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SB-260 Climate Corporate Accountability Act.(2021-2022)

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Date Published: 08/15/2022 08:19 AM
SB260:v92#DOCUMENT

Amended  IN  Assembly  August 15, 2022
Amended  IN  Assembly  June 22, 2022
Amended  IN  Assembly  June 02, 2022
Amended  IN  Senate  January 03, 2022
Amended  IN  Senate  April 19, 2021
Amended  IN  Senate  April 13, 2021
Amended  IN  Senate  April 05, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 260

Introduced by Senators Wiener and Stern
(Principal coauthors: Assembly Members Cristina Garcia and Kalra)
(Coauthor: Senator Min)
(Coauthors: Assembly Members Carrillo, Friedman, Lee, Robert Rivas, Stone, and Ting)

January 26, 2021

An act to add Section 38532 to the Health and Safety Code, relating to greenhouse gases.


LEGISLATIVE COUNSEL'S DIGEST


SB 260, as amended, Wiener. Climate Corporate Accountability Act.
The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to adopt regulations to require the reporting and verification of statewide greenhouse gas emissions and to monitor and enforce compliance with the act. The act requires the state board to make available, and update at least annually, on its internet website the emissions of greenhouse gases, criteria pollutants, and toxic air contaminants for each facility that reports to the state board, as provided.
This bill would require the state board, on or before January 1, 2024, to develop and adopt regulations requiring United States partnerships, corporations, limited liability companies, and other business entities with total annual revenues in excess of $1,000,000,000 and that do business in California, defined as “reporting entities,” to publicly disclose to the Secretary of State, emissions registry, as defined, and verify, starting in 2025 on a date to be determined by the state board, and annually thereafter, their greenhouse gas emissions, categorized as scope 1, 2, and 3 emissions, as defined, from the prior calendar year, as provided. The bill would require the state board, on or before January 1, 2029, to review, and update as necessary, these deadlines to evaluate trends in scope 3 emissions reporting and to consider changes to the deadlines, as provided. The bill would require reporting entities to disclose their greenhouse gas emissions in a manner that is easily understandable and accessible to residents of the state. The bill would require reporting entities to ensure that their public disclosures have been independently verified by the emissions registry or a third-party auditor, approved by the state board, with expertise in greenhouse gas emissions accounting. The bill would require the state board, in developing these regulations, to consult with the Secretary of State, the Attorney General, other government stakeholders, stakeholders representing consumer and environmental justice interests, and reporting entities that have demonstrated leadership in full-scope greenhouse gas emissions accounting and public disclosure and greenhouse gas emissions reductions. The bill would also require the state board to establish auditor qualifications and a process for approval of auditors that ensures sufficient auditor capacity, as well as timely reporting implementation, as required. The bill would further require the state board to contract with an emissions registry to develop a reporting and registry program to receive and make publicly available the required disclosures.
This bill would require the state board, on or before July 1, 2026, to contract with the University of California, the California State University, a national laboratory, or another equivalent academic institution to prepare a report on the public disclosures made by reporting entities to the Secretary of State. emissions registry. The bill would require the state board, require, in preparing the report, to consider, consideration to be given to, at a minimum, greenhouse emissions from reporting entities in the context of state greenhouse gas emissions reduction and climate goals. The bill would require the state board to provide the report to the Secretary of State emissions registry to post on a digital platform that would be required to be created by the Secretary of State, emissions registry, and publicly accessible, to house the state board’s report and the reporting entities’ public disclosures. The bill would require the Secretary of State emissions registry to provide the state board’s report to the relevant policy committees of the Legislature.

This bill would require the Secretary of State, in consultation with the state board and the Attorney General, to adopt regulations relating to the enforcement of these requirements, including the imposition of administrative and civil penalties for violations of these requirements. The bill would subject a reporting entity that fails to timely disclose its scope 1, 2, and 3 emissions to the Secretary of State, or who submits an incomplete disclosure, as defined, to an administrative penalty of $25,000 per day that the violation continues for the first 30 days and $50,000 per day that the violation continues thereafter. The bill would subject a reporting entity that repeatedly or intentionally violates the regulations adopted by the state board to a civil penalty not to exceed $1,000,000 per violation, to be assessed by the Attorney General and recovered in a civil action brought in the name of the people of the State of California by the Attorney General in a court of competent jurisdiction.

This bill would authorize the Attorney General to bring a civil action against a reporting entity, in the name of the people of the State of California, seeking civil penalties for violations of these provisions.
This bill would make implementation of these provisions contingent upon an appropriation by the Legislature in the annual Budget Act or another statute for its purposes.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) California has demonstrated its leadership in the battle against climate change and the climate actions of the state have inspired and contributed to bold actions in other states and across the globe.
(b) Despite California’s leadership and success in reducing its carbon footprint, Californians are already facing devastating wildfires, sea level rise, drought, and other impacts associated with climate change.
(c) The only way to protect the health and safety of Californians from climate impacts and ensure the sustainability of our communities, particularly those communities most affected by the negative effects of climate change, is to drive down global greenhouse gas (GHG) emissions that impact Californians’ health and California’s natural environment.
(d) California has achieved record economic growth, is the fifth largest economy in the world, and is a highly desirable consumer market for the globe’s most profitable companies.
(e) United States companies that have access to California’s tremendously valuable consumer market by virtue of exercising their corporate franchise in the state also share responsibility for addressing the climate crisis in the Golden State.
(f) Companies play a major role in the worsening climate crisis through emissions activities that include, but are not limited to, company operations, employee and consumer transportation, goods production and movement, construction, land use, and natural resource extraction.
(g) Accurate, verified, and comprehensive data is required to determine a company’s direct and indirect GHG emissions, also known as its carbon footprint, and to effectively identify the sources of the pollution and develop means to reduce the same.
(h) The current approach for monitoring climate emissions from private corporate enterprises relies almost exclusively on voluntary reporting of GHG inventories, goals, commitments, and agreements, and lacks the full transparency needed for the state to make meaningful, strategic, and rapid carbon reductions.
(i) The people and communities of California, facing the existential threat of climate change, have a right to know about the sources of carbon pollution, as measured by the comprehensive GHG emissions data of those companies benefiting from doing business in the state, in order to make informed decisions about the impact of the consumers’ choices when purchasing from, patronizing, and making investments in these companies.
(j) The Greenhouse Gas Protocol—the globally recognized GHG emissions accounting standard developed and updated by the World Resources Institute and the World Business Council for Sustainable Development—provides the foundation for corporate GHG emissions accounting and reporting across scopes 1, 2, and 3 emissions.
(k) Mandating annual, full-scope GHG emissions data reporting to the Secretary of State emissions registry for all United States companies with total annual revenues in excess of $1,000,000,000 that do business in California, as well as ensuring public access to the data in a manner that is easily understandable and accessible, will empower consumers, inform policymaking, and activate the private sector to drive corporate GHG emissions reductions, and is a critical next step that California must take to achieve its climate goals and protect the state and its residents.

SEC. 2.

 Section 38532 is added to the Health and Safety Code, to read:

38532.
 (a) This section shall be known, and may be cited, as the Climate Corporate Accountability Act.
(b) For purposes of this section, the following terms have the following definitions:
(1) “Emissions registry” means a nonprofit emissions registry organization contracted by the state board pursuant to paragraph (2) of subdivision (c) that:
(A) Currently operates a voluntary greenhouse gas emission registry for organizations operating in the United States.
(B) Has experience with voluntary greenhouse gas emissions disclosure by entities operating in California.

(1)

(2) “Reporting entity” means a partnership, corporation, limited liability company, or other business entity formed under the laws of this state, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States with total annual revenues in excess of one billion dollars ($1,000,000,000) and that does business in California.

(2)

(3) “Scope 1 emissions” means all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.

(3)

(4) “Scope 2 emissions” means indirect greenhouse gas emissions from electricity purchased and used by a reporting entity, regardless of location.

(4)

(5) “Scope 3 emissions” means indirect greenhouse gas emissions, other than scope 2 emissions, from activities of a reporting entity that stem from sources that the reporting entity does not own or directly control and may include, but are not limited to, emissions associated with the reporting entity’s supply chain, business travel, employee commutes, procurement, waste, and water usage, regardless of location.
(c) (1) On or before January 1, 2024, the state board shall develop and adopt regulations to require a reporting entity to annually disclose to the Secretary of State, emissions registry, and verify, all of the reporting entity’s scope 1 emissions, scope 2 emissions, and scope 3 emissions. The state board shall ensure that the regulations adopted pursuant to this subdivision require, at a minimum, all of the following:
(A) (i) That a reporting entity, starting in 2025 on or by a date to be determined by the state board, and annually thereafter on or by that date, publicly disclose to the Secretary of State emissions registry all of the reporting entity’s scope 1 emissions and scope 2 emissions for the prior calendar year, and its scope 3 emissions for that same calendar year no later than 180 days after that date, using the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard developed by the World Resources Institute and the World Business Council for Sustainable Development, including guidance for scope 3 emissions calculations that detail acceptable use of both primary and secondary data sources, including the use of industry average data, proxy data, and other generic data in its scope 3 emissions calculations.
(ii) On or before January 1, 2029, the state board shall review, and update as necessary, the public disclosure deadlines established pursuant to clause (i) to evaluate trends in scope 3 emissions reporting and consider changes to the disclosure deadlines to ensure that scope 3 emissions data is disclosed to the Secretary of State emissions registry as close in time as practicable to the deadline for reporting entities to disclose scope 1 emissions and scope 2 emissions data.
(iii) The reporting timelines shall consider industry stakeholder input and shall take into account the timelines by which reporting entities typically receive scope 1, scope 2, and scope 3 emissions data, as well as the capacity for independent verification to be performed by a third-party auditor, as approved by the state board.
(B) That a reporting entity’s public disclosure is made in a manner that is easily understandable and accessible to residents of the state.
(C) That a reporting entity’s public disclosure includes the name of the reporting entity and any fictitious names, trade names, assumed names, and logos used by the reporting entity.
(D) That a reporting entity’s public disclosure is structured in ways that maximize and streamline reporting and ease of use in meeting the requirements of national and international disclosure programs and standards, including, but not limited to, adopted rules from the United States Securities and Exchange Commission and international standards such as those established by CDP Global.

(D)

(E) (i) That a reporting entity’s public disclosure is independently verified by the emissions registry or a third-party auditor, approved by the state board, with expertise in greenhouse gas emissions accounting. The reporting entity shall ensure that a copy of the complete, audited greenhouse gas emissions inventory, including the name of the approved third-party auditor, is provided to the Secretary of State emissions registry as part of or in connection with the reporting entity’s public disclosure.
(ii) The state board shall establish auditor qualifications and a process for approval of auditors that ensures sufficient auditor capacity, as well as timely reporting implementation as required under clause (i) of subparagraph (A).
(2) The state board shall contract with an emissions registry to develop a reporting and registry program to receive and make publicly available disclosures required by this section pursuant to paragraph (1).

(2)

(3) The state board may adopt or update any other regulations that it deems necessary and appropriate to implement this subdivision.

(3)

(4) In developing the regulations required pursuant to this subdivision, the state board shall consult with all of the following:

(A)The Secretary of State.

(B)

(A) The Attorney General.

(C)

(B) Other government stakeholders, including, but not limited to, experts in climate science and corporate carbon emissions accounting.

(D)

(C) Stakeholders representing consumer and environmental justice interests.

(E)

(D) Reporting entities that have demonstrated leadership in full-scope greenhouse gas emissions accounting and public disclosure and greenhouse gas emissions reductions.
(d) (1) On or before July 1, 2026, the state board shall shall contract with the University of California, the California State University, a national laboratory, or another equivalent academic institution to prepare a report on the public disclosures made by reporting entities to the Secretary of State emissions registry pursuant to subdivision (c) and the regulations adopted by the state board pursuant to that subdivision. In preparing the report, the state board shall consider, consideration shall be given to, at a minimum, greenhouse gas emissions from reporting entities in the context of state greenhouse gas emissions reduction and climate goals. The state board, in preparing its report, entity preparing the report shall not require reporting entities to report any information beyond what is required pursuant to subdivision (c) or the regulations adopted by the state board pursuant to that subdivision.
(2) The state board shall submit the report required by this subdivision to the Secretary of State emissions registry to be made publicly available on the digital platform required to be created by the Secretary of State emissions registry pursuant to subdivision (e).
(e) (1) (A) The Secretary of State, emissions registry, on or before the date determined by the state board pursuant to clause (i) of subparagraph (A) of paragraph (1) of subdivision (c), shall create a digital platform, which shall be accessible to the public, that will house all disclosures submitted by reporting entities to the Secretary of State emissions registry under the regulations adopted by the state board pursuant to subdivision (c) and the report prepared by for the state board pursuant to subdivision (d). The Secretary of State emissions registry shall make the reporting entities’ disclosures and the state board’s report available on the digital platform within 30 days of receipt.
(B) The digital platform shall be capable of featuring individual reporting entity disclosures, and shall allow consumers to view reported data elements aggregated in a variety of ways, including multiyear data, in a manner that is easily understandable and accessible to residents of the state. All data sets and customized views shall be available in electronic format for access and use by the public.
(2) The Secretary of State emissions registry shall submit, within 30 days of receipt, the report prepared by for the state board pursuant to subdivision (d) to the relevant policy committees of the Legislature.
(f) (1) Section 38580 does not apply to a violation of this section.

(2)The Secretary of State, in consultation with the state board and the Attorney General, shall adopt regulations relating to the enforcement of this section, including the imposition of administrative and civil penalties for violations of this section.

(3)A reporting entity that fails to timely disclose its scope 1 emissions, scope 2 emissions, and scope 3 emissions to the Secretary of State by the deadlines established by the state board pursuant to subdivision (c), or whose public disclosure is incomplete, shall be liable for an administrative penalty of twenty-five thousand dollars ($25,000) per day that the violation continues for the first 30 days and fifty thousand dollars ($50,000) per day that the violation continues thereafter. For purposes of this paragraph, a reporting entity’s public disclosure is incomplete if the disclosure fails to comply with the requirements outlined in subdivision (c) or the regulations adopted by the state board pursuant to that subdivision.

(4)A reporting entity that repeatedly or intentionally violates the regulations adopted by the state board pursuant to subdivision (c) shall be liable for a civil penalty not to exceed one million dollars ($1,000,000) per violation, which civil penalty shall be assessed by the Attorney General and recovered in a civil action brought in the name of the people of the State of California by the Attorney General in a court of competent jurisdiction.

(2) If the Attorney General finds that a reporting entity has violated or is violating this section, or upon a complaint received from the state board, the Attorney General may bring a civil action against that reporting entity, in the name of the people of the State of California, seeking civil penalties for violations of this section.
(g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(h) The implementation of this section is contingent upon an appropriation by the Legislature in the annual Budget Act or another statute for its purposes.