California Climate Bill Will Make Some Company Carbon Footprints More Visible

Climate advocates say first-of-its-kind legislation approved in California will push big businesses to green their operations by making carbon emissions data public.

"It says you're going to be transparent, including from your supply chain," California state Senator Scott Wiener told an audience of policymakers and business leaders at a Climate Week NYC event on Tuesday.

Wiener, a Democrat who represents San Francisco, was one of the architects of Senate Bill 253, which will require companies with more than $1 billion in sales doing business in California to publicly disclose their greenhouse gas emissions and those along their supply chains.

Companion legislation also requires large companies to disclose their exposure to climate risks, such as the effects that drought, heat waves or extreme weather could have on their operations or work force. California Governor Gavin Newsom said Sunday, at another Climate Week event, that he intends to sign the bills, calling them part of the state's long tradition of leading the nation on environmental action.

The U.S. Securities and Exchange Commission is working on emissions disclosure rules that would apply nationally. However, that rulemaking has been delayed and, Wiener explained, the SEC rules will only include publicly traded companies, while the California bill also covers those that are privately held. Wiener estimates 5,500 companies will be required to disclose their emissions.

Due to the size of California's economy—if the state were a country, it would be the world's fifth-largest economy—the bill will likely have an outsized influence on businesses not just around the U.S., but around the world.

"It is international policy in a lot of ways," California state Senator Lena Gonzalez said at a Climate Week NYC press conference on Tuesday. Gonzalez, a Democrat representing Long Beach, was a bill co-sponsor. "This is going to apply to a lot of international companies, so having that data available is a very powerful lever for other jurisdictions to use," she said.

The bill's reach along company supply chains also expands its potential influence, as it makes visible not only the emissions from operations that a company directly controls, but also those generated by its suppliers. These so-called Scope 3 Emissions are sometimes the largest sources of a company's greenhouse gases, creating a hidden carbon footprint.

Mindy Lubber, CEO and president of the nonprofit climate advocacy group Ceres, said that footprint will no longer be hidden.

"It allows better management of carbon emissions and smarter investment decisions because the information is finally out there," she told Newsweek.

Lubber said that sort of reliable data can also empower consumers to push back against greenwashing, the term for misleading or deceptive company claims about sustainability.

"Greenwashing is something you can do if people don't really have the facts," Lubber said. "What these bills do is require facts that are on the record. It absolutely will limit greenwashing."

The emissions disclosure bill was approved with a comfortable 49-20 margin in California's lower chamber on September 11, and won final approval 27-8 in the state Senate the next day, despite opposition from the California Chamber of Commerce and the American Petroleum Institute, the lobbying group for oil companies, Wiener said. He credited the success to support from major corporations already taking voluntary action on emissions reporting, including Apple, Levi's, Google, Salesforce and Microsoft.

To accommodate some concerns raised about the cost of compliance, Wiener said, the reporting requirements for supply chain emissions will be phased in over three years, and companies acting in good faith will not face penalties for errors in disclosure reports.