Special to the Vanguard
Sacramento, CA – When Governor Newsom last week released a budget proposal that paused funding to implement all newly signed laws, including a set of landmark climate laws, until the full picture of the state’s finances is clear in May, he was met with criticism from leaders of his own party as well as climate leaders.
The Climate Accountability Package—comprised of Senator Scott Wiener’s (D-San Francisco) Senate Bill 253 and Senator Henry Stern’s (D-Los Angeles) Senate Bill 261—created the nation’s first requirements for large corporations to publicly disclose their greenhouse gas emissions, carbon embedded in supply chains, and climate risks. The New York Times called the package a “landmark climate disclosure bill […] with national and global repercussions,” and Governor Newsom touted the new law during NYC Climate Week last September as a testament to California’s global leadership on climate change.
“The fiscal impact of implementing this law is minuscule in a state budget that totaled $310 billion last year—approximately one-thousandth of one percent of the budget. Given the visibility it provides the state from financial risks associated with climate risks, like what we see with insurance companies pulling out of the state, not funding this law is irresponsible,” said Kentaro Kawamori, CEO and Co-founder, Persefoni.
Billion-dollar corporations around the world are closely monitoring California’s implementation of these measures for signs of California’s commitment to speedy and robust implementation of the new laws. Fully funding the agency’s implementation needs in the May budget proposal will send a clear signal of California’s intentions that businesses need to begin preparing to make the historic new disclosures.
“The global community is looking to California for a firm commitment to implementing our bold climate agenda, especially these world-leading climate action laws,” said Senator Wiener. “It’s critical that the May budget include funding to implement these laws so that businesses have the certainty they need to prepare to make these new disclosures. CARB can begin the implementation process with no impact on the General Fund by taking out an inter-governmental loan to cover the initial startup costs. I have every confidence in this Governor’s commitment to climate action, and our coalition will continue to work with him to keep implementation of these laws on the timeline laid out in the law.”
The fiscal impact of implementing the laws is miniscule in a state budget that totaled $310 billion last year. The California Air Resources Board (CARB), an air regulator that reports directly to the Governor, estimated $9 million is needed in this year’s budget—approximately three ten-thousandths of one percent of the budget—if the agency is to meet the phased implementation deadlines enshrined in the law. The laws are revenue neutral and allow CARB to recoup all funds spent on implementation—including in this early phase—through charging a fee to companies that file. The Greenhouse Gas Reduction Fund could make such a loan, meaning there would be no impact at all on the General Fund.
Under SB 253, all corporations with gross annual revenue over $1 billion that do business in California must begin disclosing their greenhouse gas emissions by 2026. Before the companies can file, CARB must establish rules that govern details of the disclosures, a process that can take 18 months or more. Under SB 261, corporations with gross annual revenue over $500 million that do business in California must disclose their climate-related risk.
These climate laws faced intense lobbying from the oil and gas industry and corporate lobby groups opposed to the bill, but ultimately passed with support from numerous corporate leaders, including California economic powerhouses Salesforce, Apple, Google, Levi’s and Patagonia. Governor Newsom signed the bills on October 7, weeks after announcing his intention to sign from the mainstage of NYC Climate Week.
“I’m confident that while we get through this difficult budget uncertainty, the experts at CARB won’t just be sitting around. I look forward to broadening our coalition with more corporate climate leaders who want to step up and make clear to the Governor that California has an urgent duty to catch up to the other major jurisdictions around the world, to ensure that corporations not face political or legal persecution simply for accounting for their climate risks and emissions,” said Senator Henry Stern.
“Companies and investors cannot afford any delay in the implementation of California’s landmark climate disclosure laws. Not only do investors, consumers, and other stakeholders deserve better information about companies’ climate-related financial risks and impacts, but businesses themselves deserve the standardized, consistent, and economywide disclosure rules that this legislation promises. Ceres hopes to see compete funding for the implementation of both laws in the May budget. We look forward to working with lawmakers and Governor Newsom throughout the budget process to secure funding that ensures the full and timely implementation of this legislation,” said Steven Rothstein, Managing Director of the Accelerator for Sustainable Capital Markets at Ceres.
“Even with revenue shortfalls, our state also has the opportunity this year to catalyze global climate action with the implementation of SB 253 and SB 261. These groundbreaking bills include language to advance start-up expenses with the option for a loan from sources like the Greenhouse Gas Reduction Fund. We can’t backslide or slow down while the climate crisis speeds up. We need our state leadership to do more, not less. We look forward to working with the Governor and Legislature on how to make 2024 a year of innovative and courageous climate leadership,” said Mary Creasman, CEO, California Environmental Voters.
“Governor Newsom has publicly touted the passage of SB 253 as a win for California’s climate leadership. All it will take is a small investment—$3 million—in staffing at CARB to ensure the public can access crucial information regarding emissions. This pales in comparison to the hundreds of millions spent by fossil fuel and corporate interests to keep this information out of public view. We need corporate transparency at this scale now so those in power can hold the state’s most prolific polluters accountable—low-income communities and communities of color have waited long enough. We urge the Governor to do the sensible thing and fund the initiative he signed into law last year,” said Alvaro Sanchez, VP of Policy at The Greenlining Institute.
