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  • Writer's pictureMichael Amelio

California Legislators Pass the Most Comprehensive Emissions Disclosure Regulations for Large Corps

California lawmakers have approved groundbreaking legislation that would require major corporations, ranging from oil and gas companies to retail giants, to disclose both their direct greenhouse gas emissions and indirect emissions generated by activities such as employee business travel. This legislation represents the most comprehensive emissions disclosure mandate of its kind in the United States.

Under the proposed law, thousands of public and private companies operating in California with annual revenues exceeding $1 billion would be obligated to report both their direct and indirect emissions. The primary objective of the legislation is to enhance transparency and encourage companies to assess ways to reduce their emissions.

Democratic Assemblymember Chris Ward emphasized the urgency of addressing the climate crisis, stating, "We are out of time on addressing the climate crisis. This will absolutely help us take a leap forward to be able to hold ourselves accountable."

The bill received substantial support from prominent companies, including Patagonia and Apple, as well as Christiana Figueres, the former executive secretary of the United Nations convention responsible for the 2015 Paris climate agreement. Before becoming law, the bill requires final approval from the state Senate and Democratic Governor Gavin Newsom.

While many companies in the state already disclose some of their emissions voluntarily, this legislation has faced opposition from other businesses and groups that consider it overly burdensome.

Governor Newsom has not publicly shared his stance on the bill, although his administration's Department of Finance expressed opposition in July, citing potential budgetary concerns.

Despite this, Newsom has positioned California as a pioneer in climate policies, aiming to transition away from gas-powered vehicles and expand renewable energy sources. The state has set a goal to reduce greenhouse gas emissions by 40% below 1990 levels by 2030.

State Senator Scott Wiener, the bill's introducer, sees it as an opportunity for California to lead the nation in addressing the climate crisis and promoting corporate transparency. California hosts a wide array of major companies, making it an influential player in the American economy. According to Ceres, a nonprofit policy group supporting the bill, more than 5,300 companies would be required to report their emissions under this policy.

While about 17 states, including California, have existing mandates for large polluters to disclose their emissions, California's proposed climate disclosure bill stands out due to its inclusion of indirect emissions. Additionally, reporting would be based on a company's revenue rather than its emissions output.

This legislation goes beyond the U.S. Securities and Exchange Commission's proposed rules, which would require public companies to disclose emissions up and down their supply chains. California's bill extends the requirement to both public and private companies and covers both direct and indirect emissions, including those associated with product transportation and waste disposal.

Critics argue that accurately accounting for all mandated emissions beyond a company's direct control is impractical and overly complex.

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