Newsom Signs Landmark California Climate Law to Require Big Businesses to Report Carbon Emissions

Traffic flows along San Diego roadways in San Diego, Calif., Aug. 31, 2006. Sandy Huffaker/Getty Images

California Gov. Gavin Newsom signed into law on Oct. 7 a bill requiring major corporations doing business in California to report their greenhouse gas emissions—creating the nation’s first corporate carbon emissions disclosure program.

Senate Bill 253—called the Climate Corporate Data Accountability Act—will require corporations making more than $1 billion annually to publicly disclose how much carbon they emit directly and indirectly, such as through employee travel, office air conditioning use, heating, and other activities.

Companies must also report the carbon emissions from supply chains related to doing business in the state and will also be required to pay a fee to the California Air Resources Board to file yearly reports.

State Sen. Scott Wiener, a Democrat, who authored the legislation, said the law would put California in a global climate leadership role.

“California is once again taking a strong global lead on climate action by enacting the strongest—indeed, the first—carbon disclosure requirements in the nation,” he said in a statement the day his bill became law. “Carbon disclosures are a simple but powerful tool in the fight to tackle climate change. When corporations are transparent about the full scope of their emissions, they have the tools and incentives to tackle them.”

The governor also signed a related climate-action measure, Senate Bill 261, on Oct. 7, which will require businesses that make more than $500 million yearly in revenue in California to submit a report every two years to the state on their climate-related financial risks.

Both bills require more work before they’re enacted on Jan. 1, 2026, according to the governor.

In letters to the state Senate written after signing the two pieces of legislation, Mr. Newsom said he was concerned about the overall financial impact of the bills and would work with the Legislature to modify or streamline the programs.

He announced his intention to sign SB 253 in September at the opening ceremony of Climate Week NYC, saying that although there was opposition from the California Chamber of Commerce on this and other climate bills, the state wanted to continue to lead the nation in climate action.

“The future happens in California first,” Mr. Newsom told the audience on Sept. 17, as seen on FOX40, a Sacramento-based TV station.

California Gov. Gavin Newsom speaks as he attends the Climate Ambition Summit at the U.N. Headquarters in New York on Sept. 20, 2023. The event, held during Climate Week NYC and the U.N. General Assembly is seeking to gather support for global agreements aimed at phasing out the use of fossil fuels. Kena Betancur/Getty Images

A number of businesses supported the bill in its final days in the state Legislature, including Apple and Salesforce, he noted.

In a legislative analysis of the bill, Mr. Wiener told legislators that the measure was necessary because an existing California law that requires emissions reporting—the California Global Warming Solutions Act—only applies to some industries, such as electricity generators, industrial facilities, fuel suppliers, and other major emitters, but excludes corporations.

Without corporate emissions data, the state lacked the information it needed to “accurately regulate and reduce these emissions,” according to the senator. The new law will fill the gap with detailed data regarding corporate activities, he said.

Among the corporations to support the legislation early in the process were IKEA, the Swedish ready-to-assemble furniture mega-retailer, outdoor gear company Patagonia, Sierra Nevada Brewing Co., and Seventh Generation, which is an eco-friendly cleaning and personal care retailer.

California Environmental Voters, a climate justice organization, lauded the governor’s decision to sign SB 253 into law.

“Mandatory emissions and risk disclosures are a game-changer, not just for our state but for the entire world,” the group’s CEO, Mary Creasman, said in an Oct. 7 statement. “They will pave the way for corporations to take meaningful steps towards a more sustainable future and California has once again shown its leadership in addressing the climate crisis.”

The AES Corporation 495-megawatt Alamitos natural gas-fired power station stands in Long Beach, Calif., on Oct. 1, 2009. David McNew/Getty Images

Another environmental organization, the Sierra Club, also supported the bill’s passage last month in the state Senate, saying in a statement that “many major corporations continue to make record profits across the state, while their polluting business practices cause serious harm to California communities. SB 253 will ensure that large enterprises doing business in California aren’t exacerbating the worst effects of the climate crisis.”

Votes in both the Assembly and state Senate were split mostly along party lines, with Republicans voting against it in both chambers.

Democrat Assembly members Jasmeet Bains and James Ramos joined GOP members to oppose it on the Assembly floor on Sept. 11 with a 49–20 vote. Eleven other Democrats abstained.

The bill passed the Senate in a 27–8 vote, with five senators choosing to not vote. State Sen. Marie Alvarado-Gil, a Democrat, joined Senate Republicans in voting against the bill.

The measures were opposed by the statewide business advocacy group the California Chamber of Commerce (CalChamber).

The group’s president, Jennifer Barrera, said she was “disappointed” by the governor’s action to sign both bills, noting that they would add hardship on affected businesses.

“We are disappointed that SB 253 and SB 261 were signed today,” Ms. Barrera said in an Oct. 7 statement. “SB 253 and SB 261 are major changes in climate policy and will add considerable obligations on affected businesses.”