California legislators have approved a bill that will require some of the biggest U.S.-based companies to disclose annual greenhouse gas emissions.
The Senate Bill 253, or the Climate Corporate Data Accountability Act, passed a 48-20 Assembly vote on Monday and then passed with a 27-8 Senate vote on Tuesday, the Los Angeles Times reported. Now, the bill is awaiting a final decision from California Governor, Gavin Newsom.
If signed into law, the bill will require the California Air Resources Board to establish regulations by 2025 that call on all public and private companies with over $1 billion in annual revenue to disclose emissions in three scopes, beginning with scopes 1 and 2 in 2026, and scope 3 emissions reporting starting in 2027.
The scopes, as outlined in the bill, are defined as:
- Scope 1 encompasses emissions directly caused by things the company owns or controls, such as burning fuel.
- Scope 2 is emissions caused indirectly by things like using electricity, heating, or cooling.
- Scope 3 is emissions from things the company doesn’t own or control, such as when they buy products, employees travel for work, or people use the company’s products.
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Approximately 5,400 companies, including Walmart, Apple, ExxonMobil, and Chevron, would be affected, the LA Times added.
Advocates argue that this transparency is crucial for achieving significant emissions reductions, as well as ensuring that companies’ climate pledges are genuine.
“We need the full picture to make the deep emissions cuts that scientists tell us are necessary to avert the worst impacts of climate change,” said California senator Scott Wiener, who penned the bill, in a statement. “We need strong transparency to create a level playing field among private and public companies.”
However, not everyone is on board. Last month, the California Chamber of Commerce said that the bill “will not lead to direct emissions reductions,” but rather impose a “costly reporting requirement,” conflicting with the state’s climate objectives. The agency added that since the state lacks authority to regulate emissions beyond its borders, the burden would disproportionately affect California-based companies, potentially giving an advantage to out-of-state and foreign firms.
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