California AB 1305: Disclosure Rules, Penalties, and Enforcement

California’s Assembly Bill 1305, the Voluntary Carbon Market Disclosures Act, requires any business that sells voluntary carbon offsets, buys offsets to support environmental marketing, or makes claims like “carbon neutral” or “net zero” tied to California to publish specific project-level and substantiation data on its website and update it at least annually. The California AB 1305 disclosure requirements took effect January 1, 2024, became enforceable January 1, 2025, and carry civil penalties of up to $2,500 per day per violation, capped at $500,000 per entity.¹ The law sits at Part 10 (beginning with Section 44475) of Division 26 of the Health and Safety Code, and applies regardless of company size or revenue.

Who the Law Covers

AB 1305 pulls in three groups, and a single company can sit in more than one.

The first group is any business marketing or selling voluntary carbon offsets within California. Those sellers owe the most detailed set of disclosures.²

The second group is any entity operating in the state that purchases or uses voluntary carbon offsets and then makes claims about net-zero emissions, carbon neutrality, or similar reductions. If offsets are part of how you back a green marketing claim, you have to say so.³

The third group is broader still: any entity that makes net-zero, carbon-neutral, or comparable climate claims within the state, whether or not offsets are involved.⁴ The exclusion language in Sections 44475.1 and 44475.2 only carves out entities that don’t operate in California or don’t make claims in California, so any company whose climate marketing reaches California consumers, including through a public website, is likely captured.

There is no small business exemption. Unlike SB 253 and SB 261, AB 1305 has no revenue floor and no employee-count threshold. A two-person startup selling credits into California faces the same obligations as a Fortune 500 company.

What Carbon Offset Sellers Must Disclose

Section 44475 is the most demanding piece of the statute. A business marketing or selling voluntary offsets in California must publish, on its website, all of the following for each project:²

The specific protocol used to estimate emission reductions or removals, the project site location, the project timeline, and the date the project started or will start.
Whether the offsets come from carbon removal, avoided emissions, or a combination, plus annual figures for emissions reduced or carbon removed.
If the seller knows or should know that the project’s reductions will last less than the atmospheric lifetime of CO₂, the durability period.
Whether the project meets standards set by law or by a nonprofit organization, and whether an independent expert or third party has validated it.
What the entity will do if carbon storage is reversed or projected reductions fail to materialize.
The data and calculation methods someone would need to independently reproduce and verify the number of credits issued under the protocol.

What Companies Making Climate Claims Must Disclose

The law splits climate-claim disclosures into two overlapping obligations. The right section depends on whether offsets are part of the story.

If You Use Offsets to Back a Claim

Section 44475.1 covers entities that purchase or use voluntary offsets and make net-zero, carbon-neutral, or similar claims. For each offset project or program, the website must show:³

The name of the business that sold the offset and the registry or program where it is listed.
The project ID number and project name as listed in the registry, if applicable.
Whether the offsets come from carbon removal, avoided emissions, or both, and where the project is located.
The specific methodology used to estimate emission reductions or removal benefits.
Whether the company’s data and claims have been independently verified.

If You Make a Claim Regardless of Offsets

Section 44475.2 sweeps in any entity making net-zero, carbon-neutral, or comparable claims within California, even without offsets. Required disclosures are shorter but substantive:⁴

Documentation showing how the claim was determined to be accurate or actually accomplished, and how interim progress is measured.
Whether the company’s data and claims have been independently verified.

The statute suggests substantiation may include identifying the entity’s science-based targets, the relevant sector methodology, and third-party verification of those targets and pathway.⁴ In practice, vague sustainability language will not satisfy the section; regulators expect to see the math.

Website Posting and Annual Updates

All required information must appear on the entity’s website. The statute does not prescribe formatting or page placement, but the disclosures need to be genuinely accessible rather than buried in obscure subpages. Assume regulators expect the material to be reasonably easy to find.

Disclosures must be updated at least annually.¹ Adding a new offset project, making a new climate claim, or experiencing a reversal in a carbon storage project all trigger a website update. Compliance is not a one-time task; it needs an internal process for tracking environmental data and refreshing the page.

Penalties and Enforcement

Each violation carries a civil penalty of up to $2,500 per day, with total exposure for a single entity capped at $500,000.⁵ Because the fine runs per violation per day, missing multiple required data points can stack simultaneous daily penalties. Three separate omissions can generate three parallel fines.

The California Attorney General, district attorneys, and certain city attorneys can bring civil actions.⁵ The statute contains no cure period, so there is no built-in window to fix a violation before penalties start accruing. Public enforcement actions have not been widely reported as of mid-2026, and the absence of a designated enforcement agency has left some uncertainty about pace, but waiting for a first wave before complying is a gamble against six-figure exposure.

How AB 1305 Fits With Other Climate Laws

AB 1305 does not stand alone. California enacted two companion climate disclosure statutes in 2023, and a federal marketing framework still applies on top of state law.

SB 253, the Climate Corporate Data Accountability Act, requires large companies doing business in California to disclose greenhouse gas emissions, with Scope 1 and 2 reporting beginning in 2026 and Scope 3 in 2027. SB 261, the Greenhouse Gases: Climate-Related Financial Risk Act, requires covered companies to disclose climate-related financial risks, with an initial reporting date of January 1, 2026. Both have revenue thresholds. AB 1305 does not, which is why smaller companies can find themselves subject to AB 1305 alone. For a large company hit by all three, emissions inventory work done for SB 253 can feed the substantiation disclosures under Section 44475.2.

Federal law overlaps as well. The FTC’s Green Guides at 16 CFR Part 260 set national standards for environmental marketing claims, including carbon offsets. It is deceptive under the Guides to claim an offset reflects reductions that have already occurred if reductions will not happen for two years or more, or to claim a reduction that was legally required. Sellers must use competent and reliable scientific and accounting methods and must not sell the same reduction twice.⁶ The Green Guides do not require the project-level website disclosures AB 1305 demands, so satisfying one framework does not satisfy the other. A company that posts everything AB 1305 requires but frames its claims misleadingly can still draw FTC enforcement, and vice versa.

1
California Legislative Information. AB 1305 Voluntary Carbon Market Disclosures
2
California Legislative Information. California Health and Safety Code HSC 44475
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California Legislative Information. California Health and Safety Code HSC 44475.1
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California Legislative Information. California Health and Safety Code HSC 44475.2
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LegiScan. California Assembly Bill 1305
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eCFR. 16 CFR Part 260 Guides for the Use of Environmental Marketing Claims