This text has been up to date and was initially revealed on Sept. 6, 2023.
Over the weekend, California Gov. Gavin Newsom signed California Senate Invoice 253 into legislation. The legislation is unprecedented, requiring strict greenhouse fuel reporting practices for firms within the state. It surpasses the Securities and Change Fee’s (SEC) proposed local weather disclosure guidelines, on account of emerge later this month, which exclude Scope 3 disclosures.
California Senate Democrats launched the Local weather Company Information Accountability Act, or SB 253, in January. It requires California companies with income of $1 billion or extra to reveal Scope 1 and a pair of emissions starting in 2026, adopted by Scope 3 emissions in 2027. Each company should comply, whether or not headquartered in California or just working there. Firms as diversified as Apple and United Grocers, clearly must comply. So do the Netherlands-based Ikea and New York-based Eileen Fisher, which promote merchandise as diversified as furnishings and clothes to California corporations and shoppers.
“We aren’t creating something new,” California State Sen. Scott Wiener, a Democrat, mentioned in a July legislative committee assembly concerning SB 253. “That is a longtime methodology that firms have been utilizing for fairly a while.”
The primary iteration of the invoice didn’t go by one vote within the state legislature in 2022, however this yr’s model was a special story. “I feel this yr we had a fair broader coalition [and] much more enterprise assist,” Wiener advised GreenBiz.
Adobe and Microsoft, amongst different firms, publicly supported the invoice by way of a letter to lawmakers Aug. 14. “We all know that constant, comparable, and dependable emissions knowledge at scale is critical to completely assess the worldwide financial system’s danger publicity and to navigate the trail to a net-zero future,” it mentioned.
How will world producers put together for the brand new legislation’s influence? Chris Adamo, Danone’s vice chairman of public affairs and regenerative agriculture coverage, advised GreenBiz that GHG disclosure necessities aren’t new for the worldwide meals and beverage big. “We’ve been anticipating this for years,” he mentioned, citing the EU reporting mandates with which it should already comply. Danone additionally makes voluntary disclosures by way of the Science Based mostly Targets Initiative.
Adamo did admit, although, that the extra necessities of SB 253 will create some challenges. “[These disclosures mean] extra funding and extra pondering of what we’ll must do there,” he mentioned. He particularly highlighted the problem of harmonizing knowledge for reporting. “How comparable are these totally different reporting and disclosure regimes which are being created, whether or not it is California, Europe, Science Based mostly Targets Initiatives and so forth?”
As soon as the SEC provides its anticipated separate disclosure necessities this month, corporations shall be required to report Scope 1, 2, and three GHG emissions to a number of totally different events.
Whereas Adamo, with Danone, supported the passage of SB 253, the newly signed legislation did have opponents. Politico reported that the California Air Assets Board employees is “lower than thrilled” with SB 253, and at one level sought to quietly “undermine assist for it within the legislature.”
“There was important opposition from the Chamber of Commerce, within the oil business and [from] the bankers and different industries who didn’t need these disclosures to occur, as a result of they know that a few of their members received’t look good,” Wiener mentioned.
The California Chamber of Commerce and a cohort of companies issued a letter this summer season urging legislators to strike the invoice down. Its causes included an outsized influence on companies, the excessive danger of inherently inaccurate knowledge and the chance that SB 253 is not going to straight cut back emissions.
