California lawmakers are weighing a bill that would go far beyond state lines by requiring major companies in the state to detail their greenhouse gas emissions, even those of their suppliers.
The bill, which was approved by the state Senate on May 30, would require companies that operate in California and generate more than $1 billion a year to report greenhouse gas emissions in their supply chains. While many companies measure and report at least some of their emissions without any legal requirements, many do not account for all emissions related to their products. And they don’t all measure and report emissions in the same way. The Climate Corporate Data Accountability Act seeks to change that by requiring companies – from giant banks like Wells Fargo to private family businesses like In-N-Out Burger – to follow the same protocol and account for all emissions related to their business.
“I think mandatory, standardized corporate climate disclosure is critically important – and even more important in the era of greenwashing,” said Kathy Mulvey, climate accountability advocate at the Union of Concerned. Scientists, referring to the idea that many companies overestimate their environmental achievements. .
To pass the state Assembly, the bill must overcome broad opposition from industry lobbyists, who successfully thwarted a similar proposal last year. The idea of a broad climate disclosure mandate has upset the oil and gas industry, the California Chamber of Commerce, the California Cattlemen’s Association, other agricultural groups and would have most of the state popular fast food company, In-N-Out. The burger conglomerate spent $90,000 lobbying this session on the Disclosure Bill, among other pieces of legislation. (In-N-Out did not respond to multiple requests for comment.)
The proposed mandate is the latest example of ambitious climate policy that has been stalled at the federal level but taken up by California lawmakers. The U.S. Securities and Exchange Commission, the federal agency charged with regulating markets and protecting investors, is considering a similar but less stringent rule requiring only public companies to report their issuances. Like the proposed SEC rule clashes with industry headwinds and provoking legal issues that could prompt officials to scale it all back, California continues to serve as something of a climate policy test kitchen for the rest of the country. And since many of the largest companies in the country do business in the state, which prides itself fifth largest global economy, a corporate disclosure mandate would extend far beyond state borders.
“States have a big responsibility to lead on climate because there’s not much we can do at the federal level given the politics around climate,” said Melissa Romero, senior legislative affairs manager at California Environmental Voters. “States must intervene here. This is literally the role California has played, and we need to play it again.
Climate advocates and policy analysts have long said that one of the first steps towards reducing greenhouse gas emissions is simply to account for them. “You can’t manage a problem if you can’t measure a problem first,” said Steven Rothstein, managing director of Ceres Accelerator for Sustainable Capital Markets, a nonprofit that advocates for climate solutions based on climate change. market (Ceres and California Environmental Voters worked closely with lawmakers on the bill.)
But even as more and more investors view climate change as a financial risk and as more and more companies, McDonald’s For Mercedes-Benz, commit to climate action, empty promises abound. “There is no single system” for accounting for emissions, Rothstein said. “If you’re a customer, or an investor, or a regulator, and you want to compare (company disclosures), it’s very difficult to do that.”
Proponents of the California bill say it would expose greenwashing not just by mandating corporate transparency, but by implementing a standardized system. In-N-Out, McDonald’s and Burger King, for example, should measure and report their emissions using the same protocol. The bill would also require companies to consider greenhouse gases emitted up and down the supply chain – known as ‘Scope 3’ emissions – and not just from their own. operations or their energy consumption.
Globally, supply chains represent, on average, 75 percent of a company’s emissions, but can exceed 90 percent in certain industries, such as finance and food. Raising cattle for beef puts a lot more heat-trapping gases into the atmosphere than turning on the lights in a restaurant. A third of global emissions are food related, and agriculture alone accounts for 10% of total US emissions. But only about half of the world’s 100 largest food and beverage companies measure, disclose and set targets to reduce Scope 3 emissions.
Both in California and at the federal level, it’s the proposed requirement to disclose these types of emissions — from cows, not just cooking — that has drawn the most resistance from industry groups. In a March 8 letter To lawmakers, the California Chamber of Commerce – leading a coalition of more than 50 groups – said the mandate would “necessarily require large corporations to stop doing business with small and medium-sized businesses that will struggle to accurately measure their greenhouse gas emissions let alone meet ambitious carbon emission requirements, leaving these companies without the contracts that allow them to grow and employ more workers. The American Farm Bureau Federation made a similar argument against the SEC rule when it was proposed last year, saying the rule would prove a major burden on farmers and ranchers who are not equipped to monitor and report climate pollution, such as the amount of methane that their cows burp.
Romero argued against those claims, noting that the Climate Corporate Data Accountability Act would allow companies to use industry averages in their calculations, rather than requiring vendors to provide primary data. She also noted that some companies — such as Patagonia, Ikea and Sierra Nevada, the California-based brewery — have voiced support for the disclosure mandate as a way to help reduce corporate emissions and hold companies accountable.
Although the bill narrowly failed in the Assembly last year, Romero said she’s more optimistic about its chances this session because there are several new climate-conscious Assembly members. Governor Gavin Newsom, however, has yet to take a public stance on the matter.