The California Bankers Association plans to oppose two bills that would force companies doing business in the state to publicly disclose their greenhouse gas emissions and climate-related financial risks.
The bills were introduced late last month by Democratic state lawmakers as part of a package seeking to increase environmental disclosures by companies that operate in California.
In 2021, the association opposed similar measures that were introduced as the state experienced an extended drought and massive wildfires.
"We expect to maintain our position and continue to oppose measures that present liabilities for institutions and customers and mandate disclosures that may not be reliable or even feasible," the California Bankers Association said in a statement to American Banker.
The state senators who introduced the legislation last month hope that it will receive more support following weeks of torrential rains and deadly mudslides that ruined homes and businesses and took the lives of at least 22 Golden State residents.
Senate Bill 253, the Climate Corporate Data Accountability Act, would order the California Air Resources Board to "adopt regulations to require the reporting and verification of statewide greenhouse gas emissions," according to the bill's text.
Sen. Scott Wiener, a Democrat who's sponsoring the measure, said in a public statement that the legislation aims to "standardize disclosures, align public investments with climate goals, and raise the bar on corporate action to address the climate crisis."
If the bill were enacted, the Air Resources Board would have until Jan. 1, 2025, to develop regulations for companies with more than $1 billion in annual revenue that do business in California. Those firms would be required to report all categories of emissions, including the difficult-to-calculate emissions associated with financing activities.
Senate Bill 261, introduced by Democratic Sen. Henry Stern, would require companies to disclose climate-related financial risks by the end of next year and submit plans to reduce those risks. The proposal covers any company with more than $500 million in annual revenue that does business in California, according to a spokesperson for the Democratic lawmaker.
Both Stern and Wiener were unavailable for comment.
The climate legislation amounts to "virtue signaling" from the sponsoring lawmakers that will ultimately be unproductive for businesses, said Lance Christensen, vice president of education policy and government affairs at the California Policy Center, a free-markets group.
"These programs are no more than an environmental gun to the head of those who are just trying to run their business and live their lives," Christensen said in an interview.
"What a lot of corporations and businesses are finding out is that the long-term investment in products, services or other programs related to large environmental programs often happen to be duds financially," he said.
The California proposals come as the Securities and Exchange Commission prepares a final version of its own climate disclosure proposal. The agency's draft rule would require corporations to report publicly on emissions generated by their business activities.
The SEC's final proposal is certain to face legal challenges. The initial version drew
For example, the Bank Policy Institute said it supports the SEC's efforts to "promote consistency, comparability, and reliability," but urged the agency to back off of "overly detailed, disclosure requests."
California is not the only state taking legislative action in response to climate change. Some 15 states have
And in December, the New York State Department of Financial Services proposed
The banking industry's opposition to California's climate-related proposals comes as banking groups in other states attempt to fend off efforts by Republicans to deter banks from making their own climate commitments. The conservative backlash to banks' climate pledges is taking the form of both
Last month, the Nebraska Bankers Association
In November, the Kentucky Bankers Association
