California is enacting landmark policies to increase the transparency of dirty energy companies that do business in the state.
SB 253 and SB 261 were passed by the legislature in mid-September as part of the state's Climate Accountability Package. The former will require any company with greater than $1 billion in annual revenue to publicly disclose its "direct, indirect, and supply chain greenhouse gas emissions" via a verified auditor.
SB 261 will require companies generating more than $500 million annually to "prepare biennial reports disclosing climate-related financial risk" and show how they have attempted to reduce that risk. This bill will impact nearly 10,000 businesses in the state, reported the Covington Inside Energy & Environment blog, based on California Senate analysis.
Entities who do not complete this mandatory reporting will be subjected to up to $50,000 in fines, adding some regulatory teeth to the policy.
SB 261, otherwise known as the Climate-Related Financial Risk Act, draws a connection between increased instances of natural disasters in the state and the companies contributing to the issue.
The law notes that "failure of economic actors to adequately plan for and adapt to climate-related risks to their businesses and to the economy will result in significant harm" to both the state's economy and its vulnerable populations.
These reports will be required to be disclosed on the companies' websites, which increases the amount of information consumers have about the companies and their climate commitments.
The Senate Floor Analysis noted that the purpose of this bill is to increase public transparency to improve "decision making on where to invest private and public dollars."
In turn, this legislation will also prevent private corporations from hiding behind sustainability claims and instead require them to substantiate their commitment with data and numbers.
SB 261 is the first government-mandated climate-risk disclosure document law in the country, according to Inside Energy & Environment.
Two initiatives at the federal level, the Security and Exchange Commission's proposed climate disclosure rule and federal requirement for government contractors and suppliers to disclose their pollution production, are still pending but would further increase the amount of information publicly available about dirty energy and its impact.
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