California AB 1305: Disclosures, Deadlines, and Penalties

California AB 1305, the Voluntary Carbon Market Disclosures Act, requires businesses that sell voluntary carbon offsets in California, buy offsets to support environmental claims, or publicly market themselves as “net zero” or “carbon neutral” to post detailed disclosures on their own websites and update them at least once a year. The law is codified at Health and Safety Code Sections 44475 through 44475.3 and took effect on January 1, 2024. Noncompliance carries civil penalties of up to $2,500 per day, capped at $500,000 per violation. Unlike California’s other 2023 climate disclosure laws, AB 1305 has no minimum revenue threshold, so it reaches businesses of every size.

Who Has to Comply

AB 1305 covers three groups, and the disclosure obligations are different for each.

Businesses that market or sell voluntary carbon offsets in California, under Section 44475.¹
Entities that purchase or use voluntary carbon offsets and then publicly claim to be net zero, carbon neutral, or to have significantly reduced emissions, under Section 44475.1.²
Any entity that publicly claims net zero, carbon neutrality, or significant emissions reductions, whether or not offsets are involved, under Section 44475.2.³

There is no revenue floor. If you sell a handful of voluntary offsets to a California buyer, or you put “carbon neutral” on your packaging, you are covered. The statute applies to entities “operating within the state,” and it does not precisely define that phrase. Section 44475.1(g) does say its offset-buyer requirements do not reach entities that neither operate in California nor purchase or use offsets sold within the state.² As of late 2024, no implementing regulations or official guidance had clarified the jurisdictional reach further.

What Counts as a Voluntary Carbon Offset

The statute defines a voluntary carbon offset broadly: any product sold or marketed in California that claims to represent a reduction in atmospheric greenhouse gases or to prevent emissions that would otherwise have occurred.¹ That includes products labeled as greenhouse gas emissions offsets, voluntary emissions reductions, retail offsets, or similar.

Two exclusions narrow the definition. Offsets purchased to satisfy legal mandates, such as allowances under California’s cap-and-trade program, are not voluntary and fall outside the law. And the California Attorney General’s Office has issued an advisory opinion stating that renewable energy credits are not covered, because they represent clean electricity generation rather than a claim to offset or remove emissions.

What Offset Sellers Must Disclose

Section 44475 imposes the most granular obligation in the law. For each offset project, sellers must post the estimation protocol used, the project site location, the project timeline and start date, and the annual volume of emissions reduced or carbon removed.¹ Sellers also have to identify the project type, meaning whether the credits come from carbon removal, avoided emissions, or a mix, with the breakdown disclosed for hybrid projects.

Two requirements catch sellers off guard.

The first is durability. If the seller knows or should know that the project’s reductions will not last as long as the atmospheric lifetime of CO2, the disclosure must include the durability period the project operator commits to.⁴ A forestry project with a 40-year commitment has to say so plainly.

The second is accountability for project failure. Sellers must explain what will happen if a carbon storage project is reversed or if promised future reductions do not materialize, either through the entity’s own action or through contractual obligations.¹ Vague assurances are not enough. If there is a buyback guarantee, an insurance policy, or a buffer pool mechanism, that is what belongs on the website.

Sellers must also state whether the project has been independently validated or verified by a third party, whether it meets standards established by law or by a nonprofit, and the data and calculation methods needed for someone to independently reproduce and verify the number of credits issued.¹ That last piece is demanding. It requires publishing enough underlying methodology that a qualified reviewer could audit the credit issuance from scratch.

What Offset Buyers Making Climate Claims Must Disclose

Section 44475.1 covers companies that buy voluntary offsets and then use those purchases to market themselves as net zero, carbon neutral, or as having significantly cut emissions. For each project or program, the buyer must disclose the name of the seller, the offset registry or program, the project identification number and project name as listed in the registry, the project type and site location, and the protocol used to estimate the reduction or removal benefits.² The buyer must also state whether independent third-party verification exists for its data and claims.

The offset specifics have to live on the company’s own website, tied to the claims they support. A reader should be able to click through and see which registry, which project, and which verification standard back the claim.

What Companies Making Net Zero or Carbon Neutral Claims Must Disclose

Section 44475.2 reaches the broadest group: any entity operating in California that publicly claims to have achieved net zero emissions, to be carbon neutral, or to have made significant reductions in greenhouse gas emissions. This applies whether or not offsets are used to support the claim.³

These entities must post documentation showing how the claim was determined to be accurate or actually accomplished, how interim progress toward the goal is being measured, and whether the underlying data and claims have been independently verified by a third party.⁴

The statute does not define “significant reductions,” and no regulations have filled the gap. A company that announces a 5% year-over-year emissions cut might reasonably wonder whether that triggers the disclosure requirement. Where there is doubt, the safer path is to disclose.

Where and How Often to Post

All three categories of disclosures must appear on the entity’s own website. The statute does not specify where on the site, what the link should be called, or how prominently the disclosure must appear, and no implementing regulations have been issued to fill those gaps. Most covered entities create a dedicated disclosure page linked from their sustainability or legal section.

Disclosures must be updated at least once per year.⁵ If your offset portfolio changes, a project is reversed, or your methodology evolves, the website has to reflect that within the annual cycle. Penalties accrue for every day information is missing or inaccurate, so a stale page is an expensive one.

Deadlines and Where Late Filers Stand Now

AB 1305 became legally effective on January 1, 2024. The bill’s author, Assembly Member Jesse Gabriel, sent a letter to the Chief Clerk of the California Assembly clarifying that the legislative intent was for the first disclosures to appear by January 1, 2025.⁴ California law does not formally allow phase-in periods for statutes structured this way, so legal exposure technically began on the effective date, even though enforcement was widely expected to ramp up starting in 2025.

A business discovering the law now is past both dates. The priority is posting compliant disclosures as quickly as possible, because penalties run daily.

Penalties and Who Can Sue

Section 44475.3 sets the penalty at up to $2,500 per day for each day required information is missing or inaccurate on the entity’s website. That per-day figure applies per violation, and the total penalty for any single violation cannot exceed $500,000.⁵ A company out of compliance on multiple distinct disclosure requirements could face separate $500,000 caps for each, so real exposure can far exceed that headline figure.

Enforcement runs through civil lawsuits filed in the name of the people of California. The Attorney General, district attorneys, county counsel, and city attorneys are all authorized to bring cases.⁵ AB 1305 does not create a private right of action, so consumers and competitors cannot sue directly under this statute. Misleading environmental claims can still draw separate suits under California’s Unfair Competition Law or False Advertising Law, both of which do allow private enforcement.

The daily accrual structure is the real pressure point. Six months of inaction on a single violation can put a company past $450,000 in potential penalties before anyone files a complaint.

How AB 1305 Differs from SB 253 and SB 261

California passed three major climate disclosure laws in 2023, and the obligations under each are easy to confuse. AB 1305 is the narrowest in one sense, because it applies only when you deal in voluntary offsets or make specific environmental claims. It is the broadest in another, because it has no revenue threshold at all.

SB 253, the Climate Corporate Data Accountability Act, applies to companies doing business in California with more than $1 billion in annual revenue and requires reporting of Scope 1, 2, and 3 greenhouse gas emissions. The first reporting deadline for Scope 1 and 2 was set for August 2026.
SB 261, the Climate-Related Financial Risk Act, applies to companies doing business in California with more than $500 million in annual revenue and requires published climate-related financial risk reports. Enforcement has faced legal challenges.
AB 1305 applies to any entity operating in California that sells or buys voluntary carbon offsets or publicly claims net zero, carbon neutrality, or significant emissions reductions, with no revenue floor.

Even if your business falls below the SB 253 and SB 261 thresholds, a single “carbon neutral” claim on your website can trigger AB 1305.

Open Questions Without Regulations

As of the most recent available information, no implementing regulations or official guidance have been issued under AB 1305, and none were expected. Several practical questions remain unanswered: how prominently disclosures must appear on a website, what qualifies as “operating within the state,” what counts as a “significant” emissions reduction, and what professional standards a third-party verifier must meet.

The law also provides no explicit safe harbor for buyers who rely in good faith on inaccurate data from an offset seller. If you buy offsets, post disclosures based on the seller’s representations, and those representations turn out to be wrong, the statute’s plain text still imposes the daily penalty for inaccurate website information. That puts the burden on buyers to vet sellers carefully rather than take project data at face value.⁵

1
California Legislative Information. California Health and Safety Code 44475
2
California Legislative Information. California Health and Safety Code 44475.1
3
California Legislative Information. California Health and Safety Code 44475.2
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California Legislative Information. California AB 1305 Bill Text
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LegiScan. California AB1305 2023-2024 Regular Session Chaptered