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Tuesday, July 16, 2024 | Back issues
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Strict Corporate Emissions Reporting Rules Advanced in California

If passed by the full Legislature and signed into law, billion-dollar U.S. companies like Amazon and Apple will have to disclose the full scope of their carbon footprints.

SACRAMENTO, Calif. (CN) --- In the latest escalation of the state’s climate change fight, California Democrats are attempting expose corporate America’s top polluters by prying into the business schemes of companies like Amazon and Apple.

Targeting entities operating but not necessarily domiciled in the Golden State, lawmakers are pushing sweeping new regulations requiring billion-dollar businesses to disclose the full scope of their greenhouse gas emissions. The transparency legislation would be the first of its kind in the U.S. and force corporations to calculate all their greenhouse gas emissions, from energy use down to the supply chain.

In a party-line vote, Democrats on a key state Senate committee on Monday advanced the climate change measure sponsored by a collection of environmental groups including the California League of Conservation Voters.

The bill’s author argued revealing and cracking down on corporate emissions is essential for the state to realize its litany of ambitious climate policies.

“Senate Bill 260 is a necessary and bold step forward,” said state Senator Scott Wiener, D-San Francisco. “You can’t regulate what you don’t know.”

During Monday’s Senate Environmental Quality Committee hearing, Wiener and supporters pitched the bill as a benefit to both the environment and consumers.  

By mandating carbon emissions reporting, customers will have a chance to see whether companies are holding up their end in the fight to stem global warming, said Catherine Atkin, director of Carbon Accountable.

“Information on companies’ greenhouse gas emissions is no longer nice to have, but critical company data that consumers, investors and policy makers need to inform choices on climate action,” Atkin said.

As proposed, SB 260 would require corporations to submit “science-based” reduction plans that must be approved by both a third-party auditor and the state. The so-called “Climate Corporate Accountability Act” tasks the California Air Resources Board with enacting reporting requirements by 2024 and down the line issuing fines to companies that don’t meet their targets.

If enacted, companies would issue annual reports with emissions broken down into three categories or scopes: direct emissions such as fuel use, emissions from energy consumption and indirect emissions from contractors and even employees’ commutes. The state will then make the data available online and Wiener predicts the proposal would extend to approximately 5,000 corporations doing business in the Golden State.

The proponents supplemented their case for the new regulations by citing a Carbon Disclosure Project report that estimated 71% of all worldwide greenhouse gas emissions since 1988 have come from just 100 corporations.  

As expected, business groups have joined to fight SB 260, calling it a burdensome set of duplicative and likely unconstitutional regulations. Opponents told the committee many major businesses have already voluntarily begun disclosing their carbon footprint and that attempting to log the emissions of their suppliers and employees would be difficult to do accurately.   

The California Chamber of Commerce said businesses are already subject to strict emissions reporting rules under the state’s cap-and-trade framework and argued SB 260 would be stricter than even portions of the Paris Agreement.

“It’s a massive data collection effort that will burden California businesses both large and small,” said chamber lobbyist Leah Silverthorn. “It seems to be an attempt to somewhat recreate the wheel.”

The opponents additionally argue SB 260 amounts to an attempt to regulate interstate commerce, as it could force businesses incorporated elsewhere to make changes to remain in California’s lucrative markets. They raised the likelihood of lawsuits being filed by out-of-state companies in an opposition letter to the committee.

The jurisdictional and constitutional questions are certain to be addressed in the bill’s next hearing before the Senate Judiciary Committee later this spring.

State Senator Brian Dahle, R-Redding, said though the bill is aimed at major corporations, it’s inevitable small businesses will take a hit. Dahle, who voted against SB 260 along with the other Republican committee member, said the proposal amounts to a new business tax.

“This is really going to impact every single business in California,” Dahle claimed. “Regulation is a tax; you have to pay someone to get that information.”

The Republican’s concerns however were offset by the Democratic majority, as the committee ultimately voted 4-2 in favor of Wiener’s bill.

State Senator Lena Gonzalez countered an easily digestible database of corporate emissions could lead to real change within American boardrooms.

“I’m actually looking forward to see what corporations will come up with and how they can change perhaps some of their operations to be a little bit more sustainable,” said Gonzalez, D-Long Beach.

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Categories / Business, Environment, Regional

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