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Corporations soon have to report their carbon emissions in California

California is about to sign off on a deal to become the first US state requiring large companies to report their carbon emissions. This will affect around 5,400 firms which make more than $1bn in annual revenue.

Considering filling out tax forms for the prior year proves too difficult a task for certain businesses, it’s safe to say a mandate to report annual energy usage and carbon emission outlays will not be welcomed by all.

It’s coming regardless, though, so suck it up.

The California Climate Corporate Data Accountability Act, which was passed on September 12th, will ensure that the golden state becomes the first in the US to require companies be completely transparent about their carbon footprints.

Hot off the presses, the new legislation will start to be enforced in 2026 and will affect roughly 5,400 of California’s corporate firms (both public and private) making upwards of $1bn in revenue per year.

How exactly this disclosure will be standardised and enforced, we don’t know. What’s been made abundantly clear, however, is that civil penalties will be brought to those in violation of the act with fines potentially reaching up to $500,000. Ouch.

Initially, companies will be expected to accurately calculate and present data on ‘scope 1’ emissions, which refers to those directly created by the outfit in question.

The ante will then be upped for 2027, in which figures related to scope 2 and 3 emissions – meaning those from purchased services or activities, respectively – will also become compulsory.

That means, for instance, that banks would need to be fully transparent about the carbon pollution associated with their borrowers; a prospect which has led to several financial groups opposing the Californian bill, to no avail.

In January, the Federal Reserve published research revealing that only eight of the world’s 30 largest banks are measuring their scope 3 emissions at all. ‘Scope 3 emissions constitute the lion’s share of banks’ overall emissions,’ the research paper claims.

By contrast, technology companies have generally supported the emissions legislation. Apple in particular, which has pledged to go net zero by 2030, reportedly sees the change as an opportunity to reshape the industry more sustainably throughout the US.

Nonetheless, at this avenue the individual preferences of different industries are irrelevant, and frankly it’s about time. California has the largest population of any US state and the most pollution, meaning if anyone should carry the torch for carbon transparency it’s a prime contender.

We only hope the new law forces the laggards to catch up. US greenwashing is on borrowed time.