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California has always been at the forefront of ecological innovation. Setting another precedent, the Golden State has passed a pioneering bill, SB 253, that mandates significant Pollution disclosures from large corporations. If signed into law, this will make California the first in the nation to require such transparency.
The California Air Resources Board has been tasked to develop guidelines by 2025 for corporations that have an annual turnover of more than $1 billion. By 2026, these corporations must openly report their greenhouse gas emissions from operations and electricity consumption. But here’s the game-changer: by 2027, companies will also have to reveal the Pollution arising from their supply chains and customers.
In light of this development, Senator and bill author Scott Wiener expressed his optimism, highlighting how this move could make California a forerunner in corporate carbon transparency.
The most crucial and debated part of this legislation pertains to the “Scope 3” emissions – those originating from supply chains and the use of company products and services. These emissions usually form the most significant part of a company’s carbon footprint. This stipulation encourages companies to innovate, ensuring that their products emit less and motivating their suppliers to curtail their emissions.
The federal SEC had introduced rules in 2022, suggesting similar disclosures. However, their implementation has been delayed due to strong opposition from certain companies hesitant about sharing their Scope 3 emissions. Leading financial institution, BlackRock, stated in 2022 that companies shouldn’t be forced to enforce emission reduction targets that are beyond their purview.
In contrast, tech giant Apple recently showed its Support for the California bill. Apple’s Michael Foulkes emphasized the importance of measuring these emissions to comprehend a company’s complete environmental impact.
As the bill successfully passes through the Assembly and Senate, all eyes are now on Governor Gavin Newsom. If he signs it into law, California will reinforce its commitment to the environment, given its ambition to achieve net-zero emissions by 2045.