California Senators Announce Climate Accountability Package to Raise The Bar For Corporate Climate Action
**FOR IMMEDIATE RELEASE**
January 30, 2023
California Senators Announce Climate Accountability Package to Raise The Bar For Corporate Climate Action
SACRAMENTO – Senator Scott Wiener (D-San Francisco), Senator Lena Gonzalez (D-Long Beach), Senator Henry Stern (D-Los Angeles) introduced the Climate Accountability Package, a suite of bills that work together to improve transparency, standardize disclosures, align public investments with climate goals, and raise the bar on corporate action to address the climate crisis. At a time when rising anti-science sentiment is driving strong pushback against responsible business practices like risk disclosure and ESG investing, these bills leverage the power of California’s market to continue the state’s long tradition of setting the gold standard on environmental protection for the nation and the world.
Corporations play a critical role in any effort to make deep cuts to greenhouse gas emissions. Studies have found that as much as 71% of all historic greenhouse gas emissions are attributable to just 100 companies. Without corporate action to reduce these emissions, California would be unable to meet its climate goals.
Many corporations have taken steps to disclose their climate impacts. As of 2020, 81% of S&P 500 companies voluntarily reported their direct (scope 1 and scope 2) emissions in corporate social responsibility reports.
In recent years, many corporations that have attempted to take steps to improve transparency and lower emissions have faced serious pushback from governments in other states. Leaders in Texas, Florida, West Virginia, and elsewhere have bowed to anti-science activists and fossil fuel interests and threatened corporate leaders who have attempted to disclose and cut climate pollution. The chilling effects of these efforts extend far beyond the states in which they’ve been successful. If banks, pension funds, asset managers and multinational corporations fail to transparently and uniformly disclose and plan for climate impacts and related risks to their businesses, the result will be serious damage to Californians’ savings, economy, and environment.
Climate action also presents a major opportunity for businesses, as noted last week by the co-chairs of the Congressional Sustainable Investment Caucus, Reps. Vargas and Casten. Passage of the Inflation Reduction Act has already resulted in billions in new investments in carbon-cutting projects and technologies that will create hundreds of thousands of jobs in the coming years. Meanwhile, the Securities and Exchange Commission and the Federal Reserve are pushing Wall Street to disclose the material risks posed by their investments in fossil fuels, while the Biden Administration has set forth new procurement guidelines, to ensure the Federal government does not do business with corporations that choose to hide their greenhouse gas emissions.
The Climate Accountability package re-establishes California leadership on these issues with two complementary measures, SB 253 and SB 261, to increase transparency around corporations’ emissions and investments. Due to the lack of transparency around their climate risks and impact, large corporations currently evade the scope of many state regulations, and can mislead potential customers who wish to minimize their contributions to the climate crisis
SB 253 (Senator Wiener) is a first-in-the nation measure to require all large corporations that do business in California to publicly disclose their greenhouse gas (emissions) in line with the Greenhouse Gas Protocol, the longstanding gold accounting standard established by the environmental and business communities. These disclosures will include corporate supply chains (scope 3), which can include in excess of 90% of a corporations carbon emissions. By requiring this disclosure, the public, investors, and others will better understand which corporations are walking the talk when it comes to climate action. Last year, this bill passed — as last year’s SB 260 — passed the Senate and came within one vote of passage on the Assembly floor, despite intense corporate lobbying against it. This year, the coalition supporting the bill is even bigger and more diverse, including Ceres — a coalition of corporations focused on sustainability — coming on as a co-sponsor.
SB 261 (Senator Stern) is modeled on the climate disclosure rules used by CALSTRS and hundreds of major financial institutions, as well as Federal securities risk disclosures that focus on financial risk related to the climate crisis. It protects consumers that stand to lose billions of dollars collectively if financial institutions fail to account for new risks associated with climate change.
The third measure, SB 252 (Senator Gonzalez), harnesses the power of California’s public investment funds, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), to push businesses to act on climate change while protecting these vital public funds from fossil fuels’ inherent volatility. It raises the bar for pro-climate investment, setting a standard that could influence how trillions more dollars in investments are apportioned. SB 252 ends California’s contradictory and incongruous policy of being a leader in the fight against climate change, while simultaneously investing billions of dollars of teacher and state-employee retirement funds directly into the fossil fuel corporations that are the leading cause of climate change.
Over the past decades, more and more corporations have expressed a desire to tackle the climate crisis in partnership with NGOs and the public sector. Together, these bills create a new framework that allows governments and the public to hold the corporate community to their word, establishing clear standards for transparency that will build trust, and leveraging the power of California’s public funds to accelerate the transition to clean energy.
“It’s time for the corporate community to come clean about their progress toward meeting our climate goals,” said Senator Wiener. “In recent years, we’ve seen great corporate leadership alongside cynical campaigns to spread misinformation and block desperately needed progress. At the same time, anti-science forces and fossil fuel interests — and the right wing politicians they fund — are attempting to bully financial institutions and large corporations into ignoring the climate crisis, placing our shared future at risk. To tackle the climate crisis, we need new standards to improve transparency and raise the bar for the business community across the nation - and that’s exactly what the Climate Accountability Package does. I’m excited to work to hold bad actors accountable alongside Senator Henry Stern, Senator Lena Gonzalez, and an incredible coalition of activists and business leaders.”
“For far too long, corporations have profited at the expense of low-income communities of color who have to struggle with the harmful impacts of their polluting operations. These communities suffer the most from high rates of cancer, cardiovascular diseases, respiratory diseases, premature deaths and an overall lessened quality of life, without access to clean air, water, or green open spaces,” said Senator Lena Gonzalez. “That is why today, I am extremely proud to stand in solidarity with Senator Scott Wiener, Senator Henry Stern, and numerous colleagues in the Legislature, to end this injustice through this climate accountability package, including my legislation that will end California’s direct financial support of fossil fuel companies, by requiring our public employee pension funds to divest.”
“It makes no sense for a corporation to be hiding their climate risks – like exposure to increased drought, wildfires, and extreme weather - from their shareholders or their consumers,” said Senator Henry Stern. “In fact, many of the biggest corporations and banks in the world, including our own state pension agencies, are trying to set new transparency rules in line with our climate goals, only to be blocked by competing interests and anti-science ideologues in other states. Regulators must step in to issue clear guidelines to standardize reporting and overrule bad actors if these risks are to be managed, and California can provide that leadership. To everyone dragging their heels: it’s time to step up.”
Details of the support for each of the bills can be found here:
Climate Corporate Data Accountability Act (SB 253, Wiener):
The Climate Corporate Data Accountability Act is sponsored by EnviroVoters, Ceres, the Greenlining Institute, Sunrise Bay Area, and Carbon Accountable.
“No serious conversation about climate action can leave out corporations’ responsibility to be part of the solution. One hundred energy corporations are responsible for 71 percent of global industrial carbon emissions,” said Mary Creasman, CEO, EnviroVoters. “If we are truly committed to leading on climate action, California needs to use our global market power as the 4th largest economy in the world to catalyze corporate leadership and responsibility on the climate crisis. EnviroVoters is proud to sponsor SB 253. This is the road we must take together to protect communities and our future.”
"Information about corporate climate emissions in California is currently fragmented, inconsistent, and incomplete, with a major disconnect between leading companies and those in the mid-market and their supply chains. SB 253 will help ensure that consumers, investors, policymakers, and other stakeholders across the state get a complete and thorough picture of the corporate emissions data they depend on. Ceres supports SB 253 to ensure California stays on its nation-leading path to build a just and inclusive net zero economy." - Alli Gold Roberts, senior director of state policy, Ceres
“Corporate emissions contribute to over-polluted communities and deadly climate outcomes from harsher wildfire seasons to historic storms and floods. The worst of these impacts disproportionately fall on communities of color and low-income communities,” said Alvaro Sanchez, VP of Policy at The Greenlining Institute. “Corporations have a responsibility to disclose emissions data so the public can hold them accountable for their outsized impact on our climate. The public also has a right to accurate corporate emissions data so they can make informed decisions about the companies they choose to support with their purchasing power. Establishing this foundation of information sharing will help us build better and more equitable solutions to the climate crisis,” Sanchez continued.
“The thousands of US companies with revenues of more than one billion dollars reap the benefits of our markets to the tune of more than 30 trillion dollars. They must play their part in decarbonizing the economy and ensuring a climate positive future for the people of California and the world. This starts with companies making their carbon emissions footprint fully transparent to consumers, investors and policymakers.” Catherine Atkin, Director of Carbon Accountable and co-sponsor of the Climate Corporate Data Accountability Act.
Climate-Related Financial Risk Act (SB 261, Stern):
The Climate-Related Financial Risk Act is sponsored by Ceres.
"The climate crisis's harrowing effects on supply chains, workforces, and infrastructure are among the largest financial risks companies face today. An efficient economy requires companies to disclose these risks — and their plans to address them — to investors, consumers, and other stakeholders. Ceres supports SB 261 to create a nation-leading climate disclosure standard that will benefit the entire California economy." - Alli Gold Roberts, senior director of state policy, Ceres
Fossil Fuel Divestment Act (SB 252, Gonzalez):
“With this critical bill, California has clarified its leadership stance in divesting from fossil fuels. It is an unacceptable moral failing that California’s public funds go to the fossil fuel industry, which contributes to public health harms that kill hundreds of thousands of people in the U.S. each year and disproportionately endanger Black, Brown, Indigenous, and poor communities. We owe it to our teachers, students, union members, and the cities and communities of California to stop investing in dirty fossil fuel funds that can become stranded assets. It’s time to future-proof our pension funds ” – Jane Vosburg, CalSTRS retiree and Board Chair, Fossil Free California.
“It is long past time our public pension systems end their insidious relationships with fossil fuel companies and start protecting the retirement savings of educators, healthcare workers, and public employees. Because right now, our hard-earned, public dollars are financing the fossil fuel industry and the public health crisis, environmental racism, and the destruction of our biosphere that it creates. CFA was a cosponsor of this legislation last year, and we’re persistent and very pleased to continue our work on this important issue. We applauded Senators Lena Gonzalez, Henry Stern, and Scott Wiener for continuing their pursuit of righting this wrong.” - Steven Filling, CFA Political Action/Legislation chair and professor of accounting at Stanislaus State University.