In a pioneering move, California has taken a significant step towards addressing climate change by enacting a groundbreaking law that mandates large companies operating within the state to disclose their carbon emissions.
This historic measure, signed into law by Governor Gavin Newsom, makes California the first state in the nation to require such disclosures and sets a compelling precedent for nationwide climate accountability.
As federal regulators have been slow to craft similar rules, California’s legislation, SB 253, takes center stage in the fight against climate change.
The law compels California regulators to establish regulations by 2025 for public and private companies with annual revenues exceeding $1 billion.
This scope encompasses approximately 5,300 corporations, including Chevron, Wells Fargo, Amazon, and Apple industry titans.
By 2026, these corporations must publicly disclose their carbon emissions from operational activities and electricity consumption. Crucially, by 2027, they will also be mandated to report emissions generated by their supply chains and customers, referred to as “scope 3” emissions.
This latter requirement has sparked controversy, particularly among business interests, including the fossil fuel industry.
In tandem with SB 253, the state’s legislature passed a companion bill, SB-261. It will require businesses with annual revenues exceeding $500 million to disclose their climate-related financial risks, starting in 2026, with the potential for yearly penalties for non-compliance.
One of the most significant aspects of both bills is that they will make emissions data publicly available beyond California’s borders, potentially transforming the landscape of corporate climate responsibility nationwide.
Hollin Kretzmann, a senior attorney at the environmental advocacy group Center for Biological Diversity, emphasized the importance of these disclosure requirements, stating, “The disclosure requirements would pull back the curtain on the biggest climate destroyers in the oil industry and make it harder to greenwash.”
California Sets New Standard with Landmark Carbon Emissions Disclosure Law
However, Governor Newsom’s support for these measures came with certain caveats.
In two similar signing statements, he expressed concerns about the deadlines for implementing the legislation and the potential costs it could impose on businesses.
These reservations have raised concerns among some that the laws may undergo weakening revisions.
These groundbreaking measures coincide with the Securities and Exchange Commission’s (SEC) finalization of a long-awaited, similar federal mandate.
The SEC’s proposed regulations, which could be finalized this month, would require publicly traded companies to disclose their emissions, including scope-three emissions and climate-related risks to investors.
Unsurprisingly, the bills faced staunch opposition from the state’s chamber of commerce and influential oil lobby, who argued that they could lead to inaccurate reporting and create costs that might be passed on to consumers.
Fossil fuel giants, including Chevron, and trade groups like the Western States Petroleum Association invested heavily in lobbying against these bills. Kevin Slagle, Vice President of Strategic Communications at the Western States Petroleum Association, criticized the reporting requirements as unprecedented and undefined, asserting that they would not contribute to emissions reduction.
Nevertheless, the measures garnered support from various business interests and environmental advocates.
Tech giants such as Apple, Google, Salesforce, Microsoft, and Adobe, along with businesses championing sustainability practices like Ikea, Patagonia, and Amalgamated Bank, backed the legislation.
Ivan Frishberg, Chief Sustainability Officer at Amalgamated Bank, which has been publishing emissions and climate risk reports for years, highlighted how their climate-focused practices have contributed to sustainability and spurred business growth.
California’s landmark emissions disclosure law sends a clear signal that corporate accountability and transparency in addressing climate change are imperative.
As the nation grapples with climate challenges, this legislation provides a blueprint for similar actions across the United States.
It underscores California’s commitment to leading the charge in combating climate change.
Source: The Guardian