{"id":26248,"date":"2026-05-20T14:30:15","date_gmt":"2026-05-20T19:30:15","guid":{"rendered":"https:\/\/blogs.edf.org\/climate411\/?p=26248"},"modified":"2026-05-20T14:34:22","modified_gmt":"2026-05-20T19:34:22","slug":"californias-climate-disclosure-opportunity-getting-it-right-from-day-one","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/climate411\/2026\/05\/20\/californias-climate-disclosure-opportunity-getting-it-right-from-day-one\/","title":{"rendered":"California\u2019s climate disclosure opportunity: getting it right from day one"},"content":{"rendered":"\n

California is building a vital corporate climate disclosure program that will foster greater transparency and economic resilience. The decisions made now will determine how clearly investors, companies and the public can understand where greenhouse gas emissions occur, how risks and opportunities are evolving and where solutions can scale.<\/p>\n\n\n\n

In comments recently submitted<\/a> to the California Air Resources Board regarding its March 2026 workshop, Environmental Defense Fund offered views on these important issues. The goal is simple: deliver disclosures that are consistent, credible and useful for real-world decisions. CARB is accepting further input on its workshop concepts<\/a> through June 1, with rulemaking to follow.<\/p>\n\n\n\n

Evidence shows<\/a> that standardized climate disclosure creates real economic value.<\/a> It helps investors better understand risk and make more informed decisions, which in turn protects workers\u2019 and retirees\u2019 savings<\/a>. Stronger disclosures can also lower companies\u2019 cost of capital by reducing uncertainty and improving transparency, while helping businesses identify opportunities to cut costs and emissions.<\/p>\n\n\n\n

Align with established practices to reduce cost and improve usability<\/strong><\/p>\n\n\n\n

The good news is that California is not starting from scratch. Many companies already report greenhouse gas emissions using widely accepted frameworks. For example, nearly 90% of S&P 500 companies<\/a> report Scope 1 and 2 emissions data, with nearly 70% already reporting Scope 3 as well.<\/p>\n\n\n\n

Maximizing alignment with the GHG Protocol<\/a> and the International Sustainability Standards Board<\/a> disclosure standards will reduce duplication, lower costs and make disclosures more comparable across markets and interoperable across reporting systems. It will also allow companies to use the same disclosures globally, improving consistency for investors while minimizing unnecessary reporting burden.<\/p>\n\n\n\n

State law already points in this direction. California\u2019s corporate GHG reporting statute (SB 253) requires companies to measure and report emissions in conformance with the GHG Protocol, reinforcing alignment with established standards. The focus now is on rigorous yet practical implementation, ensuring companies build on existing systems to deliver valuable information without adding unnecessary complexity.<\/p>\n\n\n\n

Pair flexibility with transparency to protect data integrity<\/strong><\/p>\n\n\n\n

CARB has proposed a workable on-ramp<\/a> that allows companies to make good-faith efforts in early years while building toward stronger reporting over time. That flexibility is important, but it must be paired with transparency on methods and inputs to protect the integrity of the data and ensure disclosures remain useful for investors and the public.<\/p>\n\n\n\n

Companies should clearly disclose how they measure or estimate emissions and explain any changes from year to year. When methods shift, they should disclose and, if relevant, quantify the impact of those changes so investors and other stakeholders can still track progress. For significant updates, companies should recalculate base-year emissions<\/a> and report results using both old and new methods during a transition period. CARB should also allow companies flexibility in selecting among established approaches to setting organizational boundaries<\/a> but should require parent companies and subsidiaries to use consistent approaches.<\/p>\n\n\n\n

Emissions factors are another component of the reporting methodology where flexibility is appropriate, but transparency is needed to contextualize the data. Methane from oil and gas operations is a clear example, where a growing body of peer-reviewed research shows that real-world emissions are often 1.5 to 2 times higher<\/a> than conventional estimates based on standard emissions factors.<\/p>\n\n\n\n

California should require companies to provide information about emissions factors used, encourage companies to use the most accurate emissions factors possible \u2013 such as measurement-based, basin-specific emissions data where available for oil and gas methane \u2013 and continue updating the set of permissible emissions factors over time.<\/p>\n\n\n\n

Require Scope 3 reporting that reflects the full picture<\/strong><\/p>\n\n\n\n

Scope 3 emissions \u2013 indirect emissions associated with upstream and downstream activities in a company\u2019s value chain \u2013 account for 70-90% of total emissions<\/a> in many sectors. Scope 3 data is therefore essential for investors trying to understand transition risk exposure and for companies working to manage it.<\/p>\n\n\n\n

CARB has outlined<\/a> three potential paths for Scope 3 reporting, which is required to begin in 2027 under SB 253:<\/p>\n\n\n\n