By a 23-7 vote, the California Senate has passed the Climate Corporate Accountability Act (CCAA), advancing the first law in the U.S. requiring large companies to disclose all of their greenhouse gas emissions.
Under the new legislation, companies doing business in California and generating over $1 billion in gross annual revenue would be required to disclose annually on their emissions from all scopes, including direct emissions (Scope 1), emissions from purchase and use of electricity (Scope 2), and indirect emissions, including those from the company’s supply chain (Scope 3).
According to the bill’s co-author, Senator Scott Wiener, the law would be broadest and most comprehensive set of emissions reporting requirements in place for corporations, and will apply to most of the largest companies in the U.S.
The announcement comes as companies worldwide are facing increasing pressure from investors, regulators and other stakeholders to provide disclosures relating to Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. More initiatives and sustainability plans and progress. Several jurisdictions across the world have announced moves towards required sustainability disclosure, including the U.S., where the SEC is currently examining rules for mandatory climate risk reporting.
Following the CCAA’s passage in the Senate, the bill will now proceed to the Assembly, before potentially advancing to the Governor, who may sign it into law. California recently launched a Climate-Related Risk Disclosure Advisory Group, aimed at supporting the development of a climate risk disclosure standard, as part of the state’s cross-government framework for urgently addressing and mitigating the impacts of climate change.
Senator Wiener said:
“Corporate transparency and accountability are critically important when it comes to addressing our climate crisis. Corporate emissions are a huge contributor to climate change, but frankly, we don’t yet know the scope of the problem. 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.”
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