California Governor signs historic climate disclosure bill

California Governor Gavin Newsom said He will sign a landmark climate bill passed by the state Legislature last week that requires major companies to publicly disclose their greenhouse gas emissions, a move with national and global ramifications.

The new law will require about 5,000 companies to report the amount of greenhouse gas pollution emitted directly from their operations as well as the amount of indirect emissions such as employee travel, waste disposal and supply chains.

Climate policy advocates have long argued that such disclosures constitute an essential first step in efforts to harness financial markets to rein in pollution caused by global warming. For example, when investors are made aware of a company’s global warming impacts, they may choose to direct their money elsewhere.

The law would apply to public and private companies that generate more than $1 billion annually and operate in California. But since the state is the world’s fifth-largest economy, California often sets the tone for the country, and many of the affected companies are global.

There were some questions about whether Newsom, a Democrat who has pushed for some of the country’s most ambitious policies to combat climate change, would sign the legislation. The California Chamber of Commerce lobbied against the decision, and the state Department of Finance opposed it, saying the measure would result in new costs not currently included in the state’s spending plan. After the state Senate approved the bill last week and sent it to Mr. Newsom’s desk, his office declined to say what it would do.

But he was asked in A Climate Week activities At the Times Center on Sunday if he were to sign the bill, Newsom first responded by detailing California’s history of forward-thinking climate policies, including his administration’s requirement that every new car in the state be fully electric by 2035.

“Am I going to give up that leadership with a response that’s just, ‘Of course I’ll sign this bill?’” he said in response to a question from David Gillis, a New York Times reporter who interviewed the governor in front of the audience. “No, I won’t.”

Mr. Newsom said his signing came with a “modest caveat” that his office wanted “some cleaning up of some of the little language” in the legislation. But he did not explain what changes he wanted to make, and a spokesman for his office did not respond to a voicemail or text message requesting an answer.

Many of the companies affected will include oil and gas giants like Chevron, major financial institutions like Wells Fargo, and global brands like Apple. Companies will be required to disclose all their emissions starting in 2027.

The new measure will be paired with another new law that will require companies with revenues of more than $500 million to report climate-related risks, although they will not have to disclose their specific emissions.

California’s legislation goes further than the SEC’s proposed measure, which would require only publicly traded companies to disclose their emissions. The proposal, which has not yet been finalized, faces strong opposition from conservatives and business groups.

“The fact that one state like California would do this is potentially troubling and perhaps promising,” said Robert Stavins, director of the Environmental Economics Program at Harvard University. “It may be the case that a billion-dollar company has $35 worth of business in California and is still affected. But that’s potentially promising because we have a long history in the United States, being at the forefront of environmental regulation and other states that are following suit.” And the federal government is finally catching up.

Climate policy advocates praised the move. Mindy S. said: “The nation’s first two bills will provide unprecedented insight into corporate climate emissions and financial climate risks,” said Looper, CEO and president of Ceres, a nonprofit group that works with investors and companies on environmental issues. .

Opponents said compliance would be expensive and burdensome, especially the requirement that companies accurately track and measure all emissions. For example, apparel manufacturers are concerned about having to report emissions associated with growing, weaving and transporting textiles, in addition to reporting direct emissions from their apparel manufacturing plants.

The California Chamber of Commerce said last week that the legislation is “a costly mandate that will negatively impact businesses of all sizes in California and will not directly reduce emissions,” said Dennis Davis, executive vice president of the California Chamber of Commerce.

Ms. Davis said on Sunday that her organization was disappointed by Mr. Newsom’s decision but was hopeful that more “purge” legislation next year would mitigate the impact of the new law.