For many companies, these indirect emissions dwarf all others. Some companies and business groups believe it is unfair to hold them responsible for pollution that they may not have direct control over. For example, a graphics card maker might argue that it has no control over the coal-fired power plants that power its suppliers’ factories in distant countries; an oil company might argue that it has no control over how customers use its products. They might drill it, but the client will burn it.
In California, Wiener and others are making a second attempt to mandate fuller disclosure — the first attempt losing in a state legislature vote last year after opposition from business groups. “I think there’s a public shaming effort going on here,” said Brady Van Engelen, a policy advocate for the California Chamber of Commerce, which opposed the bill. The group would prefer to see the state provide incentives for decarbonizing operations.
The requirement to report supply chain emissions also ends up shifting the burden of carbon accounting onto smaller suppliers, Van Engelen added. They themselves may not be subject to the rules, but big companies will force them to provide data. Wiener said he hoped the rule, once passed, would “be enforceable,” noting that the bill allows formulas and averages to be used to assess supply chain emissions, rather than tracking every supplier.
Critics also point out that holding large companies accountable to their suppliers could mean that certain emissions are double counted — for example, if a graphics card’s emissions are provided by its manufacturer and the company that includes its product in a PC or the cloud quotient reports, use them to train the AI model.
But advocates of the new measures say their focus is not on perfect accounting, but on enforcing the transparency needed to start addressing systemic challenges. Only the largest companies can understand and use their supply chains to demand reduced emissions. If the world could see those dirty secrets, maybe they’d be spurred into action.
“At the end of the day, it’s data,” said Sarah Sachs, a senior associate at Ceres, a business group that is pushing disclosure rules with the SEC and the state of California. “We just need the data to be available.
She added that California’s rules are complementary to those of the SEC and apply to a slightly different set of companies. But if widespread expectations of legal challenges to the SEC’s rules — some expected from Republican attorneys general waging a broader war on corporate sustainability commitments — weaken or delay that effort, Wiener said, California law could also serve as a backstop.
He pointed to environmental laws in other states, such as California’s auto-emissions standards. When the federal government ditched the Obama-era rules under Trump, California’s stricter rules became the de facto national standard. There is simply no way automakers can avoid the world’s fourth-largest economy.
For that to happen, the bill has to become California law. Numerous lobbying groups representing manufacturers, banks, farmers and other business interests joined CalChamber at a state Senate hearing last week to highlight the burden the rules would place on small businesses. A Democratic member who supported a previous version of the bill abstained from voting to continue discussing it, citing concerns from farm groups.
But Weiner remains optimistic, noting that many companies, including Patagonia and IKEA, have expressed support for the bill and have already reported similarly on a voluntary basis. As for the others, “I think they were concerned that these disclosures would embarrass them,” Weiner said.
