California could force large corporations to disclose carbon emissions under new bill

Companies that generate a billion dollars or more a year doing business in California would be required to publicly release their carbon emissions data under a bill introduced Monday backed by environmental and sustainable business groups.

Supporters of SB 235 say it would strengthen regulation of greenhouse gas emissions generated by some of the most profitable industries across the economy as the state strives to prevent the worst impacts of climate change. The bill is likely to face opposition from business interests.

State Sen. Scott Wiener, D-San Francisco, reintroduced the bill after an earlier version failed to clear the Assembly in August, amid opposition from the California Chamber of Commerce and several Democratic lawmakers who joined Republicans in voting against it.

The new proposal would make California the first state to require companies with annual gross revenues of over $1 billion to make public their greenhouse gas emissions in line with an independent global emissions measurement framework known as the GHG Protocol.

The new disclosure rules would not be limited to California-based corporations, and are estimated to impact some 5,500 companies operating in a state that could soon surpass Germany as the world’s fourth-largest economy.

Companies would be required to submit emissions disclosures to an online reporting platform and a third-party audit. The California Air Resources Board would then be tasked with incorporating the data into state climate goals.

“It’s time for the corporate community to come clean about their progress toward meeting our climate goals,” Wiener said in a statement. “To tackle the climate crisis, we need new standards to improve transparency and raise the bar for the business community across the nation.”

U.S. industry emitted 5.9 million metric tons of carbon from consuming fossil fuels in 2020, according to the Environmental Protection Agency. Efforts to require corporate disclosures of emissions are underway at the national level, with a proposed ruling by the Securities and Exchange Commission.

This bill goes further than the federal effort by requiring disclosure of a broader emissions classification called “scope three.” Supporters say emissions in this category, which are produced by smaller suppliers not owned by major corporations, account for the largest share of industrial pollution. Opponents of the bill have argued that these emissions are too difficult to calculate.

Advocates say the bill was changed to allow approximation formulas and software that other companies have used to measure and disclose the full extent of their carbon emissions. They highlighted Patagonia, Dignity Health, and Pepsi as examples of companies already doing so.

Wiener cited backing from Ceres, a San Francisco-based nonprofit organization that focuses on sustainable capital markets, as a reflection of business support for the measure. Managing director Stephen Rothstein said investors and consumers are increasingly looking for transparency.

“There’s an old business axiom that you can’t manage a problem if you can’t measure a problem. And right now we can’t measure it. We have a climate tower of Babel, meaning we have a lot of information out there, more and more of it, but it doesn’t talk to each other,” said. “So we need to have better information consistency.”

Despite newfound support from climate-minded groups connected to the private sector, the bill is likely to face opposition from big business, including banks and multinational corporations.

“It will be nearly impossible for ARB to ‘verify’ emissions data that is, by its very nature, subjective, inaccurate, and often incomplete,” wrote the California Chamber of Commerce and other business groups in opposition to the previous version of the bill. “California is not in the business of regulating out of state emissions, nor should it be.”

A committee hearing has not been scheduled yet.