AMENDED IN SENATE MAY 5, 2025

AMENDED IN SENATE APRIL 1, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

97

Introduced by Senator Blakespear

(Coauthors: Senators Stern and Wiener)

February 21, 2025

An act to add Section 38534 to the Health and Safety Code, relating to greenhouse gases.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: no

LEGISLATIVE COUNSEL’S DIGEST

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. Existing law, the Climate Corporate Data Accountability Act, requires, on or before July 1, 2025, the state board to develop and adopt regulations to require a reporting entity to, among other things, annually disclose all of the reporting entity’s scope 1 emissions, scope 2 emissions, and scope 3 emissions, as defined. Existing law also requires, on or before January 1, 2026, and biennially thereafter, a covered entity to prepare a climate-related financial risk report disclosing the entity’s climate-related financial risk and measures adopted to reduce and adapt to climate-related financial risk.

This bill would enact the California Contractor Climate Transparency Act, which would require the state board, beginning January 1, 2027, one year after the effective date of regulations adopted pursuant to the Climate Corporate Data Accountability Act, as specified, to require a large contractor and a significant contractor, as defined, to report annually specified information, including, for large contractors, an annual disclosure of scope 1 emissions, scope 2 emissions, scope 3 emissions, and climate-related financial risk, as specified, and for significant contractors, an annual disclosure of scope 1 emissions and scope 2 emissions, as specified.

The people of the State of California do enact as follows:

SECTION 1.

Section 38534 is added to the Health and Safety Code, to read:

38534.

(a) This section shall be known, and may be cited, as the California Contractor Climate Transparency Act.

(b) For purposes of this section, the following definitions apply:

(1) “Climate-related financial risk” means material risk of harm to immediate and long-term financial outcomes due to physical and transition risks, including, but not limited to, risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, consumer demand, and financial markets and economic health.

(2) “Large contractor” means any company doing business within the state as a vendor, contractor, or procurer that received more than twenty-five million dollars ($25,000,000) in state contract obligations in the prior state fiscal year.

(3) “Reporting entity” means a large contractor or a significant contractor. Applicability shall be determined based on the reporting entity’s state contract obligations in the prior state fiscal year.

(4) “Scope 1 emissions” means all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.

(5) “Scope 2 emissions” means indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.

(6) “Scope 3 emissions” means indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control and may include, but are not limited to, purchased goods and services, business travel, employee commutes, and processing and use of sold products.

(7) “Significant contractor” means any company doing business within the state as a vendor, contractor, or procurer that received between five million dollars ($5,000,000) and twenty-five million dollars ($25,000,000) in state contract obligations in the prior state fiscal year.

(c) Beginning January 1, 2027, one year after the effective date of regulations adopted pursuant to paragraph (1) of subdivision (c) of Section 38532, the state board shall require a large contractor and a significant contractor to report the following information annually:

(1) For large contractors, annual disclosure of scope 1 emissions, scope 2 emissions, scope 3 emissions, and climate-related financial risk, in alignment with Sections 38532 and 38533 and associated implementing regulations to ensure consistency in greenhouse gas emissions reporting.

(2) For significant contractors, annual disclosure of scope 1 emissions and scope 2 emissions, in alignment with Section 38532 and associated implementing regulations to ensure consistency in greenhouse gas emissions reporting.