-related financial risk" means material risk of harm to
13 immediate and long-term financial outcomes due to physical and transi-
14 tion risks, including, but not limited to, risks to corporate oper-
15 ations, provision of goods and services, supply chains, employee health
16 and safety, capital and financial investments, institutional invest-
17 ments, financial standing of loan recipients and borrowers, shareholder
18 value, consumer demand, and financial markets and economic health.
19 c. "Climate-related financial risk report" means a report required by
20 subdivision two of this section.
21 d. "Covered entity" means a corporation, partnership, limited liabil-
22 ity company, or other business entity formed under the laws of the
23 state, the laws of any other state of the United States or the District
24 of Columbia, or under an act of the Congress of the United States with
25 total annual revenues in excess of five hundred million United States
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13423-01-3
S. 7704 2
1 dollars ($500,000,000) and that does business in New York. Applicability
2 shall be determined based on the business entity's revenue for the prior
3 fiscal year. "Covered entity" does not include a business entity that is
4 subject to regulation by the department of financial services, or that
5 is in the business of insurance in any other state.
6 2. a. (i) On or before January first, two thousand twenty-six, and
7 biennially thereafter, a covered entity shall prepare a climate-related
8 financial risk report disclosing both of the following:
9 (A) its climate-related financial risk, in accordance with the recom-
10 mended framework and disclosures contained in the Final Report of Recom-
11 mendations of the Task Force on Climate-related Financial Disclosures
12 (June 2017) published by the Task Force on Climate-related Financial
13 Disclosures, or any successor thereto, or pursuant to an equivalent
14 reporting requirement as described in paragraph d of this subdivision;
15 and
16 (B) its measures adopted to reduce and adapt to climate-related finan-
17 cial risk disclosed pursuant to this subparagraph.
18 (ii) If a covered entity does not complete a report consistent with
19 all required disclosures pursuant to this subdivision, the covered enti-
20 ty shall provide the recommended disclosures to the best of its ability,
21 provide a detailed explanation for any reporting gaps, and describe
22 steps the covered entity will take to prepare complete disclosures.
23 b. Climate-related financial risk reports may be consolidated at the
24 parent company level. If a subsidiary of a parent company qualifies as a
25 covered entity pursuant to paragraph d of subdivision one of this
26 section, the subsidiary is not required to prepare a separate climate-
27 related financial risk report.
28 c. The department shall contract with a climate reporting organization
29 to prepare a biennial public report on the climate-related financial
30 risk disclosures required by this section.
31 d. A covered entity satisfies the requirements of this subdivision if
32 it prepares a publicly accessible biennial report that includes
33 climate-related financial risk disclosure information by any of the
34 following methods:
35 (i) pursuant to a law, regulation, or listing requirement issued by
36 any regulated exchange, national government, or other governmental enti-
37 ty, including a law or regulation issued by the United States govern-
38 ment, incorporating disclosure requirements consistent with clause (A)
39 of subparagraph (i) of paragraph a of this subdivision, including the
40 International Financial Reporting Standards Sustainability Disclosure
41 Standards, as issued by the International Sustainability Standards
42 Board; and
43 (ii) voluntarily using a framework that meets the requirements of
44 clause (A) of subparagraph (i) of paragraph a of this subdivision or the
45 International Financial Reporting Standards Sustainability Disclosure
46 Standards, as issued by the International Sustainability Standards
47 Board.
48 e. To the extent a climate-related financial risk report contains a
49 description of a covered entity's greenhouse gases or voluntary miti-
50 gation of greenhouse gases, the department may consider a covered enti-
51 ty's claims if those claims are verified by a third-party independent
52 verifier.
53 3. a. On or before January first, two thousand twenty-six, and bienni-
54 ally thereafter, a covered entity shall make available to the public, on
55 its own internet website, a copy of the report required by this section.
S. 7704 3
1 b. (i) On or before January first, two thousand twenty-six, and annu-
2 ally thereafter, a covered entity shall pay a fee, upon filing its
3 disclosure, to the department for the administration and implementation
4 of this section.
5 (ii) (A) The department shall set the fee described in this paragraph
6 at an amount adequate to cover the department's full costs of adminis-
7 trating and implementing this section. The total amount of fees
8 collected shall not exceed the department's actual and reasonable costs
9 to administer and implement this section.
10 (B) The department may adjust the fee in any year to reflect changes
11 in the Consumer Price Index during the prior year.
12 (iii) The proceeds of the fees imposed pursuant to this paragraph
13 shall be deposited in the climate-related financial risk disclosure
14 account. Moneys in the account shall be continuously appropriated to the
15 department and shall be expended by the department for the department's
16 activities pursuant to this section and to reimburse any outstanding
17 loans made from other funds used to finance the initial costs of the
18 department's activities pursuant to this section. Moneys in the account
19 shall not be expended for any other purpose not described in this
20 subparagraph.
21 4. The climate reporting organization shall be contracted to do all of
22 the following:
23 a. Biennially prepare a public report that contains all of the follow-
24 ing elements:
25 (i) a review of the disclosure of climate-related financial risk
26 contained in a subset of publicly available climate-related financial
27 risk reports by industry;
28 (ii) analysis of the systemic and sector-wide climate-related finan-
29 cial risks facing the state based on the contents of climate-related
30 financial risk reports, including, but not limited to, potential impacts
31 on economically vulnerable communities; and
32 (iii) identification of inadequate or insufficient reports.
33 b. Regularly convene representatives of sectors responsible for
34 reporting climate-related financial risks, state agencies responsible
35 for oversight of reporting sectors, investment managers, academic
36 experts, standard-setting organizations, climate and corporate sustaina-
37 bility organizations, labor union representatives whose members work in
38 impacted sectors, and other stakeholders to offer input on current best
39 practices regarding the disclosure of financial risks resulting from
40 climate change, including, but not limited to, proposals to update the
41 definition of "climate-related financial risk", and the framework or
42 disclosure standard of "climate-related financial risk reports" that
43 meets the requirements of clause (A) of subparagraph (i) of paragraph a
44 of subdivision two of this section.
45 c. Monitor federal regulatory actions among agency members of the
46 federal Financial Stability Oversight Council, as well as non-indepen-
47 dent regulators overseen by the White House.
48 5. a. The department shall adopt regulations that authorize it to seek
49 administrative penalties from a covered entity that fails to make the
50 report required by this section publicly available on its internet
51 website or publishes an inadequate or insufficient report. The adminis-
52 trative penalties authorized by this subdivision shall be imposed and
53 recovered by the department in administrative proceedings. The adminis-
54 trative penalties imposed on a reporting entity shall not exceed fifty
55 thousand dollars ($50,000) in a reporting year.
S. 7704 4
1 b. In imposing penalties for a violation of this subdivision, the
2 department shall consider all relevant circumstances, including both of
3 the following:
4 (i) the violator's past and present compliance with this section; and
5 (ii) whether the violator took good faith measures to comply with this
6 section and when those measures were taken.
7 § 2. This act shall take effect immediately.
