Clearing the Air: A Look at California’s New Emissions Disclosure Laws

As the fifth-largest economy in the world, the state of California holds enormous financial and legislative power. We saw Governor Gavin Newsom and the California legislature flex that muscle in 2022, when the state mandated that, by 2035, all new vehicles must produce zero emissions. 

On October 7, Newsom signed two new environmental bills into law. The Climate Corporate Data Accountability Act (SB 253) requires all US companies doing business in California with annual revenues of $1 billion to disclose both their direct and indirect emissions. Their reports must include Scope 1 and 2 emissions that result directly from their own operations beginning in 2026, as well as Scope 3 emissions in 2027. Transportation emissions typically fall under Scope 1 when they are company owned and operated fleet assets, and Scope 3 for emissions produced by their transportation partners. Under the Climate-Related Financial Risk Act (SB 261), companies with $500 million in revenues must disclose their climate-related financial risks, as well as their plans to mitigate those risks. 

California’s new laws are gaining attention for two reasons.  

• First, they’ll have enormous implications for large corporations — like technology giants Apple and Microsoft which supported the legislation — as well as retail, agriculture, oil and gas, and all other companies over the revenue threshold who do business in California. While many of these companies already perform rigorous environmental reporting, the new laws mandate increased disclosure requirements and expose them to potential liabilities.  
• Second, the California legislation is very likely to encourage other US states, or other countries worldwide, to follow suit in getting tougher about emissions reporting.

Redwood: Your Partner in Sustainability and Compliance  

At Redwood, our focus is on how these new laws — and similar regulations in the EU — will affect our customers.

As a leading Modern 4PL, we’re committed to helping our customers minimize their environmental footprint, including their production of emissions, by maximizing the accuracy and efficiency of logistics operations. Our solutions and services are aimed at reducing highway miles, fuel usage, paperwork and other environmental impacts. Our proprietary freight sustainability solution, Redwood Hyperion, is designed to help our customers measure and record their sustainability impact. Hyperion provides customers with visibility into freight emissions, along with sustainability reporting capabilities.

Redwood Hyperion achieves load-by-load emissions visibility by accessing customers’ shipping data with our proprietary logistics integration platform, RedwoodConnect, validating input data, and calculating emissions. Redwood helps customers analyze and report their emissions using the leading globally recognized supply chain calculation standard, the GLEC Framework (Global Logistics Emissions Council), developed by the Smart Freight Centre.

Leveraging leading tools and standards such as RedwoodConnect and the GLEC Framework, Hyperion simplifies measuring Scope 1 emissions produced by the customer’s own fleet, as well as Scope 3 emissions associated with external freight carriers and brokers. Without access to a purpose-built solution like Hyperion, most companies are challenged to aggregate all the needed data to achieve consistent, reliable visibility into their Scope 3 emissions.

Hyperion saves significant time and money by automating the emissions calculations process. Because data is taken directly from source systems associated with transportation, it is accurate, up-to-date and easy to access. And, because RedwoodConnect is a technology-agnostic solution, it can pull data from multiple freight systems to accommodate scenarios where companies have grown through acquisition and ship with multiple transportation systems.

Via Hyperion’s intuitive user interface, companies can quickly and seamlessly view their key performance indicators (KPI) related to sustainability, including emissions. They can download this data and produce exactly the kinds of comprehensive reports that are increasingly required by government regulators and other environmental stakeholders.

Envision a Greener Future

As transportation professionals, it’s incumbent on all of us to increase the sustainability of our operations. But most organizations struggle with the practical matter of how to achieve visibility into their carbon footprint — not only to report that footprint for compliance purposes, but to track, measure and improve sustainability over time.  

By offering a customizable suite of carbon visibility, reduction and offsetting tools, Redwood meets shippers wherever they are in their sustainability journey — providing the actionable insights and expert knowledge they need to meet their environmental goals. Contact the Redwood team today to start your own journey to increased sustainability and compliance.