For many companies, these indirect emissions dwarf all others. Some companies and business groups argue 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-fired power plants that power its suppliers’ factories in distant lands; an oil company might argue that it does not control how its customers use its products. They can pierce it, but the customers burn it.
In California, Wiener and others are making their second attempt to demand fuller disclosures — the first failed by a single vote in the state Assembly last year, after opposition from business groups. “I think there’s a public shaming effort going on here,” says California Chamber of Commerce policy advocate Brady Van Engelen, who opposes the bill. The group would prefer to see the state offer incentives to decarbonize operations.
Van Engelen adds that the requirement to report supply chain emissions will also eventually shift the burden of carbon accounting to smaller suppliers. They might not be subject to the rules themselves, but they would be pressured by big companies to provide data. Wiener says he wants the rules, if passed, “to be enforceable,” and he notes that the bill allows for the use of formulas and averages to assess supply chain emissions, rather than to track down every supplier.
Critics also note that forcing large companies to report on their suppliers can mean that some emissions are counted twice – if, for example, a graphics card’s emissions are reported by both its manufacturer and a company that embeds its product in PCs, or a cloud provider that uses them to train AI models.
But supporters of the new measures say their goal is not perfect accounting, but rather to force more transparency needed to start tackling a systemic challenge. Only the biggest companies have the kind of visibility and leverage in their supply chains to demand emission reductions. If the whole world can see these dirty secrets, maybe they will be spurred into action.
“At the end of the day, it’s data,” says Sarah Sachs, a senior partner at Ceres, a group of companies pushing for disclosure rules at the SEC and in California. “We just need that 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 SEC rules — some expected to come from Republican attorneys general waging a broader war on corporate sustainability promises — weaken or delay that effort, California law could also serve as a backstop, Wiener says.
It points to other state environmental laws, such as California’s standards for automobile exhaust emissions. When the federal government abandoned Obama-era rules under Trump, California’s stricter rules became de facto national standards. It was simply not possible for automakers to avoid the world’s fourth largest economy.
For this scenario to materialize, the bill will need to be incorporated into California law. At a state Senate hearing last week, CalChamber was joined by a legion of lobby groups representing manufacturers, banks, farmers and other business interests, pointing to the burden the rules would place on small enterprises. A Democratic member who supported the previous version of the bill abstained from voting to continue discussions on the bill, citing concerns from farm groups.
But Wiener remained optimistic, pointing out that a number of companies, including Patagonia and Ikea, have declared their support for the bill and are already making similar reports on a voluntary basis. As for the others, “I think they’re afraid of being embarrassed by these revelations,” says Wiener.