May 30, 2024

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California Passes Landmark Legislation Requiring Disclosure of Pollution

California Passes Landmark Legislation Requiring Disclosure of Pollution, Including Supply Chain Emissions



 

California Passes Landmark Legislation Requiring Disclosure of Pollution, Including Supply Chain Emissions.

California lawmakers passed a groundbreaking bill on Monday evening (Sep 11, 2023) that will compel large corporations operating in the state to disclose how much carbon dioxide pollution they generate, contributing to global warming.

If signed into law, this will be the first of its kind in the United States, as the U.S. Securities and Exchange Commission (SEC) has lagged behind in similar federal legislation.

 

California Passes Landmark Legislation Requiring Disclosure of Pollution, Including Supply Chain Emissions.

 

 

The legislation, known as SB 253, mandates the California Air Resources Board to establish relevant rules for companies with annual revenues exceeding $1 billion by 2025. By 2026, these companies must publicly report their greenhouse gas emissions from operations and electricity consumption. Most notably, by 2027, they will also be required to disclose how much pollution their supply chains and customers generate.

“California achieves a significant victory on climate issues despite widespread misleading campaigns by opponents…” tweeted Senator Scott Wiener, a Democrat and the author of the bill. He added, “SB 253 will make California a global leader in corporate carbon transparency, notably requiring them to disclose the pollution generated by their supply chains and customers.”

The requirement for companies to disclose emissions generated by their supply chains and the use of their products and services (referred to as “Scope 3” emissions in industry terms) has faced the most opposition from the industry. It incentivizes them to design products with lower pollution levels and encourages suppliers to reduce their own emissions. Scope 3 emissions typically constitute the largest portion of a company’s carbon footprint, which is why environmental advocates have been pushing to include them in new regulations.

The U.S. Securities and Exchange Commission proposed federal rules in 2022 that would require publicly traded companies to disclose similar information. These rules were expected to be finalized earlier this year but faced strong opposition from some companies, particularly those unwilling to share their Scope 3 emissions data, leading to delays.

BlackRock, in a statement in June 2022, stated, “We believe the purpose of Scope 3 disclosure requirements should not be to push publicly traded companies into roles where they execute emission reductions beyond their control.”

On the other hand, Apple just recently voiced its support for the California bill. Michael Foulkes, Apple’s Director of State and Local Government Affairs, wrote in a letter to Wiener last week, “While measuring these emissions may pose challenges, they are critical for a comprehensive understanding of a company’s climate impact.”

After smoothly passing both the state Assembly and Senate, the bill will now be sent to California Governor Gavin Newsom for signing into law. The implementation of this law in California is yet to be determined and will depend on how the California Air Resources Board formulates regulations. California’s goal is to achieve statewide net-zero emissions by 2045.

 

 

 

California Passes Landmark Legislation Requiring Disclosure of Pollution, Including Supply Chain Emissions

(source:internet, reference only)


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