Newsom signs first-in-the-nation corporate climate disclosure bills
Democratic Gov. Gavin Newsom signed two bills Saturday that would require large corporations operating in the state to disclose both their carbon footprints and their climate-related financial risks starting in 2026. Background: SB 253, by Sen. Scott Wiener (D-San Francisco), and SB 261, from Sen. Henry Stern (D-Sherman Oaks), are the two most ambitious climate bills to come out of deep-blue California this year. The laws faced heavy opposition from groups like the California Chamber of Commerce and the Western States Petroleum Association. Both authors amended their bills late in session to delay implementation and roll back corporate penalties for noncompliance. For SB 253 in particular, those amendments led companies like Google and Apple to support the bill and, ultimately, get enough Assembly Democrats on board to land it on Newsom’s desk. Both bills failed in the Assembly last year. Context: Taken together, the laws will change the landscape for corporate disclosure. For the first time in the U.S., large publicly traded and privately held corporations doing business in California will need to make public both their impact on the environment, including Scope 3 emissions or those generated through a company’s value chain, and how climate change is impacting their bottom line. The laws go beyond proposed federal climate disclosure rules, which would only apply to publicly traded companies and wouldn’t mandate full Scope 3 disclosure. What’s next: The laws will now be implemented by the California Air Resources Board, which needs to pass regulations by Jan. 1, 2025, before companies start filing disclosures in 2026. Newsom has said he thinks the measures will need some “clean up.” CalChamber made similar comments on the need for additional legislation next year, but Wiener has warned that those industry efforts could signal a desire to “gut” SB 253 by removing the Scope 3 reporting requirement.
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- 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.”
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