California Governor Agrees to sign Climate Bill on Companies and Carbon Footprints
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California Governor Gavin Newsom said he would sign legislation that would require large companies to disclose their carbon footprints, potentially putting the state ahead of federal regulators on managing corporate climate risks.
“Of course I will sign that bill,” Newsom said in a statement. “With the effects of climate change becoming more evident, we really saw the need to sharpen our expectations.”
The State senate approved the bill mandating greenhouse gas emissions disclosure last week, leaving Newsom with the final say.
Newsom acknowledged there had been “a lot of opposition” to the bill which would require companies earning more than $1 billion a year and operating in the state to measure categories of emissions including a complex category linked to supply chains and end-users, known as Scope 3.
“We have some cleanup on some little language,” he added, without giving details.
The Securities and Exchange Commission is yet to issue its own guidance.
Multinational companies including Apple (AAPL.O) and Microsoft (MSFT.O) have voiced support for the bill, but the California Chamber of Commerce said it would increase costs and paperwork for firms.
Measures aimed at managing environmental, social and governance (ESG) factors have created controversy among U.S. politicians in recent years. Lawyers have said the new California legislation could still be challenged in court.
Last week, California sued major oil companies, alleging they had played down the risks posed by fossil fuels.
The bill has faced opposition from some business groups, who argue that it is too costly and burdensome. However, supporters of the bill argue that it is necessary to hold companies accountable for their environmental impact and to help the state achieve its climate goals.
It is unclear whether the bill will be challenged in court, but it is expected to be signed by Governor Newsom in the coming weeks.