California

Title

Key Dates

Nature of
Action

ESG Category

Summary

 Effective date

1/1/2026

Adopted

10/7/2023

Introduced

1/30/2023

 ■ Requires a business entity doing business in California with total annual revenue in excess of $500,000,000 (“Covered Entities”) to publish a climate-related financial risk report on or before January 1, 2026, and biennially thereafter.

■ The climate-related financial risk report must disclose most of the entity’s climate-related financial risk and the measures that the company has adopted to reduce and adapt to the disclosed climate-related financial risk. The bill would require the covered entity to make a copy of the report available to the public on its own internet website.

 Enforcement/
Divestment

CalSTRS adopts low-carbon strategy for its credit portfolio

Adopted and in effect
5/5/2023

IPS Revisions

Promote Divestment from Certain Industries

■The California State Teachers' Retirement System's investment committee approved a strategy of reducing by 12% the carbon footprint of the internally managed portion of its $11 billion credit portfolio, citing net-zero portfolio emission goals.

Title

Key Dates

Nature of
Action

ESG Category

Summary

SB252: An act relating to public retirement systems

Introduced 
in 2023, carried over to 2024

Legislation

Promote Divestment from Certain Industries

■Applies to the boards of the Public Employees' Retirement System and the State Teachers' Retirement System.

■Prohibits investment in the 200 largest publicly traded fossil fuel companies as determined by the carbon content of the companies' reserves. Requires divestment by July 1, 2031, from such restricted companies. Requires reporting on this fossil fuel companies list and the actions taken commencing February 1, 2025.

■Until January 1, 2035, temporarily suspends the liquidation provision upon a good-faith determination by the board that certain conditions materially impact normal market mechanisms for pricing assets.

SUBSEQUENT DEVELOPMENTS

CalPERS Board Opposes SB252: During the CalPERS Board of Administration meeting in March, board members voted to formally oppose SB252. Citing the state constitution's fiduciary requirements, the board said "CalPERS does not believe that mandatory fossil fuel divestment is an effective solution to the reduction of greenhouse gas emissions."

Similar bill introduced, but did not pass, in 2022 (SB 1173).

A Bloomberg Law article from 7/3/2023 said that SB252, which passed the state Senate in May, won’t be given a floor vote, according to the bill’s lead author, Senator Lena Gonzalez of Los Angeles County. The legislation has been converted to a two-year bill, meaning lawmakers will have the opportunity to address the measure in the next session. “I’m committed to bringing this bill up again next year,” Gonzalez said.

On June 19, 2024, a hearing on SB 252 was canceled at the request of the bill sponsor. 

Title

Key Dates

Nature of
Action

ESG Category

Summary

SB637: Financial Institutions doing Business with Firearms Manufacturers

Introduced, but did not pass in the 2024 legislative session

Legislation

Promote Divestment from Certain Industries

■ Prohibits a state agency from entering into a contract with, depositing state funds with, or receiving a loan from a financial institution that invests in or makes loans to a company that manufactures firearms or ammunition. Allows a state agency that is a current party to such a contract to remain a party to that contract until the contract expires. Requires state agencies to comply with these provisions only to the extent that the compliance is consistent with the state agency’s fiduciary responsibilities.