How much carbon pollution do big companies produce? A new California law will force them to say

Californians will require large corporations to publicly disclose their carbon emissions and financial risks posed by climate change, after Gov. Gavin Newsom signed bills on Saturday considered the year’s strongest environmental legislation.

The Climate Corporate Data Accountability Act requires companies with more than $1 billion in annual revenue to disclose their carbon emissions — including estimates of pollution from their supply chain — starting in 2026.

Newsom’s signature was expected, after saying “of course” he would sign the law at New York’s Climate Week conference. Climate advocates say the law will fill information gaps on businesses’ responsibility for global warming and cut through corporate green-washing.

“California is giving the world a powerful tool to combat climate change,” said Senator Scott Wiener (D-San Francisco), the bill’s author, when it passed the legislature last month. “We need the full picture to reduce our greenhouse gas emissions, create transparency for investors, and hold large corporations accountable to their commitments.”

Newsom’s approval, however, came with several caveats.

In a signing message, he said the bill’s implementation deadlines were “likely infeasible,” and that the reporting protocols could result in inconsistent reporting across businesses subject to the measure. He directed his staff to work with Weiner and the Legislature to address these issues.

Newsom also expressed concern about the bill’s financial impact on businesses. He said he was asking the Caifornia Air Resources Board “to closely monitor the cost impact as it implements this new bill and to make recommendations to streamline the program.”

The governor voiced similar concerns about a sister measure he signed, Senate Bill 261, co-authored by Wiener and introduced by Sen. Henry Stern. It will require corporations with annual revenue above $500 million to file reports on financial risks tied to climate change.

California law already requires large polluters to disclose their emissions through its flagship cap-and-trade program. But the state currently has no means to measure the full scope of corporate carbon emissions up and down a company’s supply chain.

Under the corporate transparency law, Senate Bill 253, companies will have to make a fuller disclosure of their greenhouse gas emissions available online. It sailed through a final vote in the Senate last month after a tighter contest in the assembly.

The measure mandates corporations ranging from Walmart to Chevron to disclose carbon pollution released not just through their operations, but throughout their supply chain — including transportation, waste disposal and power plants.

Powerful business interests lobbied against the measure, citing high compliance costs. But several major corporations including Google, Apple, Levi’s, Salesforce, Patagonia, Microsoft, IKEA USA and Sierra Nevada Brewing Co. signed on in support.

A survey by Environmental Resources Management, an environmental consulting group, found that the average cost for companies with over $1 billion in annual revenue to fully report full climate risk was $533,000.

A previous version of the bill fell two votes short in the Assembly last year after major companies argued that downstream, or supply chain, emissions would be nearly impossible to calculate.

The current measure allows companies to use formulas to estimate them. The bill was also revised to remove the possibility of penalties on companies for inaccurate estimates made in good faith.

The U.S. Securities and Exchange Commission proposed similar rules on corporate emissions disclosure that apply to public companies, but California’s measure goes further.

Research shows that major corporations are responsible for a significant share of carbon emissions contributing to global warming. A 2017 Carbon Majors Report found 100 companies have been the source of more than 70% of the world’s greenhouse gas emissions since 1988.