California Governor Gavin Newsom Enacts Legislation Mandating Large Corporations to Report Emissions

Governor Gavin Newsom of California signed into law a comprehensive regulation on Saturday, obligating sizable enterprises to publicly disclose an extensive array of greenhouse gas emissions. This statute is unparalleled in its scope across the United States.

This legislation mandates that over 5,300 enterprises, each generating in excess of $1 billion in yearly revenue and operating within the California jurisdiction, reveal both their direct and indirect emissions. This encompasses emissions emanating from business operations such as facilities management, as well as those arising from ancillary activities, including employee business travel and product transportation.

Proponents argue that the statute will increase public awareness regarding the role of large corporations in climate change and potentially encourage these organizations to assess and minimize their carbon footprints. Advocates contend that many such businesses already furnish partial emissions data to the state government.

However, entities like the California Chamber of Commerce, agrarian collectives, and major oil corporations have expressed their reservations about the law. They contend that it imposes fresh obligations on firms lacking the requisite expertise to reliably report indirect emissions. Additionally, they caution that the timing is inopportune given that federal authorities are in the process of deliberating disclosure mandates for publicly traded companies, which could result in redundant efforts.

California has been a forerunner in pioneering climate policy initiatives, setting ambitious goals such as prohibiting the sale of new gasoline-powered automobiles by 2035, scaling up renewable energy sources, and curbing emissions from rail transport. By the end of this decade, the state aims to reduce its greenhouse gas emissions by 40% below the 1990 levels.

Democratic State Senator Scott Wiener, who had twice before failed to secure the passage of this expansive emissions disclosure regulation, stated that the newly required data would benefit consumers, investors, and legislators alike.

Prominent corporations like Apple and Patagonia have publicly endorsed the bill, citing their existing voluntary emissions disclosure practices. Christiana Figueres, a notable former United Nations official instrumental in the 2015 Paris climate accord, lauded the legislation as a vital catalyst for galvanizing the private sector toward combating climate change.

Although 17 states already mandate that major emission sources report their direct emissions, according to the National Conference of State Legislatures, California’s new law sets a precedent by obligating companies to report a broader spectrum of both direct and indirect emissions.

Legal expert Amanda Urquiza, who specializes in corporate law and advises companies on climate-related matters, noted that while public companies generally possess the necessary infrastructure for data collection, verification, and reporting, private companies will face a significant operational shift to comply with these comprehensive greenhouse gas reporting requirements.

The U.S. Securities and Exchange Commission has also proposed regulations that would compel major publicly listed companies to disclose emissions and financial risks associated with climate change.

The California Air Resources Board has been tasked with finalizing the rules to enforce the legislation by 2025. Starting from 2026, companies will be mandated to annually disclose their direct emissions as well as those associated with powering, heating, and cooling their premises. By 2027, the requirement will extend to include annual reporting of other indirect emissions.

Sophie Austin is affiliated with the Big Big News/Report for America Statehouse News Initiative, a nonprofit program that deploys journalists to local newsrooms for coverage of insufficiently reported issues. Follow Austin on the platform formerly known as Twitter: @sophieadanna.

Frequently Asked Questions (FAQs) about California emissions disclosure law

More about California emissions disclosure law

• California’s Climate Change Efforts
• National Conference of State Legislatures on Emission Policies
• U.S. Securities and Exchange Commission on Climate Change Disclosures
• 2015 Paris Climate Agreement
• California Air Resources Board
• California Chamber of Commerce on Climate Policy
• Apple’s Environmental Responsibility
• Patagonia’s Environmental and Social Responsibility