California Gets Ahead of SEC in Forcing Firms’ Carbon Disclosure
The state’s bill would apply to both the public and private sectors, while opponents say the legislation would be costly and burdensome.
Smoke drifts from an oil refinery in Martinez, California.
Photographer: Justin Sullivan/Getty ImagesCalifornia state legislators passed a bill Tuesday that would leapfrog the US Securities and Exchange Commission’s efforts to require companies to disclose their greenhouse gases and climate-related financial risks.
As the world’s fifth-largest economy, California’s environmental rules are quickly followed by other states, even when they exceed federal requirements. The Golden State’s proposal, known as the Climate Corporate Data Accountability Act, would force many of the world’s biggest publicly traded corporations to make their carbon emissions public, just like the SEC plan. The state legislation, however, also would apply to closely held businesses.
The bill backed in California now heads to Democratic Governor Gavin Newsom’s desk. If he signs it into law as expected, companies in the US would for the first time not only have to account for their own pollution, but also the emissions of suppliers and customers using their products. That concept, known as scope 3 reporting, was also included in the SEC plan.