California Senate passes climate bill, governor must decide by Oct 14

[September 13, 2023]  By Isla Binnie
 
(Reuters) -California's state Senate on Tuesday approved a bill requiring large companies to report their carbon footprints, sending the bill to Governor Gavin Newsom whose office said he must decide by Oct. 14 whether to sign it and get ahead of the federal government in setting corporate climate rules. 

Gavin Newsom, Governor, State of California speaks at the 2023 Milken Institute Global Conference in Beverly Hills, California, U.S., May 2, 2023. REUTERS/Mike Blake

"A major step for climate action, requiring large corporations to disclose their entire carbon footprint - is on its way to the Governor!" Democratic Senator Scott Wiener wrote on social media site X after the chamber voted 27-8 to pass the bill.

It would require public and private companies that operate in California and earn more than $1 billion a year to do the accounting, Wiener said.

The California bill was supported by several big companies including Apple, Ikea and Microsoft, but it was opposed by the Chamber of Commerce business group which called it "onerous."

Companies are under mounting pressure from governments and shareholders to disclose their contributions to greenhouse gas emissions that warm the global climate and endanger traditional business models. The U.S. Securities and Exchange Commission (SEC) has not yet finalized its rules on disclosure.

Newsom's office said the governor has until Oct. 14 to act on the legislation, offering no further comment in response to a Reuters request.

Democrat-dominated California has long has had some of the strictest environmental rules in areas like vehicle fuel efficiency standards and planning policy, after passing a climate change law in 2006. In recent years, attempts to manage risks linked to environmental, social and governance (ESG) factors have been hotly contested and left deep divides between some states.

The bill tackles one of the thorniest issues in climate regulation by asking companies to measure and report a complex category of indirect emissions linked to their supply chains and end-users, known as Scope 3. The California Chamber of Commerce blasted the measure, calling it "an onerous emissions tracking and paperwork requirement that will increase costs on California businesses".

The law may face other hurdles even if Newsom approves it.

"I expect the legislation to be challenged in court," said Steve O'Day, a partner at law firm Smith Gambrell Russell, although "if it does become active it will begin to force analysis and disclosure of life cycle greenhouse gas emissions" ahead of the SEC's proposed federal rule.

(Reporting by Isla Binnie in New York; Editing by David Gregorio)

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