California Governor Gavin Newsom has announced that he will sign legislation requiring large companies to disclose their carbon footprints. This move could position California ahead of federal regulators when it comes to managing corporate climate risks.
The bill mandating greenhouse gas emissions disclosure was recently approved by the State Senate, leaving Newsom with the final say. During the start of “Climate Week” in New York, which coincided with the U.N. General Assembly, Newsom confirmed that he would sign the bill into law. He did mention that there were some minor details that needed to be addressed.
The legislation would apply to companies earning more than $1 billion a year and operating in California. These companies would be required to measure and disclose various categories of emissions, including a complex category known as Scope 3, which is linked to supply chains and end-users.
While multinational companies like Apple and Microsoft have expressed support for the bill, the California Chamber of Commerce argues that it would increase costs and paperwork for firms.
It’s worth noting that the Securities and Exchange Commission (SEC) has not yet issued its own guidance on these matters. This means that California’s legislation could potentially put the state ahead in terms of addressing corporate climate risks.
In recent years, managing environmental, social, and governance (ESG) factors has become a controversial topic among U.S. politicians. Critics argue that these measures increase costs and paperwork for businesses, while supporters believe they are necessary for tackling climate change and promoting sustainability.
The signing of this legislation follows California’s decision to sue major oil companies for allegedly downplaying the risks posed by fossil fuels. The state is making significant efforts to hold corporations accountable for their impact on the environment.
It’s important to note that the new California legislation could still face legal challenges. However, if successfully implemented, it could set a precedent for other states to follow in terms of managing corporate climate risks.
Overall, California Governor Gavin Newsom’s commitment to signing legislation requiring carbon footprint disclosure demonstrates the state’s dedication to addressing climate change and holding companies accountable for their environmental impact. By taking this step, California is positioning itself as a leader in managing corporate climate risks, potentially surpassing federal regulators in this area.