SACRAMENTO, Calif. (AP) — Major corporations ranging from oil and gas companies to retail giants will have to pay for their direct greenhouse gas emissions as well as emissions from activities like employee business travel under legislation passed Monday by California lawmakers. Will also have to be disclosed. A mandate of its kind in the nation.
The legislation would require thousands of public and private businesses operating in California and earning more than $1 billion annually to report their direct and indirect emissions. The goal is to increase transparency and motivate companies to evaluate how they can cut their emissions.
“We don’t have time to deal with the climate crisis,” said Democratic Assembly member Chris Ward. “It will definitely help us moving forward to be able to hold ourselves accountable.”
The legislation was one of the highest-profile climate bills in California this year, with support from major companies like Patagonia and Apple, as well as Christiana Figueres, the former executive secretary of the UN conference behind the 2015 Paris climate accord.
The bill will still need final approval by the state Senate before reaching Democratic Governor Gavin Newsom. Lawmakers supporting the bill say a large number of companies in the state already disclose some of their emissions. But the bill is a controversial proposal that many other businesses and groups in the state oppose and say would be too burdensome.
Newsom declined to share his position on the bill when asked last month. His administration’s Finance Department opposed it in July, saying it would likely cost the state money not included in the latest budget. Newsom has furthered California’s role as a trendsetter on climate policies by transitioning the state away from gas-powered vehicles and expanding wind and solar power. By 2030, the state aims to reduce its greenhouse gas emissions by 40% compared to 1990.
State Sen. Scott Wiener, the San Francisco Democrat who introduced the disclosure bill, said in a statement that it would allow California “to once again lead the nation with this ambitious step to tackle the climate crisis and ensure corporate transparency.”
California is home to many large companies that manufacture, export, and sell everything from electronics to transportation equipment to food, and nearly every major company in the country does business in the state, which is home to nearly one in nine Americans. There is home. Newsom frequently touts the state’s status as one of the world’s largest economies.
The policy would require more than 5,300 companies to report their emissions, according to Ceres, a nonprofit policy group that supported the bill.
According to the National Conference of State Legislatures, about 17 states, including California, require large polluters to disclose how much they emit. California’s climate disclosure bill would be different because all indirect emissions companies would be required to report. Additionally, companies must report based on how much money they make, not how much emissions they emit.
The US Securities and Exchange Commission has proposed rules that would force public companies to disclose their emissions up and down the supply chain. But the California bill would go further, by mandating that both public and private companies report their direct and indirect emissions.
Companies must report indirect emissions from transporting products and disposing of waste. For example, a major retailer must report emissions from powering its buildings as well as emissions from delivering products from warehouses to stores.
Opponents of the bill say it is not possible to accurately account for all mandated emissions beyond those sources for which companies are directly responsible.
“We’re dealing with information that is either unreliable or unverifiable,” said Brady Van Engelen, policy advocate for the California Chamber of Commerce.
The chamber, which advocates for businesses throughout the state, is leading a coalition in opposition to the bill that includes the Western States Petroleum Association, the California Hospital Association and agricultural groups. They argue that many companies do not have enough resources or expertise to accurately report emissions and say the law could increase prices for people buying their products.
Hundreds of companies in California are already required to disclose their direct emissions through the state’s cap-and-trade program, said Danny Cullenward, a climate economist and fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy. The decade-old program, which allows big emitters to buy allowances for pollution from the state and trade them with other companies, is one of the largest in the world.
Cullenwardt said the disclosure bill could lead to similar proposals in other states because federal regulators, facing potential lawsuits over future disclosure mandates, “will be under pressure not to move forward.”
Supporters of the disclosure bill acknowledge that it is not a “perfect” solution that will guarantee flawless emissions reporting. But he says it’s a starting point. California environmental voters, who support the bill, say the legislation will pressure companies to move faster to reduce their emissions.
“Our state cannot wait until 2023 on climate action,” said Mary Cressman, the group’s chief executive officer.
The California Air Resources Board would have to approve regulations by 2025 to implement the bill’s requirements. Companies must begin publicly disclosing their direct emissions annually in 2026 and begin reporting their indirect emissions annually in 2027. Companies must hire independent auditors to verify their reported emissions releases. The state will not penalize companies for unintentional mistakes made in reporting a portion of their indirect emissions.
A similar proposal introduced last year passed the state Senate but failed in the Assembly. Wiener, a San Francisco Democrat who introduced the legislation both years, said supporters of the bill have built a stronger coalition this year to push for a better outcome.
A key committee of the state Assembly earlier this year blocked legislation that would have accelerated the state’s timeline for reducing greenhouse gas emissions. Lawmakers are also considering a bill that would require companies making more than $500 million a year to disclose how climate change could harm them financially.
,
Sophie Austin is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Austin @sophieadanna
Sophie Austin, The Associated Press
