California Senate passes bill requiring businesses to disclose greenhouse emissions

California Senate lawmakers passed a first-in-the-nation law on Wednesday that would require U.S.-based companies conducting business in the state and generating over $1 billion in revenue annually to disclose their greenhouse gas emissions.

The law, known as the Climate Corporate Accountability Act, passed the state Senate in a 27-3 vote on Wednesday. If passed by the Assembly and signed into law by Gov. Gavin Newsom, many of the country’s largest corporations who conduct business in California would be required to report greenhouse gas emissions to the Secretary of State.

The law would also allow the California Air Resources Board to analyze the data collected and create a report that would be published by the Secretary of State – an effort lawmakers say will promote “climate transparency and accountability from major corporations.”

“Corporate transparency and accountability are critically important when it comes to addressing our climate crisis,” Senator Scott Wiener, D-San Francisco and one of the bill’s authors, said in a statement Wednesday. “Corporate emissions are a huge contributor to climate change, but frankly, we don’t yet know the scope of the problem. That’s why we need to act quickly and decisively to ensure corporations are reporting their emissions. This is a landmark bill, and today’s vote is a big step forward for California’s fight against climate change.”

Currently, most of the largest businesses operating in California are not required to disclose their greenhouse gas emissions under law, and those who do report often don’t disclose their full emissions footprint, according to Wiener’s office. By requiring large corporations to report this information, supporters say the new law will allow consumers to see how the corporations they invest in and support impact climate change.

“It’s time to give consumers, policymakers and investors the information they need to make informed choices and to catalyze needed change and innovation,” Catherine Arvin, director of Carbon Accountable, said in a statement. “By requiring transparency of the carbon footprint of the nation’s largest corporations that reap the benefits of doing business in California, SB 260 moves us closer to that goal.”

The bill will require companies to disclose their complete greenhouse gas emissions inventories in three areas – direct emissions, emissions from purchasing and using electricity, and indirect emissions, including a corporation’s supply chain.

The law received pushback from dozens of chamber of commerce groups and alliances across the state after it was introduced in January 2021. The groups said that, while the bill would alleviate small and medium businesses from reporting to the Air Resources Board, they would still be required to report up the supply chain.

“Although SB 260 contains a large threshold for applicability, the bill requires companies to track emissions not only for its California sites or products, but for worldwide operations … Requiring reporting of emissions associated with a company’s entire supply chain will necessarily require that large businesses stop doing business with small and medium businesses that cannot meet the onerous reporting requirements required by the bill, leaving these companies without the contracts that enable them to grow and employ more workers,” a coalition of organizations, including the California Chamber of Commerce, said.

The law will now move through Assembly policy committees ahead of a full vote on the Assembly floor. If passed, the bill will move to the governor’s desk to be signed into law.