Two landmark bills, SB 253 (Weiner) and SB 261 (Stern), have recently cleared the California Assembly and are now headed to Governor Gavin Newsom for approval. These legislations, if signed, will mandate businesses with any operational ties to California, regardless of whether they are physically present in the state or not, and either privately held or publicly traded, to publicly disclose their total global greenhouse gas emissions and any other climate-based “risks”.
A critical feature of these bills is that they blur traditional jurisdictional lines. The proposed laws would apply to any entity with over $500 million in annual revenues even if their physical presence isn’t in California. Such a mandate would enhance transparency and enable the assessment of these entities’ carbon footprints.
While these bills are designed for transparency and improved environmental responsibility, they could face considerable resistance from some companies concerned about additional reporting costs and potential risks of publishing proprietary or sensitive information.
The move comes as a growing number of investors, regulatory bodies and policymakers globally are demanding more transparency from corporations on their impact on the environment, following a model pioneered by the Task Force on Climate-related Financial Disclosures (TCFD) which encourages the voluntary reporting of climate-related financial risks.
However, if signed into law by Governor Newsom, the mandate in California would move beyond encouragement and set up the first state-level, compulsory requirements for climate-related disclosures in the US.
The fate of these bills now lies in the hands of California Governor Gavin Newsom who has already exhibited a track record of supporting climate and environmental legislations. The outcome of his decision will be closely watched by stakeholders not only in California, but also nationally and globally.
Read more about these bills here.