California Passes Sweeping Emissions Bill, Awaits Governor's Decision
California's state Senate has approved a landmark bill that would require large companies to disclose their carbon footprints. The legislation is now awaiting Governor Gavin Newsom's decision, with a deadline of October 14th for him to sign it into law. This move aims to position California ahead of the federal government in establishing corporate climate regulations.
Democratic Senator Scott Wiener, a vocal supporter of the bill, hailed it as a "major step for climate action." Under the proposed law, public and private companies operating in California that earn more than $1 billion annually would be mandated to report their carbon emissions.
While several major companies, including Apple, Ikea, and Microsoft, supported the California bill, it faced opposition from the Chamber of Commerce business group, which deemed it "onerous."
In recent years, companies have faced increasing pressure from governments and shareholders to disclose their contributions to greenhouse gas emissions, which contribute to global climate change. The U.S. Securities and Exchange Commission (SEC) is also in the process of finalizing rules on such disclosures.
The California governor's office has not provided additional comments on the legislation but has until October 14th to make a decision.
California, with a Democratic majority, has long been at the forefront of implementing stringent environmental regulations. However, issues related to environmental, social, and governance (ESG) factors have sparked controversy and divisions among states in recent years.
One of the central aspects of this legislation is its approach to Scope 3 emissions, which are indirect emissions connected to a company's supply chains and end-users. These emissions are often challenging to quantify and report accurately.
The California Chamber of Commerce strongly criticized the bill, characterizing it as an "onerous emissions tracking and paperwork requirement" that would increase costs for businesses in the state.
Even if Governor Newsom signs the bill into law, it may face legal challenges. Legal experts anticipate potential court challenges, which could further shape climate reporting requirements as companies navigate both state and federal regulations.
This legislation underscores the growing significance of climate-related disclosures for businesses and their stakeholders, highlighting the need for standardized reporting and accountability measures.