Ceres commends the California State Assembly for its commendable decision to approve pioneering transparency measures regarding the climate impact of major corporations, benefiting investors, consumers, employees, and communities.
Today, the Assembly successfully passed the first of two proposed bills pertaining to corporate climate disclosure, SB 253. This legislation mandates that companies operating in California with annual earnings exceeding $1 billion report their climate-related emissions across their supply and value chains. The Assembly is anticipated to vote on the second bill, SB 261, later this week, which would require companies with revenue exceeding $500 million to disclose their climate-related risks.
This vote places California at the forefront of implementing the United States’ inaugural comprehensive mandatory climate disclosure policy, aligning with global efforts in the European Union and elsewhere. These efforts aim to provide investors with enhanced insights into how companies are managing financial risks associated with climate change.
Steven Rothstein, Managing Director of Ceres Accelerator for Sustainable Capital Markets, emphasized the importance of transparency, stating, “Investors, consumers, and other stakeholders have always deserved transparency about how companies are managing the greatest risks facing their businesses and the economy, and climate change should be no different.” He further noted the need for a standardized reporting framework that allows fair comparisons across companies and sectors, asserting that these bills are a logical response to the increasing global momentum for corporate climate disclosure.
Alli Gold Roberts, Senior Director of State Policy at Ceres, praised the Assembly’s efforts, highlighting the significance of transparency, consistency, and standardization in assessing corporate climate risk within the world’s fifth-largest economy.
Ceres, a co-sponsor of both bills and a long-standing advocate for corporate climate disclosure requirements, has actively rallied support from companies and investors throughout 2023. Over 20 companies, institutions, and industry groups, including Microsoft, Sierra Nevada Brewing, Adobe, Atlassian, IKEA USA, REI Co-op, and Palo Alto Networks, have signed letters endorsing these bills. Tech giants such as Salesforce, Apple, and Google have also expressed their support for SB 253. In addition, clothing industry groups, including the American Apparel & Footwear Association, have voiced their approval.
The demand for climate disclosure has gained momentum among consumers and investors. A recent survey revealed that 85% of Americans believe companies should disclose more about the impact of their business practices, with 87% supporting mandatory climate disclosure. In 2022, over 500 investors, representing nearly $40 trillion in assets under management, called for governments worldwide to strengthen climate disclosure standards, including through mandatory reporting.