Emissions disclosure bill is testing the state’s climate resolve in the face of industry misinformation.
Capital & Main, by Aaron Cantù, August , 2023
It’s been more than two years since a California lawmaker first introduced a bill requiring big corporations to report their greenhouse gas emissions. The information could be criticalin the fight against climate change, with global temperatures smashing records this summer — yet it died in the Legislature last year after failing by one vote.
Now, the bill could fail anew thanks to a handful of Democrats.
The Climate Corporate Data Accountability Act, carried by Sen. Scott Wiener (D-San Francisco), would force big companies to report their emissions to the California Air Resources Board.
Altogether, the lack of information on supply-chain emissions means we know only a fraction of the global economy’s climate impacts, undermining the public’s knowledge of the crisis. Some companies already report these figures, or disclose select information on their own.
But under SB 253, thousands of public and private companies — about 5,300 — would report the full scope of their climate pollution, many for the first time. That includes recognizable brands like Walmart and Costco and any other company that generates at least a billion dollars in revenue and operates in the state.
And if SB 253 becomes law in California, reportedly the largest sub-national economy in the world, it could contribute to a wave of transparency regulations requiring more corporate climate disclosures, among them the European Union’s new policy. Bill supporters say this information helps put pressure on companies to reduce their emissions.
But business interests, including the oil and gas lobby, are aligned to sink the California legislation. To pull that off, they would need the help of Democrats.
Fence-Sitting Democrats Receive Millions From Corporate Interests
Swing-vote Democrats in the State Assembly — where similar legislation failed by one vote in 2022 — may determine whether the opposition succeeds.
As Democrats have secured a supermajority in the California Legislature, business associations have increasingly targeted so-called moderate Democrats with their giving and lobbying.
Many of the same assemblymembers who helped kill the bill previously may have a chance to vote on it again. But a review of campaign contributions suggests that opposed industries have lawmakers’ ears.
Seventeen Assembly Democrats who registered no vote or voted against the bill in 2022 are still in the chamber. They have collectively taken nearly $1.16 million from oil and gas throughout their careers, including the months after last year’s session. (A full list of figures can be viewed here, with more detail here.) Thirteen lawmakers collected oil and gas money in 2023.
Over the course of their careers, Assemblymember Mike Gipson (D-South Bay) collected the most from oil and gas, at $244,380; Blanca Rubio (D-South Bay) and Brian Maienschein (D-Escondido) came in second and third, at $212,399 and $114,950.
Staff for Rubio and Maienschein didn’t return a request for comment. In an email to Capital & Main, Gipson chief of staff Emmanuel Aguayo noted Gipson’s affirmative votes on several climate bills signed last year by Gov. Newsom.
The lawmakers also took $4.6 million from business groups, many of which, such as the California Chamber of Commerce (recently rebranded as CalChamber) and regional agricultural associations, are opposed to SB 253. Forty percent of that total went to just three lawmakers: Gipson, Rubio and Maienschein. But 10 others have collected more than $100,000 each from business groups over their careers.
The governor’s rush to pass a climate package last year may have led to fatigue among some lawmakers, claimed Sen. Wiener.
“I suspect if our bill had come up a day or two before, my prediction is we would have gotten it off the floor,” Wiener said in an interview. “We just have a stronger, more diverse coalition this year.”
Wiener said he’s also planning outreach to 15 freshmen assemblymembers who would be voting for the first time. Of them, three — Esmeralda Soria (D-Merced), Blanca Pacheco (D-Downey) and Jasmeet Bains (D-Delano) — received thousands of dollars from oil and gas this year. And seven, including Soria, Pacheco and Bains, collected contributions from CalChamber (view figures here).
“We have a lot of new members, so we have a lot of work to do on that front,” Wiener said, “but I’m optimistic.”
Supply Chain Emissions a Missing Piece of Climate Puzzle
A handful of companies are supporting the bill, including Microsoft, IKEA, Patagonia and Sierra Nevada Brewing Co.
In a letter to the Assembly’s Appropriations Committee, they wrote that the bill “would level the playing field by ensuring that all major public and private companies disclose their full emissions inventory, creating a pathway for collective reduction strategies.” The committee has to approve the bill before it can go to the Assembly floor.
CalChamber has reiterated the same concerns over two years. A letter boils it down to difficulties tracking supply chain emissions, which it has described as “impossible” and something that would “necessarily require that large businesses stop doing business with small and medium businesses” that act as subcontractors.
Such claims are “not true,” said Simon Fischweicher, head of corporations and supply chains for CDP North America. The nonprofit supports companies’ efforts to account for their emissions, and connects them to climate-conscious investors; CDP’s member companies represent trillions in global market capital.
“A significant portion of companies disclosing emissions are small or medium sized,” Fischweicher said. “It’s already happening.”
Most company’s supply chain emissions (which are referred to as Scope 3 emissions by the World Resources Institute) account for the vast majority of their climate pollution. For oil refiners, this includes emissions generated when people fuel up their cars and drive using gasoline refined from company petroleum.
To take another example, Coca-Cola can track the emissions generated when its executives drive or fly (Scope 1), or when its office buildings use fossil fuels for electricity (Scope 2). But far more pollution happens indirectly, across the lifecycle of each Coke bottle or can. Understanding it requires gathering data points from subcontractors involved in bottling and distribution, as well as estimated climate pollution from all the trashed Cokes in landfills.
The bill directs companies to use the GHG Protocol, which determines supply chain emissions by multiplying “emissions factors” by weight or cost of products. The figures are imprecise, an ongoing concern as the need for accurate information grows. Advocates say standards will improve.
“That level of granularity involves different assumptions that can be made, so we’re not always going to end up on the same exact number, even from a Coke to a Pepsi,” Fischweicher said. “But what’s critical is that companies go through those steps, understand where their impacts lie, explain those figures, and understand the methodology to know how they got there.”
Industries “Fighting, Delaying” Disclosure Rules
Companies have railed against Scope 3 emissions requirements to the Securities and Exchange Commission, which is working on rules requiring public companies to disclose their emissions and exposure to climate change.
The U.S. Chamber of Commerce argued that the costs of compliance to businesses would be far higher than the government’s estimates — and that investors just don’t care much about emissions.
Separately, the American Petroleum Institute, the organization that once served as the fossil fuel industry’s main disseminator of climate change denial, said the information would be unreliable and hard to gather.
Yet API’s comments contradict its endorsement of emissions-gathering in other venues. In 2020, API and two other oil associations released a guide that encourages companies to report emissions across their value chains using various frameworks, among them the GHG Protocol.
And both the state chamber and oil lobby have cited the SEC’s rulemaking to argue that California’s climate disclosure bill would be redundant — even as their national counterparts oppose that same rulemaking at the SEC.
Wiener called these actions “shocking.”
“They’re fighting, delaying and trying to kill the SEC rule, but then saying we shouldn’t legislate because the SEC will handle it,” he said. “It’s so cynical.”