California Signs Law Requiring Firms To Report Carbon Emissions

California has passed a law that will require companies in the state, including big name tech giants, to reveal their carbon emissions.

The Guardian reported that on Saturday California Governor Gavin Newsom signed a bill that had been passed by the state legislature, requiring companies with more than $1bn (£817m) in annual revenue to report their carbon missions.

Many firms have already made pledges to reduce their carbon emissions and actively seeking carbon reductions. In April this year year for example, Apple invested another $200 million into a fund it established two years ago, that invests in projects to remove carbon from the atmosphere.

Carbon laws

Apple had first revealed its carbon removal initiative in April 2021, as part of its efforts to tackle climate change and support sustainable forestry.

But now the law passed by California at the weekend comes after delays to similar legislation from the US federal government (namely the Securities and Exchange Commission) – which is expected to finalised sometime this month.

However the California law signed by the governor at the weekend is known as SB 253, will reportedly impact 5,300 corporations in the US state, including oil giant Chevron, Wells Fargo, Alphabet, Amazon and Apple.

California’s SB 253 will require California regulators to create rules by 2025 for public and private companies whose annual revenues exceed $1bn. By 2026, those companies will have to publicly disclose how much carbon is produced by their operations and electricity use.

And by 2027, they will also be required to report emissions generated by their supply chains and customers, known as “scope 3” emissions, which are highly controversial among business interests, including the fossil fuel industry, the Guardian reported.

“This bill would require the state board, on or before January 1, 2025, to develop and adopt regulations requiring specified partnerships, corporations, limited liability companies, and other business entities with total annual revenues in excess of $1,000,000,000 and that do business in California, defined as “reporting entities,” to publicly disclose to the emissions reporting organisation, as defined, and obtain an assurance engagement on, starting in 2026 on a date to be determined by the state board, and annually thereafter, their scope 1 and scope 2 greenhouse gas emissions, as defined, and, starting in 2027 and annually thereafter, their scope 3 greenhouse gas emissions, as defined, from the reporting entity’s prior fiscal year, as provided,” the legislation states.

Job killer bills?

Meanwhile according to the Guardian newspaper, a companion bill passed by the state’s legislature, SB 261, would additionally require businesses with more than $500m in yearly revenue to disclose their climate-related financial risks beginning in 2026, or face annual penalties.

It should be noted that there has been strong opposition to both bills from California’s chamber of Commerce and the oil lobby.

Both have argued the laws will lead to inaccurate reporting and create costs that could be passed on to customers.

Indeed, California’s Chamber of Commerce actively tracks “a list of job killer bills to identify legislation that will decimate economic and job growth in California.”

Both SB 253 and SB 261 have been classified as job killers.

California exodus

President and CEO of California’s Chamber of Commerce, Jennifer Barrera tweeted that the business group was disappointed that SB 253 and SB 261 have been signed into law and will “add considerable obligations on affected businesses.”

California it should be remembered has already witnessed big name tech firms relocating to other US states.

Elon Musk has for example repeatedly warned about California’s ‘overtaxation’ and ‘over-regulation’ and ‘overlitigation’ as reasons for companies relocating away to other states such as Texas or Florida.

In December 2020, Musk announced he had personally moved out of California after he had sold his Bel Air homes. Musk personally relocated to Texas, after living in Los Angeles for 20 years.

Then in October 2021 he followed through on his warning, after clashing repeatedly with Californian officials last year, and also moved Tesla’s corporate headquarters to Texas.

Other tech giants such as Oracle moved its corporate headquarters from California, and relocate it to Texas.

Hewlett-Packard Enterprise (HPE), one of the founding fathers of California’s tech homeland of Silicon Valley, also revealed it was leaving the ‘golden state’ and moving its headquarters to Texas.

A number of other firms have already left the San Francisco Bay Area, including data-mining provider Palantir Technologies, which moved to Denver from Palo Alto.

E-cigarette maker Juul Labs also relocated to Washington from San Francisco, and Charles Schwab said its headquarters will move from San Francisco to Westlake, Texas.

Texas is already home for other tech firms such as Advanced Micro Devices (AMD), and Dell, among others.