California businesses file suit to stop emissions inventory, climate risk rules

(The Center Square) - The California Chamber of Commerce filed a lawsuit to block California laws mandating companies submit inventories of all direct and indirect emissions and issue climate risk disclosures. The suit cites First Amendment violations for compelling companies to make inaccurate statements regarding emissions inventories due to reporting difficulties, and to make public statements with which they disagree regarding climate risk disclosures.

“Both policies violate the First Amendment because they compel companies to make public statements that are likely inaccurate or with which they disagree, due to the incredible challenge of accurately reporting or obtaining reliable information regarding the emissions of their entire supply chain,” said California Chamber of Commerce chief executive officer Jennifer Barrerra in a public statement.

SB 261, by State Sen. Henry Stern, D-Canoga Park, requires any companies with over $500,000 in revenue conducting business in California to prepare climate-related financial risk reports disclosing the risk and measures adopted to reduce and adapt.

In opposition, CalChamber warned requiring the same level of reporting to even small businesses would be unfair, writing, “SB 261 takes a one-size fits all approach to the business community … there should be a proportional approach to developing disclosure requirements to ensure that smaller organizations are not subject to risk.

SB 253, by State Sen. Scott Wiener, D-San Francisco, requires companies with over $1 billion in revenue with any presence in California to submit inventories of their every emission, even indirect emissions from commuting or contractors, or face fines of $500,000 per year for errors or noncompliance. Republicans warn this will discourage corporations from doing business with smaller companies that may have difficulty counting emissions.

“Senate Bill 253 is going to put a much bigger impact on businesses than intended,” said Sen. Roger Niello, R-Fair Oaks, to The Center Square. “While the supporters have emphasized that only about 5,300 U.S. corporations will be required to report, there will be small businesses that work with those corporations that will also be overly burdened to comply.”

Wiener, meanwhile, claimed, “it’s both inexpensive and easy for corporations to make these disclosures” and that “the Chamber is taking this extremist legal action because many large corporations … are absolutely terrified that if they have to tell the public how dramatically they’re fueling climate change, they’ll no longer be able to mislead the public and investors.”

SB 253 requires such stringent reporting of all emissions that if a company’s suppliers, contractors, and other providers of goods and services are big enough to have to inventory emissions, their emissions would be counted multiple times.

According to an independent analysis from Thompson Reuters, “Double counting may occur when a manufacturer and a retailer both account for Scope 3 emissions resulting from the third-party transportation of goods between them,” and that “Collecting data on Scope 3 emissions requires information from multiple sources, such as suppliers, customers, and other stakeholders, making it difficult to obtain accurate and reliable data.”