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California bill would mandate corporate emissions disclosures

BY: JORDAN WOLMAN | 01/30/2023 06:01 AM EST

California lawmakers on Monday introduced a bill that would require large U.S. companies to disclose their greenhouse gas emissions, a move that would go further than proposed federal rules and cover several thousand major companies.

What happened: The “California Climate Corporate Data Accountability Act” proposed by Sen. Scott Wiener (D-San Francisco) would require all companies earning at least $1 billion in revenue and doing business in the state to provide information on their global carbon footprints starting in 2026, including emissions from direct operations, energy use and supply chains.

The bill would be more stringent than the SEC’s proposed climate disclosure rule, which would only apply to publicly traded companies and wouldn’t require all of them to disclose supply-chain emissions, also known as Scope 3.

“We want to make sure that the public and investors and everyone else know which corporations are taking climate change seriously, and which aren’t,” Wiener said in an interview.

Why it matters: The bill would apply to about 5,400 companies doing business in the world’s fourth-largest economy. Advocates said action in California would serve as a model for other states. New York lawmakers are also proposing similar legislation this year after failing last year.

Context: It’s Wiener’s second attempt at mandating emissions disclosures. Last year’s bill narrowly failed in the Assembly after clearing the Senate. Wiener said he’s optimistic the bill will pass this time, citing stronger business support earlier in the process and some legislative districts flipping in November’s election.

“I can look around and see some districts that are now represented by Democrats instead of Republicans,” he said. “Some districts where there are members who did not support it, or I look at the new members who are very strong on climate.”

The bill drew opposition last session from national trade groups, including the American Chemistry Council, the American Bankers Association, the Bank Policy Institute and the Securities Industry and Financial Markets Association. The California Chamber of Commerce, which also opposed the bill last year, said it anticipated continuing opposition due to the bill’s Scope 3 requirements.

Wiener’s proposal is part of a package of legislation introduced Monday aimed at addressing corporate emissions. A bill from state Sen. Lena Gonzalez (D-Long Beach) would require the state’s two major public pension funds to divest from fossil fuels, and one from state Sen. Henry Stern (D-Los Angeles) would require companies earning at least $500 million in revenue and doing business in California to report on climate-related financial risks. The divestment bill failed last session.

Details: Under the bill, companies would be required to disclose Scope 3 emissions but would have an extra six months to do so after reporting on Scopes 1 and 2. They would be allowed to use industry averages and proxy data to estimate Scope 3, in line with proposed reporting standards from the International Sustainability Standards Board.

The disclosures would require third-party verification and would be handled by the California Air Resources Board, which would contract with a nonprofit organization to create a public database. The bill would allow the attorney general to bring civil action against noncompliant companies, a scaling back of the previous version’s proposed authority to levy fines for violations.

What’s next: Wiener said he expects the bill to get its first hearing this spring, likely in the Senate Environmental Quality Committee.

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