California Gov. Gavin Newsom said Sunday that he would sign a landmark climate law passed by the state legislature last week that requires large companies to publicly disclose their greenhouse gas emissions, a move with national and global implications.
The new law requires around 5,000 companies to report the amount of greenhouse gases emitted directly by their business activities, as well as the amount of indirect emissions caused by, for example, employee travel, waste disposal and supply chains.
Climate policy advocates have long argued that such disclosures are an essential first step in efforts to use financial markets to curb pollution from a warming planet. For example, if investors are made aware of a company’s impact on global warming, they may choose to put their money elsewhere.
The law would apply to public and private companies that generate more than $1 billion per year and operate in California. But because the state is the fifth-largest economy in the world, California often sets the trend for the country, and many of the companies affected are global corporations.
There were some questions about whether Mr. Newsom, a Democrat who has championed some of the country’s most ambitious policies to combat climate change, would sign the bill. The California Chamber of Commerce lobbied against it, and the governor’s state Treasury Department opposed it, saying the measure would result in new costs not currently included in the state spending plan. After the bill was approved by the state Senate last week and sent to Mr. Newsom’s desk, his office declined to say what it would do.
But when asked at a Climate Week event at the Times Center on Sunday whether he would sign the bill, Mr. Newsom first responded by detailing California’s history of avant-garde climate policies, including his own administration’s requirement that every new car in the The state must be fully electric by 2035.
“Would I give up this leadership if I had an answer that was anything other than, ‘Of course I’ll sign this bill’? he said in response to a question from David Gelles, a New York Times reporter who interviewed the governor in front of an audience. “No, I will not.”
Mr. Newsom said his signature came with a “modest caveat” that his office wanted to “clean up some small language” in the legislation. However, he did not provide details about the changes he planned to make, and a spokesman for his office did not respond to a voicemail or text message seeking a response.
Affected companies include oil and gas giants like Chevron, major financial institutions like Wells Fargo and global brands like Apple. From 2027, companies would have to disclose all emissions.
The new measure would accompany another new law that would require companies with revenues over $500 million to report their climate-related risks but would not have to disclose their specific emissions.
The California legislation goes beyond a measure proposed by the Securities and Exchange Commission that would require only publicly traded companies to disclose their emissions. This proposal, which has not yet been finalized, faces strong opposition from conservatives and business groups.
“The fact that a single state like California would do this is potentially concerning and potentially promising,” said Robert Stavins, director of the environmental economics program at Harvard University. “It could be that a company valued at $1 billion is doing $35 in California but is still impacted. But it is potentially promising because we have such a long history in the United States of California leading the way in environmental regulations and other states following suit and the federal government eventually catching up.”
Climate policy advocates praised the move. “These two first-in-the-nation bills will provide unprecedented insight into corporate climate emissions and financial climate risk,” said Mindy S. Lubber, executive director and president of Ceres, a nonprofit group that works with investors and companies on environmental issues.
Opponents said compliance would be expensive and burdensome, particularly the requirement that companies accurately track and measure all emissions. Clothing manufacturers, for example, fear that in addition to the direct emissions of their garment factories, they would also have to report emissions associated with growing, weaving and transporting textiles.
The California Chamber of Commerce last week called the legislation “a costly mandate that will negatively impact businesses of all sizes in California and does not directly reduce emissions,” said Denise Davis, executive vice president of the California Chamber of Commerce.
Ms. Davis said on Sunday that her organization was disappointed by Mr. Newsom’s decision but was confident that further “cleanup” legislation next year could mitigate the impact of the new law.