California’s agricultural industry is struggling to determine the full implications of a pending state law requiring large companies to publicly disclose their greenhouse gas emissions, including those from suppliers such as farms.
Democratic Gov. Gavin Newsom signed the bill — S.B. 253 — passed by the Assembly last month that requires “full-scope GHG emissions data reporting” for companies that do business in the state and have annual revenues of more than $1 billion.
“Ensuring public access to the data in a manner that is easily understandable and accessible will inform investors, empower consumers, and activate companies to improve risk management in order to move towards a net-zero carbon economy,” the bill says, calling the requirements “a critical next step that California must take to protect the state and its residents.”
Business groups, including ag organizations, have fiercely opposed the bill, arguing that it will not lead to reductions in emissions of GHGs and that for agriculture in particular, the science of estimating Scope 3 emissions — such as those at the producer level — needs refinement.
The deadline for reporting Scope 1 and 2 emissions — direct and indirect emissions from the business — is Jan. 1, 2026, under the bill. For Scope 3 emissions, which would include activities further down the supply chain, the deadline will be 2027.
Scope 3 emissions as defined by the bill would include “indirect upstream and downstream [GHG] emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control.”
The state has until Jan. 1, 2025, to come up with regulations to govern the new program, a tight time frame that has some ag advocates worried.
Newsom himself signaled some agreement with concerns about the bill in his statement announcing his signing of the measure, saying the implementation timelines are “likely infeasible, and the reporting protocol specified could result in inconsistent reporting across businesses subject to the measure.” He directed state officials to “work with the bill's author and the Legislature next year to address these issues.”
Chris Reardon, California Farm Bureau
The bill does not limit reporting to operations in California but is broadly worded to include corporations' supply chains, which could include myriad ag producers, such as Midwestern row crop farmers or southern cotton growers.
Unlike a proposal from the federal Securities and Exchange Commission that would limit reporting requirements to public companies, the California bill encompasses any company that earns more than $1 billion annually and does business in the state.
Democratic Sen. Scott Wiener, the chief sponsor of the bill, calls SB 253 “a first-in-the nation measure” and emphasizes that the required disclosures will include the Scope 3 emissions, “which can include in excess of 90% of a corporation's carbon emissions. By requiring this disclosure, the public, investors, and others will better understand which corporations are walking the talk when it comes to climate action.”
But Chris Reardon, director of governmental affairs at the California Farm Bureau Federation. says, “Nobody has any idea of what the impacts are going to be.
“We are all beginning to look in earnest at agriculture and [the bill’s] impacts,” he said, likening the legislative effort to “putting the cart before the horse.”
He said Wiener has indicated he would be open to further discussions on implementation of the Scope 3 emissions reporting.
As previously reported by Agri-Pulse, Robert Spiegel, a policy director at the California Manufacturers and Technology Association, has called S.B. 253 a “wide-ranging mandate for all California companies and beyond” and expressed concern that the reporting mandates would generate “pages upon pages of information” stuffed with inaccurate and irrelevant details.
Taylor Roschen, who has represented a wide variety of California farm groups' interests on the bill, said the state's estimate that approximately 5,300 companies will be required to report does not encompass downstream suppliers such as farmers. She also raised questions about whether financial information from farmers who hold loans with Wells Fargo, for example, would be subject to release.
Echoing Reardon's comments, she said the data on GHGs from farms simply isn't good enough at this point. “We just haven't seen the type of surety we'd like to see,” she said.
A legislative analysis of the bill posted on the Assembly website says despite changes made in the bill to ease reporting of Scope 3 emissions, mandating that reporting “will make life harder for the affected billion-dollar companies. The ability to use certain generic data … significantly simplifies the endeavor, but it is still not trivial.”
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“Some companies (both below and above the SB 253 threshold) already do voluntarily report full-scope emissions today, but it is a minority of the estimated 5,344 companies that would be required to report under this bill,” the analysis says. “There is value in applying the same requirements across all those companies though; it will result in a less-fragmented view of corporate emissions and enable more meaningful comparisons between companies.”
The International Dairy Foods Association, which has been tracking the bill, also believes that the legislative action is too much, too soon.
IDFA has analyzed both S.B. 253 and accompanying legislation requiring climate-related financial risk disclosures. “In the case of consumer food and beverage product value chains, it is widely acknowledged that scope 3, which is the most difficult to account for, is of utmost importance to determine, report, and manage as part of a meaningful climate change mitigation strategy,” IDFA noted in its analysis.
“Transparent GHG accounting is quickly becoming a norm in the marketplace,” said Matt Herrick, IDFA's senior vice president of public affairs and communications. “That’s clear across banking, insurance, and corporate governance.”
The same forces that have driven that change, he added, “have been sufficient to spur corporate climate mitigation and voluntary reporting, and therefore, mandatory reporting requirements are not necessary in our current view.”
He called the passage of S.B. 253 “premature” and said “if the governor is listening, we’d call for more engagement, consideration of existing GHG accounting capabilities and challenges, and increased collaboration to address the significant financial investments needed to successfully decarbonize across food and ag.”
In the dairy sector, which has committed to net-zero emissions by 2050, “actors all along the supply chain have started tackling the onerous task of establishing sound, science-based GHG reduction agendas,” Herrick said. “However, through that process it has been widely observed that GHG accounting and reporting — especially involving scope 3 or value chain emissions — is fraught with complexity and gaps.”
He also pointed to the federal Securities and Exchange Commission’s own reporting proposal. “We hope the governor understands that this is not the proper forum for establishing GHG reporting mandates nor the right timing considering the SEC has yet to finalize its proposed climate disclosure rule,” Herrick said.
SEC Chair Gary Gensler has said repeatedly the SEC’s proposal, which could be finalized this year, is not intended to sweep small farmers into the Scope 3 reporting requirements.
SEC Chair Gary Gensler
While the new requirements have raised concerns, they also could be an opportunity for agriculture, said Amrith Gunasekara, director of science and research at CFBF’s California Bountiful Foundation.
“Unlike other industries where they can't reduce their greenhouse gases, agriculture can sequester carbon,” he said.
The state has a healthy soils program that pays farmers for adopting certain soil health practices, he said. This year, the California Department of Food and Agriculture awarded about $62 million in 14 block grants. The department received 24 applications seeking about $106 million.
The foundation has begun research on wine grapes and orchard crops, but nothing has been published yet in peer-reviewed journals. “We are probably about a year out from really highlighting some of the work, because we have to collect the data, we need to get it published, we need to create programs around it,” he said.
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