How California’s Proposed Emissions Reporting Bill Would ‘Break New Ground’
Fashion industry groups, including the American Apparel & Footwear Association (AAFA) came out Wednesday in support of a proposed California bill that would mandate greenhouse gas (GHG) emissions reporting.
The bill, which also received the approval of the Council of Fashion Designers of America (CFDA), the Accessories Council and Fashion Makes Change, would require large corporations to disclose their emissions annually and publicly. The legislation would apply to corporations with more than $1 billion in gross revenues that do business in California.
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California’s proposed Climate Corporate Data Accountability Act requires disclosures in line with the Greenhouse Gas Protocol, including those from corporate supply chains, which account for the vast majority of the fashion industry’s carbon footprint.
“The continual warming of our planet poses a significant risk to our industry and our communities,” AAFA president and CEO Steve Lamar said in a statement. “We believe it is essential that we work together, pre-competitively, to ensure that the industry plays its part in meeting our climate change targets.”
As currently written, the legislation would require corporations to report Scope 1 and 2 emissions annually starting in 2026—or by a date to be determined by a state board—for their prior fiscal year. Companies would begin reporting Scope 3 emissions in 2027.
California would begin auditing Scope 1 and 2 emissions at a “limited assurance level” starting in 2026 and a “reasonable assurance level” in 2030. The state may establish “an assurance requirement” for third-party audits of Scope 3 emissions starting in 2027, before auditing at a “limited assurance level” in 2030. It would not enforce an administrative penalty for any misstatements with regards to Scope 3 emissions disclosures “made with a reasonable basis and disclosed in good faith.”
A similar bill passed the California Senate last year but failed in the Assembly. This year’s version of the legislation passed the Senate in May and is currently pending in the Assembly Appropriations Committee.
In January, the AAFA, CFDA, Accessories Council and Responsible Business Coalition came together to release the THREADS Sustainability and Social Responsibility Protocol, a framework for developing sustainability legislation that affects the fashion sector. The THREADS acronym stands for Transparently developed and enforced, Harmonized across jurisdictions and industries, Realistic timelines, Enforceable, Adjustable, Designed for success, and Science-based.
Leaders from the AAFA, CFDA, Accessories Council and Fashion Makes Change praised the California law in a letter to Assemblymember Holden Wednesday, writing that the legislation was “compatible” with the industry’s THREADS Protocol.
“SB 253 would break new ground on ambitious climate policy, but more importantly, because it is compatible with our THREADS Protocol, we believe the legislation will be effective in meeting its objectives,” the leaders wrote. “The structure of SB 253’s disclosure requirements will help companies, investors, and the State better understand emission output, and strengthen the ability of companies across industries to strategize and combat costly risks associated with climate change.”
California’s Chamber of Commerce and industry groups like the Western States Petroleum Association and the Western Growers Association have opposed the bill, saying emissions estimates could be inaccurate. Earlier this month, however, a coalition of companies, including Ikea, Patagonia, Everlane and REI Co-op, came out in support of the bill in a letter addressed to Chris Holden, chair of the Assembly Appropriations Committee.
“We know that consistent, comparable, and reliable emissions data at scale is necessary to fully assess the global economy’s risk exposure and to navigate the path to a net-zero future,” the companies wrote. “All sectors and economic actors must work together to shift the entire economy—we cannot do this on our own.”
The Securities and Exchange Commission (SEC), meanwhile, is concurrently pursuing its own rules around emissions reporting for public companies—the California bill would cover private corporations as well—but has faced pushback from industry groups and conservative politicians. Last year, the AAFA said it “generally supports” the annual disclosure of GHG emissions, but urged the agency to give companies one to three more years to comply with Scope 1 and 2 emissions, as well as an additional 18 months beyond that for Scope 3 emissions further along the supply chain.
