The American Bankers Association joined the California Bankers Association and two other financial trade groups in a letter to members of the California State Assembly opposing Senate Bill 260, the Climate Corporate Accountability Act, a comprehensive greenhouse gas disclosure bill that is being considered this week.
Senate Bill 260 would require U.S. companies with more than $1 billion in revenue doing business in California to disclose annually audited amounts of direct GHG emissions (scope 1 emissions), indirect emissions from purchased energy (scope 2) and indirect emissions from activities upstream and downstream in a registrant’s “value chain,” if material (scope 3, which would include “financed emissions” in a bank’s lending portfolio).
In the letter, the trade associations said that the legislation is unworkable because there are currently no objective criteria for assessing scope 3 emissions data. In addition, they noted that “scope 3 financed emissions reported by banks are likely to reflect little other than the asset size of a bank. Larger banks will appear to have greater emissions because they report the entire value chain information from more or larger customers. Smaller banks will appear to have lower GHG emissions only because they serve fewer customers.”
The groups called on lawmakers to delay passage of the bill to ensure that California standards can be aligned with anticipated federal standards, such as those currently under consideration by the Securities and Exchange Commission. “With the expectation that the SEC will finalize its proposal by year-end, California should defer action until the SEC regime is in place to minimize potential conflict and maximize the value of any required disclosures to the public,” the groups said.