Senate Bill S7704

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7704
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             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:
 
   Section 1. The environmental conservation law is amended by  adding  a
 new section 75-0116 to read as follows:
 § 75-0116. CLIMATE-RELATED FINANCIAL RISK REPORTING.
   1. FOR PURPOSES OF THIS SECTION, THE FOLLOWING DEFINITIONS APPLY:
   A.  "CLIMATE REPORTING ORGANIZATION" MEANS A NONPROFIT CLIMATE REPORT-
 ING ORGANIZATION CONTRACTED BY THE DEPARTMENT PURSUANT TO PARAGRAPH C OF
 SUBDIVISION TWO OF THIS SECTION THAT BOTH:
   (I) CURRENTLY OPERATES A CLIMATE REPORTING ORGANIZATION FOR  ORGANIZA-
 TIONS OPERATING IN THE UNITED STATES; AND
   (II)  HAS EXPERIENCE WITH CLIMATE-RELATED FINANCIAL RISK DISCLOSURE BY
 ENTITIES OPERATING IN NEW YORK.
   B. "CLIMATE-RELATED FINANCIAL RISK" MEANS MATERIAL  RISK  OF  HARM  TO
 IMMEDIATE  AND  LONG-TERM FINANCIAL OUTCOMES DUE TO PHYSICAL AND TRANSI-
 TION RISKS, INCLUDING, BUT NOT LIMITED  TO,  RISKS  TO  CORPORATE  OPER-
 ATIONS,  PROVISION OF GOODS AND SERVICES, SUPPLY CHAINS, EMPLOYEE HEALTH
 AND SAFETY, CAPITAL AND  FINANCIAL  INVESTMENTS,  INSTITUTIONAL  INVEST-
 MENTS,  FINANCIAL STANDING OF LOAN RECIPIENTS AND BORROWERS, SHAREHOLDER
 VALUE, CONSUMER DEMAND, AND FINANCIAL MARKETS AND ECONOMIC HEALTH.
   C. "CLIMATE-RELATED FINANCIAL RISK REPORT" MEANS A REPORT REQUIRED  BY
 SUBDIVISION TWO OF THIS SECTION.
   D.  "COVERED ENTITY" MEANS A CORPORATION, PARTNERSHIP, LIMITED LIABIL-
 ITY COMPANY, OR OTHER BUSINESS ENTITY  FORMED  UNDER  THE  LAWS  OF  THE
 STATE,  THE LAWS OF ANY OTHER STATE OF THE UNITED STATES OR THE DISTRICT
 OF COLUMBIA, OR UNDER AN ACT OF THE CONGRESS OF THE UNITED  STATES  WITH
 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
 
 DOLLARS ($500,000,000) AND THAT DOES BUSINESS IN NEW YORK. APPLICABILITY
 SHALL BE DETERMINED BASED ON THE BUSINESS ENTITY'S REVENUE FOR THE PRIOR
 FISCAL YEAR. "COVERED ENTITY" DOES NOT INCLUDE A BUSINESS ENTITY THAT IS
 SUBJECT  TO  REGULATION BY THE DEPARTMENT OF FINANCIAL SERVICES, OR THAT
 IS IN THE BUSINESS OF INSURANCE IN ANY OTHER STATE.
   2. A. (I) ON OR BEFORE JANUARY FIRST,  TWO  THOUSAND  TWENTY-SIX,  AND
 BIENNIALLY  THEREAFTER, A COVERED ENTITY SHALL PREPARE A CLIMATE-RELATED
 FINANCIAL RISK REPORT DISCLOSING BOTH OF THE FOLLOWING:
   (A) ITS CLIMATE-RELATED FINANCIAL RISK, IN ACCORDANCE WITH THE  RECOM-
 MENDED FRAMEWORK AND DISCLOSURES CONTAINED IN THE FINAL REPORT OF RECOM-
 MENDATIONS  OF  THE  TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
 (JUNE 2017) PUBLISHED BY THE TASK  FORCE  ON  CLIMATE-RELATED  FINANCIAL
 DISCLOSURES,  OR  ANY  SUCCESSOR  THERETO,  OR PURSUANT TO AN EQUIVALENT
 REPORTING REQUIREMENT AS DESCRIBED IN PARAGRAPH D OF  THIS  SUBDIVISION;
 AND
   (B) ITS MEASURES ADOPTED TO REDUCE AND ADAPT TO CLIMATE-RELATED FINAN-
 CIAL RISK DISCLOSED PURSUANT TO THIS SUBPARAGRAPH.
   (II)  IF  A  COVERED ENTITY DOES NOT COMPLETE A REPORT CONSISTENT WITH
 ALL REQUIRED DISCLOSURES PURSUANT TO THIS SUBDIVISION, THE COVERED ENTI-
 TY SHALL PROVIDE THE RECOMMENDED DISCLOSURES TO THE BEST OF ITS ABILITY,
 PROVIDE A DETAILED EXPLANATION FOR  ANY  REPORTING  GAPS,  AND  DESCRIBE
 STEPS THE COVERED ENTITY WILL TAKE TO PREPARE COMPLETE DISCLOSURES.
   B.  CLIMATE-RELATED  FINANCIAL RISK REPORTS MAY BE CONSOLIDATED AT THE
 PARENT COMPANY LEVEL. IF A SUBSIDIARY OF A PARENT COMPANY QUALIFIES AS A
 COVERED ENTITY PURSUANT TO  PARAGRAPH  D  OF  SUBDIVISION  ONE  OF  THIS
 SECTION,  THE  SUBSIDIARY IS NOT REQUIRED TO PREPARE A SEPARATE CLIMATE-
 RELATED FINANCIAL RISK REPORT.
   C. THE DEPARTMENT SHALL CONTRACT WITH A CLIMATE REPORTING ORGANIZATION
 TO PREPARE A BIENNIAL PUBLIC REPORT  ON  THE  CLIMATE-RELATED  FINANCIAL
 RISK DISCLOSURES REQUIRED BY THIS SECTION.
   D.  A COVERED ENTITY SATISFIES THE REQUIREMENTS OF THIS SUBDIVISION IF
 IT  PREPARES  A  PUBLICLY  ACCESSIBLE  BIENNIAL  REPORT  THAT   INCLUDES
 CLIMATE-RELATED  FINANCIAL  RISK  DISCLOSURE  INFORMATION  BY ANY OF THE
 FOLLOWING METHODS:
   (I) PURSUANT TO A LAW, REGULATION, OR LISTING  REQUIREMENT  ISSUED  BY
 ANY REGULATED EXCHANGE, NATIONAL GOVERNMENT, OR OTHER GOVERNMENTAL ENTI-
 TY,  INCLUDING  A  LAW OR REGULATION ISSUED BY THE UNITED STATES GOVERN-
 MENT, INCORPORATING DISCLOSURE REQUIREMENTS CONSISTENT WITH  CLAUSE  (A)
 OF  SUBPARAGRAPH  (I)  OF PARAGRAPH A OF THIS SUBDIVISION, INCLUDING THE
 INTERNATIONAL FINANCIAL REPORTING  STANDARDS  SUSTAINABILITY  DISCLOSURE
 STANDARDS,  AS  ISSUED  BY  THE  INTERNATIONAL  SUSTAINABILITY STANDARDS
 BOARD; AND
   (II) VOLUNTARILY USING A FRAMEWORK  THAT  MEETS  THE  REQUIREMENTS  OF
 CLAUSE (A) OF SUBPARAGRAPH (I) OF PARAGRAPH A OF THIS SUBDIVISION OR THE
 INTERNATIONAL  FINANCIAL  REPORTING  STANDARDS SUSTAINABILITY DISCLOSURE
 STANDARDS, AS  ISSUED  BY  THE  INTERNATIONAL  SUSTAINABILITY  STANDARDS
 BOARD.
   E.  TO  THE  EXTENT A CLIMATE-RELATED FINANCIAL RISK REPORT CONTAINS A
 DESCRIPTION OF A COVERED ENTITY'S GREENHOUSE GASES  OR  VOLUNTARY  MITI-
 GATION  OF GREENHOUSE GASES, THE DEPARTMENT MAY CONSIDER A COVERED ENTI-
 TY'S CLAIMS IF THOSE CLAIMS ARE VERIFIED BY  A  THIRD-PARTY  INDEPENDENT
 VERIFIER.
   3. A. ON OR BEFORE JANUARY FIRST, TWO THOUSAND TWENTY-SIX, AND BIENNI-
 ALLY THEREAFTER, A COVERED ENTITY SHALL MAKE AVAILABLE TO THE PUBLIC, ON
 ITS OWN INTERNET WEBSITE, A COPY OF THE REPORT REQUIRED BY THIS SECTION.
 S. 7704                             3
 
   B.  (I) ON OR BEFORE JANUARY FIRST, TWO THOUSAND TWENTY-SIX, AND ANNU-
 ALLY THEREAFTER, A COVERED ENTITY SHALL  PAY  A  FEE,  UPON  FILING  ITS
 DISCLOSURE,  TO THE DEPARTMENT FOR THE ADMINISTRATION AND IMPLEMENTATION
 OF THIS SECTION.
   (II)  (A) THE DEPARTMENT SHALL SET THE FEE DESCRIBED IN THIS PARAGRAPH
 AT AN AMOUNT ADEQUATE TO COVER THE DEPARTMENT'S FULL COSTS  OF  ADMINIS-
 TRATING  AND  IMPLEMENTING  THIS  SECTION.  THE  TOTAL  AMOUNT  OF  FEES
 COLLECTED SHALL NOT EXCEED THE DEPARTMENT'S ACTUAL AND REASONABLE  COSTS
 TO ADMINISTER AND IMPLEMENT THIS SECTION.
   (B)  THE  DEPARTMENT MAY ADJUST THE FEE IN ANY YEAR TO REFLECT CHANGES
 IN THE CONSUMER PRICE INDEX DURING THE PRIOR YEAR.
   (III) THE PROCEEDS OF THE FEES  IMPOSED  PURSUANT  TO  THIS  PARAGRAPH
 SHALL  BE  DEPOSITED  IN  THE  CLIMATE-RELATED FINANCIAL RISK DISCLOSURE
 ACCOUNT. MONEYS IN THE ACCOUNT SHALL BE CONTINUOUSLY APPROPRIATED TO THE
 DEPARTMENT AND SHALL BE EXPENDED BY THE DEPARTMENT FOR THE  DEPARTMENT'S
 ACTIVITIES  PURSUANT  TO  THIS  SECTION AND TO REIMBURSE ANY OUTSTANDING
 LOANS MADE FROM OTHER FUNDS USED TO FINANCE THE  INITIAL  COSTS  OF  THE
 DEPARTMENT'S  ACTIVITIES PURSUANT TO THIS SECTION. MONEYS IN THE ACCOUNT
 SHALL NOT BE EXPENDED FOR  ANY  OTHER  PURPOSE  NOT  DESCRIBED  IN  THIS
 SUBPARAGRAPH.
   4. THE CLIMATE REPORTING ORGANIZATION SHALL BE CONTRACTED TO DO ALL OF
 THE FOLLOWING:
   A. BIENNIALLY PREPARE A PUBLIC REPORT THAT CONTAINS ALL OF THE FOLLOW-
 ING ELEMENTS:
   (I)  A  REVIEW  OF  THE  DISCLOSURE  OF CLIMATE-RELATED FINANCIAL RISK
 CONTAINED IN A SUBSET OF PUBLICLY  AVAILABLE  CLIMATE-RELATED  FINANCIAL
 RISK REPORTS BY INDUSTRY;
   (II)  ANALYSIS  OF THE SYSTEMIC AND SECTOR-WIDE CLIMATE-RELATED FINAN-
 CIAL RISKS FACING THE STATE BASED ON  THE  CONTENTS  OF  CLIMATE-RELATED
 FINANCIAL RISK REPORTS, INCLUDING, BUT NOT LIMITED TO, POTENTIAL IMPACTS
 ON ECONOMICALLY VULNERABLE COMMUNITIES; AND
   (III) IDENTIFICATION OF INADEQUATE OR INSUFFICIENT REPORTS.
   B.  REGULARLY  CONVENE  REPRESENTATIVES  OF  SECTORS  RESPONSIBLE  FOR
 REPORTING CLIMATE-RELATED FINANCIAL RISKS,  STATE  AGENCIES  RESPONSIBLE
 FOR  OVERSIGHT  OF  REPORTING  SECTORS,  INVESTMENT  MANAGERS,  ACADEMIC
 EXPERTS, STANDARD-SETTING ORGANIZATIONS, CLIMATE AND CORPORATE SUSTAINA-
 BILITY ORGANIZATIONS, LABOR UNION REPRESENTATIVES WHOSE MEMBERS WORK  IN
 IMPACTED  SECTORS, AND OTHER STAKEHOLDERS TO OFFER INPUT ON CURRENT BEST
 PRACTICES REGARDING THE DISCLOSURE OF  FINANCIAL  RISKS  RESULTING  FROM
 CLIMATE  CHANGE,  INCLUDING, BUT NOT LIMITED TO, PROPOSALS TO UPDATE THE
 DEFINITION OF "CLIMATE-RELATED FINANCIAL RISK",  AND  THE  FRAMEWORK  OR
 DISCLOSURE  STANDARD  OF  "CLIMATE-RELATED  FINANCIAL RISK REPORTS" THAT
 MEETS THE REQUIREMENTS OF CLAUSE (A) OF SUBPARAGRAPH (I) OF PARAGRAPH  A
 OF SUBDIVISION TWO OF THIS SECTION.
   C.  MONITOR  FEDERAL  REGULATORY  ACTIONS  AMONG AGENCY MEMBERS OF THE
 FEDERAL FINANCIAL STABILITY OVERSIGHT COUNCIL, AS WELL  AS  NON-INDEPEN-
 DENT REGULATORS OVERSEEN BY THE WHITE HOUSE.
   5. A. THE DEPARTMENT SHALL ADOPT REGULATIONS THAT AUTHORIZE IT TO SEEK
 ADMINISTRATIVE  PENALTIES  FROM  A COVERED ENTITY THAT FAILS TO MAKE THE
 REPORT REQUIRED BY THIS  SECTION  PUBLICLY  AVAILABLE  ON  ITS  INTERNET
 WEBSITE  OR PUBLISHES AN INADEQUATE OR INSUFFICIENT REPORT. THE ADMINIS-
 TRATIVE PENALTIES AUTHORIZED BY THIS SUBDIVISION SHALL  BE  IMPOSED  AND
 RECOVERED  BY THE DEPARTMENT IN ADMINISTRATIVE PROCEEDINGS. THE ADMINIS-
 TRATIVE PENALTIES IMPOSED ON A REPORTING ENTITY SHALL NOT  EXCEED  FIFTY
 THOUSAND DOLLARS ($50,000) IN A REPORTING YEAR.
 S. 7704                             4

   B.  IN  IMPOSING  PENALTIES  FOR  A VIOLATION OF THIS SUBDIVISION, THE
 DEPARTMENT SHALL CONSIDER ALL RELEVANT CIRCUMSTANCES, INCLUDING BOTH  OF
 THE FOLLOWING:
   (I) THE VIOLATOR'S PAST AND PRESENT COMPLIANCE WITH THIS SECTION; AND
   (II) WHETHER THE VIOLATOR TOOK GOOD FAITH MEASURES TO COMPLY WITH THIS
 SECTION AND WHEN THOSE MEASURES WERE TAKEN.
   § 2. This act shall take effect immediately.