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For many companies, those indirect emissions dwarf all the rest. Some companies and business groups contend that it is unfair to hold them responsible for pollution that they may not directly control. A graphics card maker, for example, may say it cannot control the coal plants that power its suppliers' factories in distant countries; an oil company might argue that it doesn't control how its customers use its products. They may drill it, but customers burn it.
In California, Wiener and others are making their second attempt at mandating more complete disclosures—the first failed last year by a single vote in the State Assembly, after opposition from business groups. “I think there’s a public shaming effort going on here,” says Brady Van Engelen, a policy advocate for the California Chamber of Commerce, which opposes the bill. The group would prefer to see the state come up with incentives for decarbonizing operations.
Van Engelen adds that the requirement to report on supply chain emissions will also end up passing the burden of carbon accounting to smaller suppliers. They might not be subject to the rules themselves, but they'd be pressed by large corporations to provide data. Wiener says he wants the rules, if passed, “to be implementable,” and he notes that the bill allows the use of formulas and averages to assess supply chain emissions, rather than tracking down each and every supplier.
Critics also note that requiring large firms to account for their suppliers may mean some emissions get counted twice—if, for example, a graphics card’s emissions are reported by both its manufacturer and a company that includes its product in PCs, or a cloud provider that uses them to train AI models.
But advocates of the new measures say their point is not perfect accounting, but rather to force more of the transparency needed to start tackling a systemic challenge. Only the largest corporations have the kind of visibility into and leverage over their supply chains to demand reductions in emissions. If the whole world can see those dirty secrets, maybe they’ll be spurred into action.
“At the end of the day, it's data,” says Sarah Sachs, a senior associate at Ceres, a business group that is pushing for disclosure rules at the SEC and in California. “We just need this data to be available.
She adds that the California rules are complementary to the SEC rules, applying to a slightly different set of companies. But if widely expected legal challenges to the SEC’s rules—some expected to come from Republican attorneys general waging a broader war against corporate sustainability pledges—water down or delay that effort, California’s law could also serve as a backstop, Wiener says.
He points to other state environmental laws, such as California’s standards for automotive tailpipe emissions. When the federal government abandoned Obama-era rules under Trump, California’s more stringent rules became de facto national standards. It simply wasn’t possible for automakers to sidestep the world’s fourth largest economy.
For that scenario to play out, the bill will have to make it into California law. At a State Senate hearing last week, CalChamber was joined by a legion of lobbying groups representing manufacturers, banks, farmers, and other business interests, emphasizing the burden that the rules would place on smaller businesses. A Democratic member who supported the prior version of the bill abstained from voting to continue discussions on the bill, citing concerns from farming groups.
But Wiener remained optimistic, pointing out that a number of corporations, including Patagonia and Ikea, have stated their support for the bill, and already do similar reporting on a voluntary basis. As for others, “I think they’re afraid they’re going to be embarrassed by these disclosures,” Wiener says.
English (US)