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California bill on disclosure would go beyond SEC’s proposed rules

The legislation would require California corporations to disclose Scope 3 emissions by 2027.

California state capital building

Image via Shutterstock/SchnepfDesign

A California Senate bill is proposing strict greenhouse gas reporting regulations for corporations in the state, surpassing the Securities and Exchange Commission's (SEC) proposed climate disclosure rules. 

The Climate Corporate Data Accountability Act, or SB 253, was introduced earlier this year by Senate Democrats and would require California businesses with a revenue of $1 billion or more to disclose Scope 1 and 2 emissions, starting in 2026. Mandatory Scope 3 emissions reporting would begin in 2027, with every corporation required to comply, regardless of whether the company is headquartered in the state. The SEC’s proposed reporting rule excludes Scope 3 disclosures.

"We are not creating anything new," said Democratic state Sen. Scott Weiner in a July legislative committee meeting regarding SB 253. "This is an established methodology that corporations have been using for quite some time." 

Although the first iteration of the bill failed to pass by one vote in the state Legislature in 2022, this year’s version appears promising. Specifically, corporations such as Adobe and Microsoft, among others, publicly supported the bill via a letter submitted to lawmakers Aug. 14: "We know that consistent, comparable, and reliable emissions data at scale is necessary to fully assess the global economy’s risk exposure and to navigate the path to a net-zero future."

Of course, there are opponents. Politico reported that the California Air Resources Board staff is "less than thrilled" with SB 253, and at one point sought to quietly "undermine support for it in the Legislature." 

Additionally, a cohort of businesses and chambers of commerce — including American Chemistry Council and the California Chamber of Commerce — issued a letter urging legislators to strike the bill down. The letter cites multiple reasons the bill should not pass, including an outsized impact on businesses in California, the high risk of inherently inaccurate data and the likelihood that SB 253 will not directly reduce emissions.

The bill is likely to be voted on by the end of California’s 2023 legislation session in September.

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