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

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Date Published: 04/19/2021 09:00 PM
SB260:v96#DOCUMENT

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, Chiu, 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.The act provides that any person who violates specified provisions of the act, as provided, is guilty of a misdemeanor and is punishable by a monetary fine, imprisonment in a county jail, or by both a fine and imprisonment.
This bill would require the state board, on or before January 1, 2023, to develop and adopt regulations requiring United States-based 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, on or before January 1, 2024, starting in 2024 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. 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 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 a panel of experts to determine standards and protocols to ensure that public disclosures are made in a manner that is easily understandable and accessible to state residents and for the state board to utilize to collect data for all scope 1, 2, and 3 emissions by reporting entities. By expanding the scope of a crime under the act, the bill would impose a state-mandated local program. The bill would require the state board to adopt regulations relating to the enforcement of the above requirements, including the imposition of administrative civil penalties for a violation.
This bill would require the state board, on or before January July 1, 2025, to prepare a report on the greenhouse gas emissions of reporting entities that includes, among other specified topics, a best reasonable estimate of the required annual aggregated greenhouse gas emissions levels of reporting entities that would be necessary to maintain global temperatures within 1.5 degrees Celsius of preindustrial levels.
The bill would require the state board to create a digital platform that will house all reports prepared by the state board and submitted by reporting entities pursuant to these requirements.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YESNO  

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) Yet, even in California, carbon emissions are not being reduced at the scale and pace required to avoid the worst impacts of climate change, and Californians are already facing devastating wildfires, sea level rise, drought, and other impacts associated with climate change.
(c) California has achieved record economic growth, is the fifth largest economy in the world, and is a highly desired consumer market for the globe’s most profitable companies.
(d) United States-based companies that have access to California’s tremendously valuable consumer market by virtue of exercising their corporate franchise in the state also share a responsibility for addressing the climate crisis in the Golden State.
(e) 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.
(f) Accurate, verified, and comprehensive data is required to determine a company’s greenhouse gas (GHG) emissions, also known as its carbon footprint, and to effectively identify the sources of the pollution and develop means to reduce the same.
(g) 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. By their nature, these voluntary campaigns neither record nor disclose the full list of emitters or the full scope of carbon pollution by those reporting the information. The result is a continuing lack of transparency from polluters.
(h) 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 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, patronizing, and making investments in these companies.
(i) To ensure that corporate carbon emissions data disclosures are actionable by the people of California, it is imperative that the information is conveyed in a manner that is understandable and accessible to the general public.
(j) Mandating GHG emissions data disclosures for all United States-based companies with total annual revenues in excess of $1,000,000,000 and that do business in California will inform policymaking, empower the public and activate the private sector to drive corporate GHG emissions reductions, and is a critical next step the state 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) “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) “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) “Scope 2 emissions” means indirect greenhouse gas emissions from electricity purchased and used by a reporting entity, regardless of location.
(4) “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) On or before January 1, 2023, the state board shall develop and adopt regulations to require a reporting entity to verify and annually report to the state board 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, both of the following:
(1) That a reporting entity, on or before January 1, 2024, starting in 2024 on a date to be determined by the state board, and annually thereafter, publicly disclose all of the reporting entity’s scope 1 emissions, scope 2 emissions, and scope 3 emissions for the prior calendar year in a manner that is easily understandable and accessible to residents of the state. The public disclosure shall include the name of the reporting entity and any fictitious names, trade names, assumed names, and logos used by the reporting entity.
(2) That a reporting entity’s public disclosure pursuant to this subdivision is independently verified by 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 for the prior calendar year, including the name of the approved third-party auditor, is provided to the state board as part of or in connection with the reporting entity’s public disclosure pursuant to this subdivision.
(d) (1) On or before January July 1, 2025, the state board shall prepare a report on the greenhouse gas emissions of reporting entities. The report shall include, but is not limited to, all of the following:
(A) (i) The best reasonable estimate of the required annual aggregated greenhouse gas emissions levels of reporting entities that would be necessary to maintain global temperatures within 1.5 degrees Celsius of preindustrial levels.
(ii) In preparing the estimate required pursuant to this paragraph, the state board shall consider the most current protocols and guidance of the Science Based Targets initiative (SBTi) as they pertain to required emissions reductions from businesses and, in line with those protocols and guidance, exclude avoided emissions and offsets as counting towards a reporting entity’s emissions reduction goals.
(B) (i) The best reasonable estimate of projected greenhouse gas emissions from reporting entities based on successful implementation of the state’s existing greenhouse gas emissions reduction, clean energy, and other similar regulations to which reporting entities are subject.
(ii) The estimate required pursuant to this paragraph shall, at a minimum, include an estimate of the projected greenhouse gas emissions from reporting entities for the calendar years 2030 and 2045.
(C) Recommendations, based on the emissions reports required to be submitted by reporting entities under the regulations adopted by the state board pursuant to subdivision (c), that reporting entities may consider to effectively reduce their remaining emissions in line with what is recommended by the SBTi to maintain global temperatures within 1.5 degrees Celsius of preindustrial levels.
(2) The state board shall make the report required by this subdivision publicly available on the digital platform required to be created by the state board pursuant to subdivision (e), and submit the report to the relevant policy committees of the Legislature.
(e) The state board shall create a digital platform that will house all reports produced by the state board and submitted by reporting entities pursuant to this section. The digital platform shall be capable of featuring individual reporting entity reports, as well as aggregated data, in a manner that is easily understandable and accessible to residents of the state.
(f) In developing regulations pursuant to this section, the state board shall consult with a panel of experts, which shall include, but not necessarily be limited to, experts in climate science and corporate carbon emissions accounting, implementing state agency representatives, stakeholders representing consumer and environmental justice interests, and reporting entities that are leaders in collecting, reporting, and setting targets for the reduction of their own carbon footprint, to develop standards and protocols for both of the following:
(1) Ensuring that public disclosures required under this section are made in a manner that is easily understandable and accessible to state residents.
(2) Collecting data for all scope 1 emissions, scope 2 emissions, and scope 3 emissions by reporting entities.
(g) The state board may adopt or update any other regulations that are necessary and appropriate to implement this section.
(h) Section 38580 does not apply to a violation of this section. The state board shall adopt regulations relating to the enforcement of this section, including the imposition of administrative civil penalties for violations of this section.
(i) 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.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.