Groundbreaking Bill Would Require Large Companies To Track Carbon Emissions

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A young woman with black hair in a ponytail walks three fluffy dogs on the sidewalk, across a cobbled street from a large FedEx truck. The photo is from New York City, September, 2020. The move from retail stores to online shopping has only grown during the COVID-19 pandemic, when many physical stores have closed.
A FedEx truck makes deliveries in Manhattan in September 2020. The move from retail stores to online shopping has only grown during the COVID-19 pandemic, when many physical stores have closed.  (Spencer Platt/Getty Images)

Large companies doing business in California would have to inventory their carbon emissions and set science-based targets for cutting them, under legislation introduced at the state capitol Wednesday.

“If you want to do business in California, the public has a right to know what your carbon footprint is,” says state Sen. Scott Wiener, a San Francisco Democrat. “Climate change is an existential threat for our world, and we are nearing a tipping point where we're not going to be able to pull back.”

The Climate Corporate Accountability Act, or SB 260, would apply to all companies making more than a billion dollars a year and doing business in California, regardless of where the company has headquarters. It would require these businesses to disclose a thorough inventory of their carbon emissions each year. That kind of deep accounting would include:

  • Direct emissions, such as burning fossil fuels at a refinery, or emissions from trucks and planes at a freight company;
  • Indirect emissions, caused by, for example, the electricity used to keep lights on in a building; and
  • Harder-to-measure secondary emissions, including the carbon footprint of business travel and employee commutes, and emissions produced in the company’s supply chain.

If the legislation passes, the California Air Resources Board would develop accounting rules giving major corporations three years to be transparent about their climate impacts, and one more year to take action. Companies would then report their carbon inventories annually.

Wiener says detailed climate emissions data could enable regulators to enforce limits for ozone, particulate matter, and cancer-causing air pollution.

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“Once businesses are disclosing their comprehensive carbon footprint, not just their core operations, but also their electricity they're using, their supply chains, their employee commutes and so forth, it creates accountability,” says Wiener.

The legislation comes as major investors and some corporations appear to be shifting attitudes toward accountability, if not transparency, around their contributions to climate change. Not long ago, the chief executive of the world’s biggest investment manager, BlackRock, called on companies “to disclose a plan for how their business model will be compatible with a net-zero economy,” and threatened to sell shares in the world’s worst climate polluters.

“When you go into fast-food restaurants in California, you know what the calories are, because the state said people have to be able to understand this in order to make decisions in a healthy and open way,” says Michael Schmitz, Carbon Accountable’s co-executive director. “In the climate area the need for that kind of data is the same, and we think that data should be public.”

Some sectors of the economy, including large carbon emitters from stationary sources, already disclose some emissions to state regulators, as part of California’s cap-and-trade program. Wiener says the legislation expands on that principle.

“Not that many companies do it and they don't report a broad enough array of their carbon emissions,” Wiener says. “We already have a foundation and we're building on that and making it more comprehensive and broader.”

Carbon Accountable, which worked with Wiener in crafting the legislation, says that as many 1,400 publicly-traded companies and 3,800 private ones might be subject to the proposed requirements, based on Dun & Bradstreet records. That includes a diverse array of companies from Facebook to FedEx.

“I think the key thing is making sure that we understand where the emissions are coming from in our goal of getting to zero emissions or carbon neutrality by 2045,” said EPA Secretary Jared Blumenfeld, who added, “we really need to move to an economy-wide program” to achieve that goal.

No other state has required either full carbon-footprint transparency of companies, or science-based goals for reducing emissions. Carbon Accountable’s Schmitz says that, according to his research, SB 260 would be the first accountability rule of its kind in the country. The California League of Conservation Voters and Sunrise Bay Area also sponsor the bill.