California lawmakers have passed a bill mandating that large U.S. companies disclose their yearly greenhouse gas emissions. Known as Senate Bill 253 or the Climate Corporate Data Accountability Act, it received approval from both the Assembly and the Senate.
The legislation is now pending approval from California Governor Gavin Newsom.
If enacted, the California Air Resources Board will be tasked with creating regulations by 2025. These regulations will require both public and private companies generating over $1 billion in yearly revenue to disclose their emissions across three defined scopes.
Reporting for scopes 1 and 2 would commence in 2026, followed by scope 3 in 2027.
Scope 1 covers emissions directly from company-owned or controlled sources, Scope 2 includes emissions from indirect activities like electricity usage, and Scope 3 pertains to emissions from external sources, such as purchased goods or employee travel.
About 5,400 firms, including industry giants like Walmart, Apple, ExxonMobil, and Chevron, would be impacted by this legislation. Supporters of the bill argue that such disclosure is essential for making substantial reductions in emissions and for verifying the authenticity of corporate climate commitments.
California Senator Scott Wiener, the bill’s author, stated that comprehensive data is crucial for making the necessary emissions reductions to mitigate the severe consequences of climate change.
He also emphasized the need for transparency to maintain a fair competitive landscape among companies.
Critics, however, have reservations about the bill. The California Chamber of Commerce last month expressed concerns that the bill would not directly lead to emissions reductions but would impose expensive reporting obligations.
They also pointed out that the bill could put California-based companies at a disadvantage since the state cannot regulate emissions outside its jurisdiction.
