California lawmakers urge SEC to adopt their climate disclosure standards.

• Large businesses operating in California with annual revenue over $1 billion will be required to disclose their Scope 1, 2, and 3 greenhouse gas emissions to an emissions reporting entity, as per a bill signed into law by Gov. Gavin Newsom on Oct. 7.
• Over two dozen California Democrats wrote to Gary Gensler, urging him to adhere to the state's recent precedent on the matter.
• The letter from California lawmakers states that SB 253 effectively eliminates the cost of complying with a federal Scope 3 disclosure requirement for businesses in California with over $1 billion in revenue.

Over two dozen California Democratic lawmakers wrote to Gary Gensler, the head of the U.S. Securities and Exchange Commission, urging him to adhere to the recent precedent set by California, which mandates companies to reveal comprehensive greenhouse gas emissions data.

A law signed by California Gov. Gavin Newsom on Oct. 7 requires businesses with annual revenue over $1 billion in California to disclose their greenhouse gas emissions in detail.

Large businesses must report their Scope 1, 2, and 3 emissions, with Scope 1 emissions being those generated by owned fuel sources, Scope 2 emissions being those emitted to produce electricity, steam, heat, or cooling purchased by the business, and Scope 3 emissions being the largest and hardest to track, generated indirectly through the supply chain.

The SEC proposed climate disclosure regulations in March 2022 that would require businesses to report their greenhouse gas emissions and information about climate-related risks that could significantly affect their operations or financial condition.

The SEC has received numerous comments from parties who are against the inclusion of Scope 3 emissions in the upcoming regulation, including Exxon Mobil, Walmart, and agricultural organizations such as the National Cattlemen's Beef Association, the National Cotton Council, and the Wisconsin Pork Association, all of whom are requesting, at the very least, an exclusion of Scope 3 emissions for the agricultural industry.

The California lawmakers "strongly urge" the SEC to adopt Scope 3 disclosure requirements in addition to Scope 1 and 2, as stated in a letter dated Thursday.

The letter states that investors will be unable to accurately assess the management's performance in relation to risks and opportunities if Scope 3 data is not consistently and reliably available.

According to California lawmakers, the cost for businesses in the state to submit Scope 3 emissions data to federal regulators is negligible due to the state's SB 253 law requiring large businesses to report their Scope 3 emissions.

The SEC spokesperson informed CNBC that Gensler would address Congress directly about the agency's plans and that the SEC values open engagement, reviewing all comments during the comment period.

On Sept. 27, Gensler informed the U.S. House of Representatives Committee on Financial Services that the SEC typically takes between 12 and 24 months to revise its rules, but emphasized that the SEC would not rush the process to a final decision.