California eyes mandatory GHG emissions disclosure

January 4, 2022

The California Senate has passed the Climate Corporate Accountability Act, a new bill that requires companies doing business in the state to disclose greenhouse gas (GHG) emissions.

California has become the first state to pass such a law. The legislation requires firms generating over $1 billion in gross annual revenue to disclose scope 1, scope 2 and scope 3 carbon emissions.

According to Senator Scott Weiner, the bill’s co-author, the law will be the broadest and most comprehensive set of corporate emissions reporting requirements and will apply to most of the largest companies in the US.

Weiner said that corporate transparency and accountability were critically important in addressing the climate change crisis.

“Corporate emissions are a huge contributor to climate change, but frankly, we don’t yet know the scope of the problem,” said Weiner. “That’s why we need to act quickly and decisively to ensure corporations are reporting their emissions.

“This is a landmark bill, and today’s vote is a big step forward for California’s fight against climate change.”

Following the act’s passage through the Senate, the bill will proceed to the California Assembly before potentially advancing to Governor Gavin Newsom to sign it into law.

The announcement comes as companies around the world are facing increased pressure from investors, regulators, and other stakeholders to provide greater disclosures in relation to environmental, social and governance issues.

California recently launched a Climate-Related Risk Disclosure Advisory Group, which aims to support the development of a climate risk disclosure standard. The group is part of the state’s cross-government framework for addressing and mitigating the effects of climate change.

In December, the Partnership for Carbon Accounting Financials and CDP teamed up to boost the capacity of financial institutions to measure and disclose their financed emissions.