Postcard from California: Disclosing the full climate impacts of big businesses

ExxonMobil is one of the world’s worst climate polluters, emitting more than 90 million metric tons of greenhouse gases in 2024. But that only accounts for its direct emissions from oil and gas drilling, refining gasoline and other fossil fuels, as well as from producing plastics.

Next year, ExxonMobil and other major oil companies doing business in California must begin to publicly disclose the full scope of their climate pollution – not just direct emissions but indirect emissions from their supply chains, their employees’ commuting and business travel, and customers’ use of their products. That includes emissions from gasoline burned by millions of cars and trucks, which would far surpass direct emissions.

The state’s two new climate disclosure laws, the first in the US, will not only apply to oil companies but to most big companies doing business in California. More than 4,000 companies in all sectors, whether their headquarters are in California or not, will be covered by one or both laws.

The Climate Data Accountability Act (SB 253) requires companies with annual revenues of $1 billion or more to report direct and indirect emissions. The Climate-Related Financial Risk Act (SB 261) requires companies with yearly revenues of at least $500 million to report the risk to their business model from climate-linked impacts such as wildfires and rising sea levels, and their plans for mitigating the risk.

The laws, signed by Gov. Gavin Newsom two years ago, were originally slated to take effect in stages starting Jan. 1. In October, after being swamped with questions from affected companies, the California Air Resources Board (CARB) delayed publication of draft rules for the laws until the first quarter of 2026, with full implementation later in the year and in 2027.

The new California laws have national and global implications.

Legislation proposing disclosure rules similar to California’s has been introduced in New York, Illinois, New Jersey and Washington state. The US Securities and Exchange Commission (SEC) proposed much less comprehensive disclosure rules during the Biden administration, but the Trump administration’s SEC has effectively abandoned them. The European Union developed rules for full-scope disclosure, but has backed off implementation, partly due to pressure from the White House.

And if ExxonMobil has its way, California’s disclosure laws will never take effect.

On Oct. 24, ExxonMobil sued California in federal court, seeking to block the rules as an infringement on its right to free speech. The company said the laws would force it to “serve as a mouthpiece for ideas with which it disagrees.”

ExxonMobil said it already voluntarily discloses its emissions.

But its reporting framework falls well short of the guidelines of the Greenhouse Gas Protocol, a widely used international standard that is the basis for the California rules. ExxonMobil said the rules would send the “misleading and counterproductive message that large companies are uniquely responsible for climate change no matter how efficiently they satisfy societal demand for energy, goods, and services.”

It’s “truly shocking that one of the biggest polluters on the planet would be opposed to transparency,” Newsom spokeswoman Tara Gallegos told the New York Times. She said the laws “have already been upheld in court and we continue to have confidence in them.”

The Greenhouse Gas Protocol was developed by the nonprofits World Resources Institute (WRI) and the World Business Council for Sustainable Development.  WRI says climate disclosures are “a key enabler for corporate climate action.”

“This transparency can be an important tool for holding companies accountable to setting up and meeting their climate goals,” WRI’s Amanda Carter wrote on the organization’s website. “But climate disclosures aren’t just a political tool … Disclosure also makes investors happy, because the more information they have, the better they are at avoiding bad investment decisions.”

According to Ceres, a Boston-based advocacy group that works to promote action by businesses toward greater sustainability, investors’ support for environmentally responsible companies moves the economy toward a greener future. In a legal brief supporting California in a separate lawsuit brought in 2024 by the US Chamber of Commerce, Ceres said dozens of companies, including Apple, Microsoft and IKEA, had written letters of support to California legislators for the passage of one or both laws.

“We want to invest in climate disclosure analysis and reporting because we expect a return: ignoring the risks we face would be very costly, while finding the path towards a net zero future offers economic stability and growth,” said an August 2023 letter from Microsoft and 14 other companies. “Mandatory disclosure is needed to level the playing field, so that our peers also take responsibility for managing climate risk and together we can ensure a sustainable, resilient, and prosperous future.”

California prevailed in the Chamber of Commerce lawsuit. Whatever the outcome in the ExxonMobil case, it opens a new front in the escalating legal battle between the world’s largest investor-owned oil company and the world’s fourth-largest economy.

Two years ago, California Attorney General Rob Bonta filed a sprawling lawsuit against ExxonMobil and four other giant petrochemical companies for an alleged “decades-long campaign of deception” about fossil fuels’ harm to the climate and the climate crisis’ devastating impacts on the state.  The lawsuit charges that the oil companies knew their products were harming the environment, but hid the truth in a still-ongoing campaign to deny climate science and block government initiatives to cut fossil fuel emissions.

Last year, Bonta filed another sweeping lawsuit against ExxonMobil, the world’s largest producer of raw materials to make single-use plastics,  alleging that for more than 50 years it has fraudulently promoted recycling as the solution to the ever-growing global plastic waste crisis. ExxonMobil blamed the state for not “work(ing) with us to fix the problem and keep plastic out of landfills.”

All three cases will likely take years to resolve. If California wins, it will be a monumental advance toward holding the oil industry accountable for its role in fueling the climate crisis. If ExxonMobil wins, it will mean that Big Oil continues to evade its responsibility for the crisis.

The world will be watching.

(Opinion columns published in The New Lede represent the views of the individual(s) authoring the columns and not necessarily the perspectives of TNL editors.)

Featured image: Getty Images for Unsplash+.