Companies Call for Climate Disclosure Legislation As California Lawmakers Return to Session
August 14, 2023 /3BL/ - As the California State Assembly returns this week to Sacramento for the end of the 2023 legislative proceedings, more than a dozen major companies are calling for lawmakers to finalize first-in-the-nation legislation that would require companies to provide standardized and consistent climate-related disclosures.
In the coming weeks, lawmakers are set to consider two key pieces of legislation that would provide consumers, investors, and other stakeholders with information about how companies are managing the financial risks and opportunities from climate change. SB 253 (authored by Sen. Scott Wiener) would require all large public and private companies operating in the state to report their greenhouse gas emissions across their operations and supply and value chains, while SB 261 (authored by Sen. Henry Stern) would require them to report on their climate-related financial risks.
While most large companies voluntarily disclose climate information already, these bills would provide a standardized and consistent template that would apply to companies operating in California, across the economy. Designed to meet the growing consumer and investor demand for information about companies’ risk management and sustainability plans, the legislation has also won the support of leading businesses who see an opportunity to demonstrate their leadership to those stakeholders while helping them measure their own progress toward achieving their goals.
“We believe businesses have a responsibility to use not just their voices, but their operations to ensure the long-term health of our planet. We must develop new and innovative models to decouple economic growth from environmental impact while freely sharing our findings along the way. We must empower our employees, members, customers, and communities to support this transition. And we must demand that our government does the same,” said Matthew Thurston, divisional vice president, sustainability, REI Co-op. “Legislation such as SB 253 and SB 261 provide the necessary transparency for businesses to account for their carbon emissions and climate risks, a key step towards enabling them to measure, verify, and achieve their climate targets.”
"Decarbonization in the corporate sector should be an urgent priority given the growing risks posed by climate change," said Stuart Landesberg, CEO, Grove Collaborative. "Without scope 1-3 GHG emissions disclosures, the full picture of corporate climate emissions and climate risks remains fragmented, incomplete, and unverified—making demands for action difficult to understand and follow through on. SB 253 and SB 261 provide a foundation for meaningful climate action, which is why Grove Collaborative proudly supports these critical steps towards corporate decarbonization, required to meet our net zero emissions by 2030 goal."
Corporate support for the legislation has been growing this year. More than a dozen companies have submitted a letter to lawmakers in support of SB 253: Microsoft, IKEA USA, Sierra Nevada Brewing Co., Patagonia, Adobe, Avocado Green Brands, Dignity Health, Grove Collaborative, REI Co-Op, Everlane, Eileen Fisher, Recology, Atlassian, and Seventh Generation. In a separate letter, 12 companies signed in support of SB 261: Microsoft, VF Corp., Patagonia, REI Co-Op, Sierra Nevada, Alter Eco, DSM North America, Seventh Generation, Grove Collaborative, Avocado Green Brands, Atlassian, and Everlane.
Consumers and investors alike have been making their desire for climate disclosure increasingly clear in recent years. According to a recent survey, 85% of Americans said companies should disclose more about the impact of their business practices on society, and 87% support mandatory climate disclosure. And in 2022, more than 500 investors representing nearly $40 trillion in assets under management called for governments around the world to strengthen climate disclosure standards, such as by requiring mandatory reporting.
After a previous version of SB 253 failed to pass by a single vote in 2022, both bills have already been approved this year by the state Senate and are expected to come up for a vote in the Assembly before the end of the legislative session.
If passed, the bills would create the first broad-based climate disclosure policy in the U.S., with SB 253 applying to more than 5,300 companies and SB 261 covering more than 10,000 companies — reflecting California’s position as the world’s fifth-largest economy. The legislation would complement the IFRS’s International Sustainability Standards Board disclosure standards, the EU’s Corporate Sustainability Reporting Directive, and the federal disclosure rule soon to be finalized by the U.S. Securities and Exchange Commission, because it would provide transparency into how both public and private companies are managing material climate-related financial risks and opportunities.
“The disclosure of corporate financial risks is a normal business function, which is why policymakers around the world are sensibly applying it to the considerable business and economic threats of climate change,” said Alli Gold Roberts, senior director of state policy, Ceres. “Leading companies see the benefits of these policies, which help them attract investment, inform consumers, and measure their own progress toward their goals. Ceres and the companies and investors we work with urge the State Assembly to finalize SB 253 and SB 261 this year, positioning California once again as a national economic leader by bringing standardized and consistent climate disclosure requirements to the U.S.”
Ceres will join a rally at the Sacramento Capitol on Aug. 23 at 1 p.m. to demonstrate broad, cross-sectoral support for both SB 253 and SB 261. Notable participants include the bill authors, Sens. Wiener and Stern, as well as Assembly Member Tasha Boerner and other supporters of the legislation, such as Patagonia, California Environmental Voters, and the Greenlining Institute, among others.
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.
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