KCCA in Focus With California Advancing More Climate Legislation

At the policy level, few countries or states are as committed to fighting climate change and cutting carbon emissions as is California.

Alone, the Golden State’s status as a leader on the carbon-cutting front makes the  KraneShares California Carbon Allowance ETF (KCCA) a relevant choice for investors seeking unique climate-related exposures. California’s resistance to resting on prior legislative achievements enhances the relevance of the exchange traded fund.

Rather, the state continues advancing various bills aimed at reducing carbon emissions and contributing to the battle against rising global temperatures. Consider the Climate Accountability Package, a combination of bills that California lawmakers will likely consider in a recently commenced legislative session.

It includes a mandate that any company doing business in the state and generating more than $1 billion in annual sales must disclose the state of its greenhouse gas emissions and potential climate-related risks.

California Keeping KCCA Relevant

Again, the Climate Accountability Package is a combination of multiple proposals, indicating there’s potential for KCCA’s relevance to increase in a variety of ways.

The reporting policy mentioned above would affect more than 5,300 firms operating in the largest state by population while another proposal would require smaller firms to disclose climate-related risks by the end of next year.

“The second bill, S.B. 261, would require companies with annual revenue of $500 million or above to begin disclosing by the end of 2024 climate-related financial risks in reports published on their corporate websites. Some 10,000 companies are expected to fall under that rule, according to an analysis by the bill’s sponsor, Sen. Henry Stern, a Democrat representing a district northwest of Los Angeles,” according to S&P Global Market Intelligence.

There are no guarantees that those bills will pass, but some large corporates with California footprints support them. Moreover, members of the political party that control both legislative chambers as well as the governor’s office are sponsoring them.

Another point to consider is California’s history of not relying on federal policy to chart the course on carbon reduction. This remains the case today.

“California has never and should not be relying on the federal government to lead the way on progressive issues,” State Sen. Scott Wiener (D-San Francisco) told S&P. “If the federal government gets it done, that’s fantastic and I support that. But in California, we’re going to lead as we always have.”

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