Washington, D.C. — The U.S. Chamber of Commerce, along with the American Farm Bureau Federation, California Chamber of Commerce, Central Valley Business Federation, Los Angeles County Business Federation, and Western Growers Association, filed a lawsuit against the state of California in the U.S. District Court for the Central District of California over its new corporate climate disclosure laws, which were signed by Gov. Gavin Newsom on Oct. 7, 2023.
The new corporate disclosure laws require businesses to report on emissions across their supply chain, including indirect emissions, no matter where they occur despite the fact that such emissions can be nearly impossible for a company to accurately calculate. The laws also require companies to subjectively report their worldwide climate-related financial risks and proposed mitigation strategies. The laws apply to companies across the U.S. and worldwide on the basis of even minimal operations in the state of California, thus attempting to impose essentially a national standard.
Tom Quaadman, U.S. Chamber of Commerce Center for Capital Markets Competitiveness executive director, issued the following statement on the suit, which was filed against the state of California for violating the First Amendment, which bars California from compelling a business to engage in subjective speech, and the federal Clean Air Act, which preempts a state’s ability to regulate emissions in other states — as California seeks to do by mandating reporting on out-of-state emissions.
“We are proud of the leadership and innovation shown by America’s businesses in tackling climate change. Businesses and government need to work together to address the problem and that requires policies that are practical, flexible, predictable, and durable.
“California’s corporate disclosure laws are the opposite of that and violate the First Amendment by forcing businesses to engage in subjective speech.
“With many public companies already disclosing material climate risks, businesses are well ahead of government regulators. California’s laws usurp the role of federal regulators, opening the door for other states to take an opposite approach to disclosure, leaving businesses and their investors caught in the middle of a political scrap between states. The resulting fragmentation will undermine the competitiveness of American capital markets, ushering in an era of duplicative and conflicting state-imposed requirements.
“To make matters worse, these laws demand that both public and private businesses with even minimal operations in the state calculate their greenhouse gas emissions from their whole supply chain, no matter where those emissions take place, and subjectively measure and report their worldwide climate-related financial risks and proposed mitigation strategies to California. The costs and compliance issues of this law will be felt by businesses of all sizes, but especially small, Main Street businesses.
“The Chamber and its partners will continue to fight back against illegal and excessive government overreach at the state and federal levels, especially micromanagement that undermines responsible efforts by businesses to address climate risks.”
The full complaint can be viewed here.