This text has been up to date and was initially printed on September 6, 2023.
Over the weekend, California Gov. Gavin Newsom signed California Senate Invoice 253 into regulation. The regulation is unprecedented, requiring strict greenhouse fuel reporting practices for companies within the state. It surpasses the Securities and Change Fee’s (SEC) proposed local weather disclosure guidelines, as a result of emerge later this month, which exclude Scope 3 disclosures.
California Senate Democrats launched the Local weather Company Knowledge 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. Corporations as diversified as Apple and United Grocers, clearly should 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 customers.
“We’re not creating something new,” California State Sen. Scott Wiener, a Democrat, stated 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 did not cross by one vote within the state legislature in 2022, however this yr’s model was a special story. “I believe this yr we had an excellent broader coalition [and] much more enterprise assist,” Wiener informed GreenBiz.
Adobe and Microsoft, amongst different firms, publicly supported the invoice through a letter to lawmakers Aug. 14. “We all know that constant, comparable, and dependable emissions information at scale is important to completely assess the worldwide economic system’s threat publicity and to navigate the trail to a net-zero future,” it stated.
How will world producers put together for the brand new regulation’s affect? Chris Adamo, Danone’s vice chairman of public affairs and regenerative agriculture coverage, informed GreenBiz that GHG disclosure necessities are usually not new for the worldwide meals and beverage big. “We’ve been anticipating this for years,” he stated, citing the EU reporting mandates with which it should already comply. Danone additionally makes voluntary disclosures via 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 considering of what we’ll should do there,” he stated. He particularly highlighted the problem of harmonizing information for reporting. “How related are these completely different reporting and disclosure regimes which can be 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 completely different events.
Whereas Adamo, with Danone, supported the passage of SB 253, the newly signed regulation did have opponents. Politico reported that the California Air Sources Board workers 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 gained’t look good,” Wiener stated.
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 affect on companies, the excessive threat of inherently inaccurate information and the probability that SB 253 is not going to immediately cut back emissions.