Colorado is proposing legislation that mandates businesses with over $1 billion in revenue to disclose greenhouse gas emissions, starting in 2028. The initiative follows similar actions in California and global movements towards sustainability reporting. Scope 1, Scope 2, and Scope 3 emissions will be reported in phases, with strict enforcement measures outlined. The bill’s passage remains uncertain due to potential lobbying efforts.
Colorado is considering a new bill that mandates businesses disclose their greenhouse gas (GHG) emissions, joining several states in this initiative. The move comes after the U.S. Securities and Exchange Commission (SEC) announced it would eliminate its reporting requirement, which was set for 2024 but never implemented. If enacted, the new law will require companies operating in Colorado with revenues exceeding $1 billion to report their emissions starting in 2028.
The impetus for such regulations follows the global focus on reducing climate change impacts, specifically targeting net zero greenhouse gas emissions by 2050, as outlined in the Paris Agreement of 2015. Various global efforts have emerged to regulate and influence corporate practices concerning sustainability. Notably, large investment firms have pressured companies to adopt sustainable practices, leading to annual Environment, Social, and Governance (ESG) reports. However, these reports were often unregulated and lacked standardization.
In 2021, the International Sustainability Standards Board developed the Sustainability Disclosure Standards to provide uniformity in sustainability reporting, which was adopted globally by mid-2023. In the U.S., the SEC had proposed climate-related reporting standards in early 2022; however, legal challenges led to the indefinite delay of these mandates.
States are now taking the lead on sustainability regulations, as seen with California’s approval of the Climate Accountability Package. This legislation requires large companies to submit extensive GHG reports beginning in 2026. Colorado’s proposed House Bill 25-1119 aligns with the California requirements, compelling businesses with more than $1 billion in revenue to report on their emissions.
The bill outlines that reporting entities must include all subsidiary revenues and establishes a phased approach for emissions reporting. Scope 1 and Scope 2 emissions reporting is expected to commence in 2027, while Scope 3 emissions will be reported from 2029 through 2031. Enforcement will fall under local authorities, with significant penalties for non-compliance.
Although Democrats control the state legislature, the bill’s fate remains uncertain amid potential lobbying efforts from the business sector aimed at altering or opposing the legislation. Observers anticipate amendments as the bill progresses through the legislative process.
In summary, Colorado’s proposed legislation requiring large businesses to disclose their greenhouse gas emissions aims to enhance transparency and accountability concerning climate impacts. This reflects a broader trend among states to implement sustainability regulations in the absence of federal mandates. With the emphasis on comprehensive reporting timelines and strict enforcement mechanisms, the bill may face challenges, particularly from the business lobby during its legislative journey.
Original Source: www.forbes.com
