In what is being described by environmental and industry groups as the most significant environmental legislation this year in Sacramento, state lawmakers have sent a bill to Gov. Gavin Newsom that would require corporations doing business in California add up how many tons of greenhouse gases they emit each year, and make the information public.
The bill, the first of its kind in the nation, is being closely watched in other states and other countries.
If Newsom signs it into law, the measure would require about 5,300 companies with more than $1 billion in annual revenue — brand names from McDonalds to Walmart, Chevron to Home Depot — to issue the annual reports, verified by outside auditors, starting in 2026.
The data could potentially be used by researchers, advocacy groups, media outlets and others to issue “biggest polluter” lists showing which companies emit the most carbon dioxide, methane and other greenhouse gases that scientists say are contributing to the steady warming of the planet.
“There are a number of corporations that are working very hard to reduce their carbon footprint,” said State Sen. Scott Wiener, D-San Francisco, the bill’s author, on Friday. “And there are others that aren’t. Some market themselves as green, yet are anything but. This bill will lift up the hood so the public will be able to see which are walking the walk and which are not. It will create a significant incentive for corporations to become very serious about reducing their carbon footprint.”
The bill would affect all large companies doing business in California, whether or not their headquarters are in the state, and whether they are publicly owned or private.
Newsom has not indicated whether or not he will sign it. He is scheduled to appear on Sunday at Climate Week, an annual conference in New York City that is run in partnership with the United Nations.
Environmental groups call the measure, SB 253, a key to addressing climate change, by making more transparent who the largest polluters are.
“If your house is super messy and you are having people over for dinner, you clean up the dishes, you clean the bathroom, and you wipe down the counters,” said Mary Creasman, CEO of California Environmental Voters, a nonprofit group in Oakland. “This gives companies the incentive to clean up their act, and to pollute less. It will create a race to the top.”
Dozens of industry groups oppose the bill, from oil companies to agricultural interests.
They include the California Chamber of Commerce, Western Growers Association, California Restaurant Association, California Trucking Association and others.
They say it will increase costs, add red tape and put a burden on small businesses, who may be asked to provide information if they supply larger companies with goods and services. They also argue it will put California at a competitive disadvantage to other areas. And opponents say that it’s nearly impossible to accurately tally up all the emissions.
“Business leaders and company owners make decisions — including where to locate and expand their operations — based on costs and the ability to be profitable,” said Denise Davis, a spokeswoman for the California Chamber of Commerce. “This is a profoundly flawed mandate that focuses on data that is either unobtainable or will be inaccurately reported.”
The bill, which the Democratic-controlled Legislature approved Tuesday, requires companies to report emissions from their facilities and from their sources of electricity. Most controversial, it requires them to report emissions from other sources, like employee commutes, business travel, their supply chain and emissions when consumers buy their products.
“Wherever these interest groups can, they are looking to tighten down regulations and tighten down the way our businesses operate and the way people live in this state,” said Kevin Slagle, a spokesman for the Western States Petroleum Association, which represents big oil companies.
“There is just no system where you plug in the data and the answer gets spit out,” he added. “If somebody buys a hamburger at McDonalds and they eat it in their car, do those emissions count?”
In recent weeks, some leading companies have come out in favor of the bill.
They include Silicon Valley titans like Apple, Google and Microsoft.
“Climate change poses a significant risk to our long-term economic success, impacts the health and livelihood of the communities in which we operate and live, and disrupts the value chains on which we rely,” many of the corporate supporters wrote in a letter of support Aug. 14. “However, the full picture of corporate climate emissions currently remains fragmented, incomplete, and unverified.”
Large accounting firms, including Deloitte, Ernst & Young, PwC and KPMG, have begun to include greenhouse gas reporting among their services.
Nationally, the Biden administration has proposed a similar rule for all U.S. companies. But the regulations, which would affect only publicly traded companies, have not been released yet by the U.S. Securities and Exchange Commission, due to opposition from industry groups.
The European Union is working on similar rules for 2025.
A related disclosure law has been on books nationally for 37 years.
President Reagan signed a law in 1986 that set up a program called the Toxics Release Inventory. It required large companies to report every year to the U.S. EPA how many pounds of various toxic chemicals they were putting into the air and water.
Reporting the releases has contributed to a drop in pollution, often because companies have tried to avoid bad publicity. From 2012 to 2021, air releases of toxic chemicals decreased by 26%, and water discharges fell by 10% nationwide, according to the EPA.