California Assembly passes landmark emissions disclosure bill

The California Assembly approved first-of-its-kind legislation Monday night that would require all major corporations that operate in the Golden State to disclose both direct and indirect greenhouse gas emissions.

The Climate Corporate Data Accountability Act, or SB 253, would require the state Air Resources Board to develop and adopt emissions disclosure rules for companies that do business in California and whose annual revenues exceed $1 billion.

The bill, which passed the Assembly floor Monday night, still requires a final signoff from the state Senate before it can reach the governor’s desk. But the legislation has recently garnered the support of many high-profile tech firms, including Google California on Monday and Apple late last week.

The two companies respectively described such climate disclosures as “a key element to combatting climate change” and as an opportunity “to maintain California as a leader in fighting climate change.”

State Sen. Scott Wiener (D), the San Francisco legislator who introduced the bill, described its passage as a “huge climate win in California” in a Monday night statement on X, the platform formerly known as Twitter.

“Despite a massive misinformation campaign by opponents, the Assembly just passed our bill to require large corporations to be transparent about their carbon footprint,” Wiener wrote.

“SB 253 will make California a global leader in corporate carbon transparency,” he added.

If the legislation goes on to become law, corporations would need to begin reporting certain greenhouse gas emissions data beginning at a yet-to-be-determined date in 2026, according to the text of the bill.

The regulations would roll out in increments, with the requirement to issue annual reports of so-called “Scope 1” and “Scope 2” greenhouse gas emissions from the previous fiscal year beginning in 2026 and then “Scope 3” emissions starting in 2027.

The bill defines Scope 1 emissions as all direct emissions that come from sources that the reporting company “owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.”

Scope 2 refers to indirect emissions from consumed electricity, heating or cooling, while Scope 3 applies to those from sources that the company neither owns nor controls, such as purchased goods, business travel, employee commutes and use of sold products.

The U.S. Securities and Exchange Commission has also proposed rules that would require publicly traded companies to report both direct and indirect emissions. But the California bill would reach beyond these mandates — by making the same demands of private corporations.

It remains unclear as to whether Gov. Gavin Newsom (D) would sign the bill into law. His administration’s Department of Finance opposed the legislation in a mid-August analysis, calling out new budgetary costs that “are not included in the current spending plan.”

The California Chamber of Commerce last month maintained that the bill would “not reduce emissions” and would instead create “a costly reporting requirement” that conflicts with state climate goals. 

Noting that the state cannot regulate emissions outside its borders, the Chamber identified a burden that would “fall squarely on California-based companies, giving out-of-state and foreign companies a market advantage.”

Among the other major organizations against SB 253 are the Western States Petroleum Association, the California Hospital Association and agricultural groups.

A spring letter from a coalition of opponents, led by the Chamber of Commerce, warned that each company would likely have to pay more than $600,000 per emissions disclosure — costs that could be passed on to the consumer.

Small- and medium-sized businesses, the coalition argued, could struggle to track emissions from “distant upstream and downstream supply chains” and therefore suffer “a detrimental impact.”

Nonetheless, proponents of the bill contend that the legislation could be a major step in climate action that could have knock-on effects across the globe.

“California is the fifth largest economy in the world, and companies around the world sell into California,” Michael Gerrard and Eric Orts, professor and visiting professor at Columbia Law School, noted in a recent analysis.

The professors said the bill “would mesh with corporate climate disclosure regulations elsewhere, particularly in Europe, and would therefore represent a significant step toward assuring the accuracy, trustworthiness, and transparency of corporate climate performance reporting.”

Acknowledging that SB 253 is by no means “a silver bullet,” Gerrard and Orts highlighted its capacity to reduce emissions and increase preparedness “for the worsening physical impacts of climate change.”

“We see no good reason for businesses to oppose the California bills, which have been carefully designed to provide a level playing field for climate information disclosure,” they concluded. “Instead, they should strongly support passage of these bills.