A groundbreaking California law will force large companies doing business in the state—including major global corporations—to disclose their planet-heating carbon emissions.
The measure, signed into law by the governor, Gavin Newsom, on Saturday, will be the nation’s first of its kind, serving as a blueprint for national climate accountability. It comes as federal regulators have dragged their feet on crafting similar rules, which could be finalized this month.
SB 253 will require California regulators to create rules by 2025 for public and private companies whose annual revenues exceed $1 billion. That affects about 5,300 corporations, including Chevron, Wells Fargo, Amazon, and Apple.
By 2026, those companies will have to publicly disclose how much carbon is produced by their operations and electricity use. Critically, by 2027, they will also be required to report emissions generated by their supply chains and customers, known as “scope 3” emissions, which are highly controversial among business interests, including the fossil fuel industry.
A companion bill passed by the state’s legislature, SB-261, would additionally require businesses with more than $500 million in yearly revenue to disclose their climate-related financial risks beginning in 2026, or face annual penalties.
Both bills will make new data public beyond California’s borders, which supporters say could be game-changing. “The disclosure requirements would really pull back the curtain on the biggest climate destroyers in the oil industry and make it harder to greenwash,” said Hollin Kretzmann, a senior attorney at the environmental advocacy group Center for Biological Diversity, which supported the bills.
Yet Newsom’s signatures came with caveats. In two similar signing statements, he raised concerns about the bills’ implementation deadlines and the costs they will impose on businesses. He previously said approval would be subject to “some cleanup” in language, sparking concern that the laws will be weakened.
“I thank the governor and the bill authors for their leadership, but the hard work of implementing these laws must prove our shared commitment to California’s climate leadership,” said David Weiskopf, senior policy advisor at advocacy group NextGen.
The measures come as the Securities and Exchange Commission (SEC) finalizes a long-awaited, similar federal mandate. Last year, the agency proposed regulations that would likewise require publicly traded companies to notify investors of their emissions—including scope 3 emissions—and climate-related risks.
The bills faced staunch opposition from the state’s chamber of commerce and powerful oil lobby, who argued they will lead to inaccurate reporting and create costs that could be passed on to customers.
This spring, fossil fuel giant Chevron spent $1.27 million on lobbying in the state, according to disclosure records. The trade group Western States Petroleum Association spent $2.38 million over the same period.
“The reporting requirements are unprecedented, undefined, and will do nothing to reduce emissions,” said Kevin Slagle, Western States Petroleum Association’s vice-president of strategic communications, declining to specify how much the association spent to fight the bills.
Spokesperson Bill Turenne said Chevron already voluntarily reports its emissions, including Scope 3, and “will continue our mandatory and voluntary financial disclosures in the jurisdictions where we operate.”
Reports show oil companies’ scope 3 reporting processes are inconsistent.
Marathon Petroleum, the California Independent Petroleum Association, and the American Chemistry Council also fought the bills, a new analysis from climate research group Sunstone Strategies shows, as did other fossil fuel interests.
Other business interests, however, joined environmental advocates in supporting the measures. Tech giants Apple, Google, Salesforce, Microsoft and Adobe backed it, as did businesses that tout their sustainability practices such as Ikea, Patagonia and Amalgamated Bank.
Ivan Frishberg, chief sustainability officer at Amalgamated Bank, which has published emissions and climate risk reports for years, said his firm’s climate-focused practices have spurred more business. “We’re making a lot of money by doing the right thing,” said Frishberg.
Even companies whose focus is selling planet-heating products should realize more climate disclosure is on the way, he said.
The EU has already adopted regulations mandating climate disclosure by large companies doing business there and is building out additional requirements, which could apply to many companies affected by the California laws.
The SEC chair, Gary Gensler, said the measures could “change the baseline” for the long-awaited federal rule.
“If those companies were reporting to California, then it would be in essence less costly because they’d already be producing that information,” he said during a house oversight hearing last month.
The agency has faced pressure to weaken its proposal from oil interests including ConocoPhillips, Phillips 66, and trade group the American Petroleum Institute.
The opposition will likely be “renewed and vigorous” in the wake of the California victories, said Jackie Fielder, co-director of the corporate accountability coalition Stop the Money Pipeline.
Advocates say the statewide fight should show federal regulators not to cave to meet polluters’ demands. In California, lawmakers amended both bills to delay phase-in dates, lessen noncompliance penalties, and reduce the frequency of reporting requirements, but could not win oil companies’ support. “The big lesson is that the fossil fuel industry aren’t good faith negotiators,” said Kretzmann.
Krestzmann said the bill shows California can be a “climate leader.” Last month, Newsom also brought a much-lauded lawsuit against oil companies for allegedly misleading the public about the climate crisis.
But the governor could go even further, said Kretzmann, by imposing additional requirements for fossil projects or even directing regulators to halt new oil and gas permits altogether.
Advocates will be closely watching for changes to the legislation. Last month, Newsom said his staff would do “some cleanup on some little language” on the bills without specifying his desired changes. “That definitely made us raise our eyebrows,” said Fielder.
Newsom has not stated plans to remove scope 3 requirements or otherwise weaken the measures, but will likely face pressure to do so. California’s chamber of commerce says it will push for language tweaks to help protect business interests, which could signal a desire to “gut” the disclosure policy, bill author Scott Weiner told Politico.
“We’ll be watching,” Fielder said.