ABA, California bankers urge state to reconsider climate disclosure ... - ABA Banking Journal
ABA, California bankers urge state to reconsider climate disclosure law | ABA Banking Journal
California should take steps to ease the burden for financial institutions to comply with a new state law that requires them to report their greenhouse gas emissions, including those emissions for which they are not directly responsible, the American Bankers Association, California Bankers Association and California Credit Union League said in a joint letter last week.
The Climate Corporate Data Accountability Act will require businesses with annual revenues of more than $1 billion to report their direct and indirect emissions to the state every year. The state legislature passed the bill last month and Gov. Gavin Newsom has signaled his intention to sign it into law, although he has suggested he is willing to “clean up” the legislation.
In their letter, the associations urged Newsom to veto the bill, noting that banks may need as long as two years to comply with the law, and that the information gathered is likely to be inconsistent and unreliable, given that there are no nationally recognized standards for the reporting required. Short of a veto, the groups had several suggestions to mitigate the law’s more burdensome reporting requirements, particularly for “scope 3” financed emissions that are generated by borrowers in a bank’s lending portfolio, as well as their business partners and customers.
Among their suggestions, the associations said the state should expand or clarify proposed “safe harbor” language for emissions reporting so companies that do not have effective internal controls over emissions accounting systems may be considered to have made estimates in good faith. They also urged that California’s requirements align with, or be compatible with, federal standards or other international standards incorporated by U.S. authorities.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”