California Governor Signs Law Requiring Corporates To Disclose Emissions

California Governor Signed The Law Requiring Corporates To Disclose Emissions - Carbon Herald
Credit: Cedric Letsch | Unsplash

On Saturday, California Governor Gavin Newsom signed the nation’s first-of-its-kind law that will force large companies doing business in the state with annual revenues exceeding $1bn, to disclose their carbon emissions.

Under the law fall about 5,300 corporations, including Chevron, Wells Fargo, Amazon, Apple, Disney, etc. The bill called SB 253 requires large public and private companies doing business in California to disclose their scope 1 and 2 emissions beginning in 2026. By 2027, they will also be required to report emissions generated by their supply chains and customers, known as “scope 3” emissions.

Relevant: California Gov. Newsom Plans To Introduce Climate Law For Big Business

The California Air Resources Board is also required to put a system in place for reporting emissions by January 1, 2025 – a bit more than a year from now.

In September 2023, a companion bill known as SB-261 was passed by the state’s legislature and would additionally require businesses with more than $500 million in annual revenue to disclose their climate-related financial risks beginning in 2026, or face annual penalties. According to Senator’s Newsom, the SB-261 bill would encourage companies to work to avoid those risks. 

Both bills aim to increase climate disclosures in order to prevent “greenwashing”, when companies exaggerate the actual contributions to reducing their emissions in their marketing and communication which misleads the public about their footprint in the climate crisis. According to Senator Elizabeth Warren, a supporter of the bills, that would help investors understand different companies’ vulnerabilities.

The new legislation, however, came with caveats where Mr Newsom raised concerns about the bills’ implementation deadlines and the costs they will impose on businesses. He had previously said that approval would be subject to “some cleanup” in language which raised concerns the laws might be weakened.

Relevant: California Issues New Rules For Tackling Embodied Carbon In Building Construction

According to bill author Scott Weiner who told Politico, Governor Newsom has been facing pressure from fossil fuel interests to remove scope 3 requirements or otherwise weaken the measures, however, he has not stated intentions to do so. The California Chamber of Commerce has said it will push for language tweaks to help protect business interests in the state, which could signal a desire to loosen the law and emissions disclosures.

Lobbying from fossil fuel companies and organizations has been evident in the state, coming up with claims that the regulations will lead to inaccurate reporting and create costs. In the wake of California climate victories, opposition from oil and gas interests has been “renewed and vigorous” according to Jackie Fielder, co-director of the corporate accountability coalition Stop the Money Pipeline.

As per disclosure records, Chevron spent $1.27 million on lobbying in California during the spring to fight the bills and the trade group Western States Petroleum Association spent $2.38 million over the same period.

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