California Governor Gavin Newsom has announced his intention to endorse a pivotal legislative measure poised to alter the landscape of climate risk reporting for American corporations. Addressing a distinguished audience at a climate panel convened in New York City, Governor Newsom affirmed his commitment to affix his signature to CA SB253 (23R). This proposed legislation, heralding a seismic shift in corporate transparency, would mandate companies amassing annual revenues exceeding $1 billion and conducting business within California to divulge their scopes 1, 2, and 3 emissions.
This legislative edict will usher in an era of unparalleled transparency, unveiling the identities of the most prodigious corporate contributors to greenhouse gas emissions and illuminating the often-obscured realms of emissions deeply embedded within corporate supply chains. The ambit of this legislation extends its purview over more than 5,000 corporate entities currently operating within the precincts of California, wielding the potential to recalibrate the national paradigm for evaluating climate risk. In the context of the federal government’s reticence to proffer definitive regulations mandating augmented climate risk disclosure, the California initiative assumes paramount significance.
Governor Newsom also articulated his readiness to endorse a complementary legislative proposal, CA SB261 (23R), championed by Senator Henry Stern (D-Sherman Oaks). This measure seeks to compel major corporations to furnish comprehensive revelations pertaining to their climate-related financial vulnerabilities. The governor acknowledged that both legislative acts may necessitate subsequent refinements, connoting the potential for post-enactment “clean-up” measures.
Governor Newsom’s proclamation was made on the occasion of his presence in New York, coinciding with Climate Week, strategically synchronised with the United Nations’ deliberations. These declarations are poised to reverberate within the hallowed corridors of Wall Street, where their implications hold substantial resonance.
Senator Scott Wiener (D-San Francisco), the progenitor of SB 253, lauded California’s proactive stance, proclaiming, “California will once again lead the nation with this ambitious step to tackle the climate crisis and ensure corporate transparency.” The ambit of SB 253 is projected to encompass an expansive cohort of approximately 5,400 companies. This legislative endeavour, unveiled earlier this year as an integral component of a comprehensive climate accountability package, transcends the nascent federal climate disclosure norms propounded by the Securities and Exchange Commission (SEC). While the SEC’s prospective rule predominantly pertains to publicly traded entities, with no sweeping mandate for scope 3 emissions disclosure, the California legislation casts a far-reaching net, encompassing privately held corporations and compelling comprehensive scope 3 revelations.
