Corporate climate disclosure bill reintroduced in California Legislature

Legislation that would require corporations to report their greenhouse gas emissions has been reintroduced in the California State Senate, with the proposed law modeled after an American Bankers Association-opposed bill that was narrowly defeated by state lawmakers last year.

The Climate Corporate Data Accountability Act would require businesses with annual revenues of more than $1 billion to report their direct and indirect emissions to the state every year. Specifically, companies would need to disclose annually audited amounts of direct greenhouse gas 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).

ABA was one of many business groups that raised concerns about the 2022 version of the legislation. Along with the California Bankers Association, ABA noted many serious difficulties in reporting financed emissions, and that the legislation relied on international reporting standards that are not yet fully developed. The proposal also has the potential to create duplicative and conflicting reporting requirements with those that are expected from federal regulators when the SEC finalizes climate disclosure rules later this year.