PILING ON — The groundbreaking corporate climate disclosure measures enacted by California Gov. Gavin Newsom over the weekend has like-minded lawmakers across the country thinking their states could be ready to follow suit. But major influence groups that have lobbied on opposite sides of the issue are warning that creating a patchwork of state-level copycat rules could do more harm than good by increasing the cost and complexity of compliance, giving new fuel to one of the main arguments leveled by business interests and others fighting the efforts. State lawmakers in New York and Washington pointed to California’s model in telling POLITICO that they plan to push similar measures to compel large companies to disclose the size of their carbon footprints and the financial impacts of climate change. “There will be a bill that’s introduced, and it will be very seriously considered,” said Washington state Sen. Joe Nguyen, a Democrat who chairs the chamber’s environment, energy and technology committee. “I expect there to be a policy that we will take up and likely pass.” California’s passage “100 percent” cleared the way for Washington state to move forward, he said. New York state Sen. Brad Hoylman-Sigal, also a Democrat, said California’s new law “adds an enormous boost to our efforts,” which includes his bill to compel greenhouse gas emissions disclosure and another one by state Sen. Peter Harckham to require disclosure of climate-related financial risk. The measures were introduced this year and saw no movement, but both Hoylman-Sigal and a spokesperson for Harckham anticipate they will now gain support. Key groups, though, are saying not so fast. Ceres, a nonprofit that aims to align corporations and other stakeholders around sustainability issues, is recommending against other states pursuing their own climate disclosure bills. Ceres, which backed the California legislation, said it would be preferable to let the Golden State’s implementation process play out and allow the U.S. Securities and Exchange Commission to finalize its own rule. Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets, said further state efforts may not be necessary given that the California laws will sweep in large publicly traded and private companies that more than likely operate across states. And he said companies shouldn’t be forced to navigate complex disclosure regulations that could vary across states. That last point is seconded by the U.S. Chamber of Commerce, which opposes the SEC’s proposed disclosure rules. Tom Quaadman, executive vice president of the Chamber’s Center for Capital Markets Competitiveness, said blue-state efforts to pass California-style climate disclosure measures could boost the red-state backlash against environmental, social and governance policies. “These are issues that need to be addressed on the national level,” Quaadman said. “And then you're going to have potentially a competing set of requirements coming out of red states. And then layer on top of that the European (rules). This creates a fragmented approach that becomes unworkable for American businesses. So if anything, this is political gamesmanship that is actually not moving the ball forward.” In addition to the lobbying fights to come, lawmakers pushing the state bills will face other challenges, including narrow legislative windows, as well as issues around Scope 3 reporting and enforcement that proved thorny in California. The lawmakers plan on forging ahead anyway. Hoylman-Sigal said he feels an increased mandate to act as the SEC lingers past 18 months on issuing a final rule. “There would be certainly less impetus” if the SEC issues its final rule, he said. “But this is where state legislatures find ourselves, which is a lack of federal action. Is a 50-state patchwork of laws on a subject matter preferable? No, but when there’s a vacuum at the federal level, states need to determine the best way forward.”
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