Amid a global push for emissions transparency, California and the UK are among the most recent jurisdictions to introduce new climate-related CO2 emissions disclosure requirements.
In California, Governor Gavin Newsom has signed into law a suite of bills passed by the California Legislature. They include SB 253 – the Climate Corporate Data Accountability Act – requiring US-based corporations making more than $1bn annually and conducting business in the state of California to disclose their full carbon footprint, and the Climate-Related Financial Risk Act (SB 261) which requires companies making more than $500m annually that do business in California to submit annual climate-related financial risk reports to the public.
The bills faced opposition from the oil and gas industry but received significant support from major corporations including Microsoft, Apple and Google.
Speaking about the impact of legislation around CO2 disclosures, Mary Creasman, CEO for California Environmental Voters, said in a press statement: “Now our largest corporations will have to measure and publicly disclose their direct and indirect emissions, creating global impacts in our fight to reduce pollution.”
The new bills are intended to increase transparency, allowing stakeholders to make informed decisions and thereby encouraging affected corporations to be more sustainable. This is also the intended outcome of the UK Transition Plan Taskforce’s (TPT) final framework for corporate transition plans, published this week.
As the UK continues to push towards its 2050 net-zero target, transition plans will formalise company plans to lower greenhouse gas emissions. TPT’s framework outlines the necessary components of a good transition plan, in the next step towards making consistent company CO2 disclosures and transition plans mandatory.
The plans will need to include consideration of carbon emissions reductions in both operations and supply chains and will detail each entity’s strategic ambition.
According to the framework, the outlined strategic ambition “shall comprise the entity's objectives and priorities for responding and contributing to the transition towards a low greenhouse-gas-emissions, climate-resilient economy and set out whether and how the entity is pursuing these objectives and priorities in a manner that captures opportunities, avoids adverse impacts for stakeholders and society, and safeguards the natural environment”.
The framework also outlines the need for an implementation strategy, engagement strategy and specific metrics and targets, to be embedded in company governance.
Companies themselves are showing a desire to decarbonise, suggests a recent poll from GlobalData, Energy Monitor's parent company. Asked if their companies have any decarbonisation or emissions reduction targets in place, 40.2% of 214 respondents across a network of business-to-business websites reported that they do.
There has been an accompanying overall increase in the consideration of regulation and governance relating to the environment in companies across the UK and the US. Filings analysed by GlobalData have revealed significant year-on-year increases in the frequency of the terms in filings since 2016.
There has also been a global shift towards mandating emissions disclosures. In the EU, new requirements to disclose climate mitigation transition plans have been proposed under the Corporate Sustainability Reporting Directive whilst, in Australia, the Treasury recently discussed a proposal for transition plan disclosure requirements.
Singapore has demonstrated its intention to implement ISSB-aligned disclosures after the Monetary Authority of Singapore released its Finance for Net Zero Action Plan in April 2023, and the Hong Kong Stock Exchange recently consulted on mandated strengthened climate-related disclosures. California and the UK are among the most recent jurisdictions to introduce new climate-related CO2 emissions disclosure requirements, but others are also on the move.
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