California gets ahead of SEC in forcing firms’ carbon disclosure

investmentnews.com:

Top US companies have focused their firepower for much of the past two years on opposing a US Securities and Exchange Commission plan that would require them to disclose greenhouse gases and climate-related financial risks. In doing so, they’ve overlooked a California bill passed Tuesday that’s poised to have an even bigger impact.

As the world’s fifth-largest economy, California’s environmental rules are quickly followed by other states, even when they exceed federal requirements. The Golden State’s proposal, known as the Climate Corporate Data Accountability Act, would force many of the world’s biggest publicly traded corporations to make their carbon emissions public, just like the SEC plan. The state legislation, however, also would apply to closely held businesses.

The bill backed by state legislators now heads to Democratic Governor Gavin Newsom’s desk. If he signs it into law as expected, companies in the US would for the first time not only have to account for their own pollution, but also the emissions of suppliers and customers using  their products. That concept, known as scope 3 reporting, was also included in the SEC plan.

“The goal is to create transparency around corporate carbon emissions,” said state Senator Scott Wiener, a Democrat from San Francisco who authored the California bill. “It’ll create a strong incentive for businesses to reduce their carbon footprint.”

There’s growing consensus that climate change is creating economic risks and threatening the stability of financial markets. Many proponents of climate disclosures say they’re necessary to better track and regulate emissions and drive environmental action. The SEC has said its plan aims to help investors make informed decisions, rather than