California is set to bolster its role as a global climate leader as Gavin Newsom committed to signing two climate-related disclosure bills into law.
The legislation will mandate large companies operating in California to comprehensively disclose their greenhouse gas emissions and climate-related financial risks.
The bills, known as SB 253, the “Climate Corporate Data Accountability Act,” and SB-261, “Greenhouse gases: climate-related financial risk,” sailed through the California Assembly last week. The Governor has until October 14 to officially sign the bills into law. Addressing his intentions at a Climate Week NY event, Newsom underscored California’s longstanding leadership in climate initiatives, from implementing the first cap-and-trade programme to requiring the sale of only alternative fuel cars by 2035.
Newsom made his stance clear: “Would I cede that leadership by having a response that is anything but ‘of course I will sign that bill?’ No, I would not. Of course I’m going to sign those bills, and California will continue to maintain that leadership.”
The Governor indicated some minor language revisions before finalising the bills. SB 253 will require companies with revenues above $1bn to disclose emissions across all scopes — from direct emissions to indirect emissions tied to supply chains and business activities. The disclosure requirements will take effect in 2026 for Scope 1 and 2 emissions, and in 2027 for Scope 3 emissions. SB 261, on the other hand, mandates U.S. firms doing business in California and earning more than $500m to prepare a report outlining their climate-related financial risks, based on the TCFD framework.
These bills are the first of their kind in the U.S., requiring mandatory climate-related reporting for many large companies. They go further than the forthcoming regulations from the SEC and include all types of emissions, including Scope 3.
California Senator Scott Wiener, who introduced SB 253 earlier this year, said, “In announcing he will sign SB 253, Governor Newsom is reaffirming California’s global climate leadership. These carbon disclosures are a simple but intensely powerful driver of decarbonisation.”
Keep up with all the latest FinTech news here
Copyright © 2023 FinTech Global