California Sen. Scott Wiener (D) reintroduced legislation to require companies with $1 billion in annual revenue to disclose greenhouse gas emissions after his effort to pass the bill last year fell one vote short of passing the Assembly in 2022.
The bill was introduced Monday along with two other measures to address climate change. Legislation unveiled by Sen. Lena Gomez (D) would prevent the California Public Employees’ Retirement System and California State Teachers Retirement System from investing in fossil fuel companies. Another measure, introduced by Sen. Henry Stern (D), would create a panel to review and analyze climate-related financial risk reports.
Together, the bills are designed to enlist companies to help slow the effects of climate change, the three lawmakers said at a press conference.
The bills contrast with GOP-led states cracking down on companies that Republican lawmakers have argued are using social criteria to govern themselves and, in the case of financial service companies, make investments. The trend of using environmental, social and governance criteria in investing is known as ESG.
Earlier this month, a group of 21 GOP attorneys general wrote to the nation’s top two proxy-voting advisory firms seeking assurances that their advice will not reflect non-financial or ESG criteria, such as reducing greenhouse-gas emissions or increasing diversity in the workplace.
Republican opponents of ESG argue that it robs consumers of choice and the ability to spend money in a way that doesn’t violate their political principles, such as supporting gun rights or opposing perceived liberal causes, like fighting climate change.
At the press conference, the California Democrats used a similar argument while calling out the GOP push against ESG.
“Today the effort is really about flexing our spending and our investment power,” Stern said. “If you go swipe your Chase card at the store and feel good about even buying a new solar system for your home, but then the financing behind that card is the biggest oil and gas financier in the entire world, you’re contradicting yourself.”
Wiener raised concern about GOP-led states and their efforts to ban social and environmental matters from commerce and banking.
“There are elected officials in this country who not only are not supporting climate action but are literally threatening to sue corporations, investigate them, call them in for hearings to embarrass them because those corporations are saying we want to be more sustainable,” Wiener said.
He added that his bill is an attempt to “go in the opposite direction.”
Gonzalez said her legislation would divest $11 billion that CalSTRS and CalPERS have invested in fossil fuel companies.
More details about the three measures are below.
- Known as the Climate Corporate Data Accountability Act, the bill would require companies doing business in the state with revenue over $1 billion a year to submit the level of greenhouse gasses they emit to the state.
- Companies would submit their emissions report to the State Air Resources Board beginning in 2026 on a date to be determined by the state board and annually after that.
- Company disclosures are to include three levels of emissions: Scope 1, which includes direct company emissions, such as from vehicles owned by the company; scope 2, which includes emissions the company causes indirectly, such as the source of the power purchased; and scope 3, which includes emissions from a company’s supply chain.
- Prohibits the boards of the CalPERS and CalSTRS from making new investments or renewing existing public employee retirement fund investments in a fossil fuel company.
- The funds have until July 1, 2030, to divest from fossil fuel companies.
- Does not require a board to take any action unless the board determines in good faith that the action is consistent with its fiduciary responsibilities established in the California Constitution.
- Requires companies doing business in California with annual revenue of $500 million or more to produce a climate-related financial risk report by 2025. The information will be available on the company’s website and a copy will be submitted to the secretary of state.
- Establishes the Climate-Related Risk Disclosure Advisory Group, which will prepare its own annual report detailing the systemic and sector-wide climate-related financial risks facing the state.