Another proposed corporate climate disclosure requirement – the Illinois Climate Corporate Accountability Act

California’s new corporate climate disclosure requirements have sucked up most of the attention, especially since the lawsuit challenging those requirements filed last week by the U.S. Chamber of Commerce. Greenhouse gas emissions reporting requirements also were recently introduced in Illinois. The Climate Corporate Accountability Act (HB4268) introduced in January by State Representative Kimberly du Buclet (Democrat) would require U.S. entities doing business in Illinois with total annual revenues over $1 billion to annually disclose and verify their scope 1, 2 and 3 GHG emissions. 

Reporting entities

Partnerships, corporations, limited liability companies and other business entities formed in the United States that do business in Illinois with total annual revenues in excess of $1 billion would have reporting requirements under the Act. 

Reporting obligations 

Under the Act, reporting entities would be required to annually report on their calendar year scope 1, 2 and 3 GHG emissions. Reporting would start on January 1, 2025 for calendar 2024. Reporting entities would have up to an additional 180 days to disclose scope 3 emissions data. The scope 3 emissions reporting deadline would be required to be re-evaluated by the Illinois Secretary of State no later than July 1, 2029.  

Emissions data would be required to be calculated in accordance with the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

Emissions information would need to be provided to an online registry contracted by the Illinois Secretary of State. Disclosures would be publicly accessible.

Verification requirement

Disclosures would need to be independently verified by the emissions registry or a third-party auditor approved by the Secretary of State.

Implementation

The Act would require the Secretary of State to develop and adopt by July 1, 2024 rules requiring GHG emissions reporting and verification. Among other things, the Act would require that the rules allow for entities’ public disclosures to be structured in ways that maximize and streamline reporting and ease of use in meeting the requirements of national and international disclosure programs and standards, including rules applicable to public companies adopted by the Securities and Exchange Commission.

Penalties

If the Illinois Attorney General determines that a reporting entity violated the Act, or upon a complaint received from the Secretary of State, the Attorney General could bring a civil action against the reporting entity seeking civil penalties.

Five quick takeaways

• The legislation is still in the early stages. On January 16, it had its first reading in the Illinois House of Representatives and was referred to the House Rules Committee.
• Assuming HB4268 continues to move forward, an open question is whether modifications will be made that seek to address the challenges to the similar California Climate Corporate Data Accountability Act. Modifications also may be made to conform to relevant aspects of the SEC’s climate disclosure rules, which are expected to be adopted soon.
• The timing for implementation and initial compliance seems unrealistic. In that regard, see California Governor Gavin Newsom’s reservations when he signed California’s GHG emissions reporting requirements. The implementation and compliance dates in HB4268 presumably are intended as a marker for negotiation.
• Expect significant lobbying, for, against and advocating for modifications to HB4268.  
• It is premature to take specific compliance steps to address HB4268, but the bill bears watching.

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