In 2020, California experienced its deadliest and most destructive wildfire season on record. Then, in 2022, California’s snowpack was at its lowest level on record, leaving the state’s reservoirs at just 58% of capacity. Climate change clearly poses significant financial risks to California's economy, ranging from the physical risks associated with wildfires, droughts, and intensified storms to the transitional risks linked to the shift towards a low-carbon economy. These transitional risks include the impacts of changing policy and regulations, market shifts and consumer preferences, supply chain disruptions or failure to keep pace with technological advancements.
Carbon accounting provides a quantifiable framework for organizations to measure their greenhouse gas (GHG) emissions to better evaluate these climate risks. The passage of SB 253 will keep California’s economy better informed of such climate-related risks within the state and prepare companies to manage such risks.
In this statement, we address the feasibility of reporting carbon emissions and the power of technology to radically simplify carbon accounting. Carbon accounting is the process of taking an organization’s activities and calculating the associated GHG emissions. The GHG Protocol, the emissions reporting standard used in this bill, uses emission factors that enable different activities to be boiled down to a common carbon currency – carbon dioxide equivalent (CO2e). The GHG Protocol is the best methodology available in which businesses can achieve a true and fair account of their emissions. Using the GHG Protocol ensures that reporting entities are able to calculate their emissions under a shared language, unlike with the current practices which are dictated by voluntary reporting and influenced by various protocols and standards, so that all entities are comparing apples to apples.
Carbon accounting software facilitates this process by codifying the GHG Protocol, streamlining the uploading of a company's emissions activity data, and automatically applying the necessary emissions factors and calculations to achieve a GHG footprint in a less laborious and more efficient manner. It also helps interested stakeholders, such as policymakers, regulators, and investors, understand, compare, and analyze this information by viewing the data at the different organizational levels and providing a granular ledger that enables confidence and auditability of the data. Additionally, AI, machine learning, and predictive analytics are helping to improve the speed, ease, and fidelity with which we can calculate climate data. These tools are helping to dramatically improve the efficiency of gathering activity data, identifying data anomalies, filling data gaps, and performing predictive analytics.
“Before joining Persefoni, I was Senior Counsel for Climate and ESG at the US Securities and Exchange Commission. I came to Persefoni because I believe in the power of technology to radically simplify carbon accounting. There is no region better suited to drive climate risk disclosure in the US than California. California has a history of forward-thinking climate initiatives. It has the reach, scope, and venture community to propel this multi-trillion dollar, multi-decade green energy transition,” shared Persefoni Deputy GC & Chief Sustainability Officer, Kristina Wyatt before the California State Assembly Committee on Natural Resources regarding CA SB 253.
Not only can California avoid risk with SB 253, it can also address climate opportunities. The Wall Street Journal reported that while green job postings jumped a whopping 20%, green talent grew only 8.4%. With a historic amount of money being poured into climate technology, demand for green skills is rapidly growing and outpacing supply. Not only does California have the opportunity to drive the green energy transition with this bill, it also will ensure that its economy does not fall further behind while the UK, Japan, Europe, and Canada formalize their own climate disclosure policies. For example, Canada, California’s second largest export partner and as of April 2023, is requiring greenhouse gas footprint and decarbonization disclosures for its major government suppliers.
Persefoni appreciates the opportunity to support SB 253 and provide insight on the role technology is playing to facilitate GHG accounting and reporting. We are available for further discussion as the bill is up for consideration.