California sets precedent with first-ever GHG disclosure mandate

California sets precedent with first-ever GHG disclosure mandate

On September 17, 2023, during Climate Week NYC’s inaugural ceremony, California’s Governor Gavin Newsom announced his intention to sign Senate Bill 253. This groundbreaking legislation, crafted by Senator Scott Wiener (D-San Francisco), is the first in the United States to mandate companies to disclose their greenhouse gas (GHG) emissions. While a few countries globally have implemented similar mandates, California’s move solidifies its reputation as a trendsetter, often leading the charge ahead of the federal government. Given California’s influential role, other states within the U.S. are expected to adopt similar measures in the near future.

Key highlights from the announcement include:

1. Unprecedented disclosure requirements: SB 253 mandates both public and private entities, with annual revenues surpassing a billion dollars and operating within California, to transparently reveal the greenhouse gas emissions stemming from their operations and supply chains.

2. Driving decarbonisation: The bill’s disclosure stipulations are anticipated to be a potent catalyst for decarbonisation. By offering clear insights into corporate carbon footprints, the legislation is set to encourage businesses to intensify their efforts towards reducing emissions.

Wiener expressed his gratitude towards Newsom’s commitment, stating, “By endorsing SB 253, Governor Newsom underscores California’s leadership in global climate initiatives. Comprehensive carbon disclosures will empower businesses, investors, and consumers, fostering accelerated decarbonisation. This bill champions companies actively addressing the climate crisis and holds accountable those lagging behind.”

Historically, disclosures have been instrumental in environmental advancements. For instance, the U.S. EPA’s Toxic Release Inventory, which mandated corporate toxic disclosures, witnessed a 54.5% reduction in the release of covered substances between 1988 and 2001. Recent research in the journal Science suggests that obligatory disclosures could potentially slash corporate emissions by 70%, urging companies to align with their industry’s median emission levels.