As governor of California, Gavin Newsom has cultivated a reputation as a climate crusader who holds powerful polluters accountable for delay tactics.
“The climate crisis is, after all, a fossil fuel crisis. Period, full stop. And these guys have been playing us for fools,” Newsom told a crowd at New York’s Climate Week in September. He praised the state’s attorney general for accusing the oil industry of misleading the public on climate change. California may not be able to solve the problem on its own, Newsom argued, but when it comes to the oil companies, the Golden State “can illuminate their deceit.”
The governor then made news: He announced his intent to sign a pair of ambitious and contentious climate bills. Modeled on a similar proposal from the U.S. Securities and Exchange Commission, Senate Bills 253 and 261 will require large companies doing business in California to disclose their greenhouse gas emissions and analyze the financial risks they face from climate change. This is a big deal. With federal courts increasingly hostile to regulatory policymaking, the state’s leadership could prove particularly influential. Even if opponents of climate disclosure succeed in weakening the forthcoming SEC rule or convince a receptive court to overturn it, California’s requirements will still apply to any large company doing business in the state — which, due to the size of its economy, likely includes most of them.
So it was no surprise that the governor’s decision earned national headlines. But all the effusive coverage missed something else important: Back at home, Newsom signaled his intent to water down the rules and vetoed another critical piece of climate legislation that would have fought greenwashing.
When Newsom signed the climate disclosure bills on October 7, he issued parallel signing statements with a distinctly less supportive tone than he took in New York. While in September the governor called for “some cleanup” in follow-up legislation, in October he described the regulatory implementation timelines as “infeasible” and promised to work on legislation to extend deadlines. He also raised concerns about the “overall financial impact” of each bill on the business community, and directed the California Air Resources Board, which will implement both laws, to make recommendations to “streamline” the two programs.
No matter how pragmatic the governor’s aim, opening the door to relax both laws does not bode well for the upcoming rulemaking process. Although the California Air Resources Board has led the nation for decades with ambitious vehicle pollution standards, it regularly accommodates powerful interest groups at home and stalls the reform of underperforming climate programs. It also maintains the state’s official greenhouse gas emissions inventory, which is replete with creative accounting. Proponents of strong disclosure standards face an uphill battle, especially if the governor quietly backs interest groups that oppose them.
But that wasn’t the worst of it. The same day he signed the corporate disclosure bills, Newsom also vetoed Senate Bill 390, which would have clarified the application of California’s existing false advertising laws to the voluntary carbon offsets industry. (Disclosure: I co-authored an academic letter in support of the bill.) The governor’s veto was surprising because the bill received unanimous support on the floor of both houses of the state legislature, had no registered opposition, and limited any offsets-related violations to civil, rather than criminal, penalties.
Newsom’s veto raises fundamental questions about his views on anti-greenwashing laws. Companies violate California’s existing false advertising law today when they either know, or should know through “the exercise of reasonable care,” that their climate claims are untrue or misleading. In plain language, this is a negligence standard: a company that means well, but fails to take reasonable precautions to ensure the accuracy of its public marketing, could nevertheless be held accountable for false or misleading statements.
That’s as it should be. Although Senate Bill 390 would have retained the same standard for carbon offsets, the governor’s veto message raised concerns that the bill might penalize “unintentional mistakes” from “well-intentioned” offset market participants — including from carbon credit verifiers, the private parties responsible for auditing the accuracy of claims in today’s markets. He suggested that upholding truth-in-advertising standards could create “significant turmoil” beyond California’s borders, a notable contrast to his message of leadership on corporate disclosures.
Taken at face value, the governor’s veto message suggests that the carbon offsets industry should receive special treatment, with less accountability for marketing statements than any other industry faces under current law. This is hardly the right approach for addressing greenwashing in an industry that is famously rife with supposedly sincere but completely incredulous claims, such as the suggestion that without offset income, a conservation organization would have to cut down a forest it spent tens of millions of dollars to protect, or that a billionaire’s private hunting club would clearcut its own lands. Moreover, market turmoil is already here: offsets litigation is pending under current state law, high-profile projects are collapsing in the face of public scandals, and the global offsets market is poised to contract.
To the governor’s credit, he also signed Assembly Bill 1305, which requires companies to disclose their use of carbon offsets and the role those offsets play in meeting any corporate climate targets. This bill appears to be the first of its kind in the nation, with provisions that can be enforced by state and local governments. And to his credit, Newsom has championed many other high-profile climate policies during his time in office, too.
But when it comes to fighting greenwashing, there is a growing disconnect between the governor’s words and his actions — precisely the kind of gap that anti-greenwashing laws themselves are supposed to address.
California politicians like to promote the state as a climate leader that develops new policies for others to copy. Often the state’s role is transformative and catalytic, as could again be the case with strong corporate climate disclosure rules. But for all his hardline talk about California’s ability to “illuminate” industry deceit, Newsom’s actual stance on corporate climate accountability appears far more ambivalent.
The national media would do well to focus less on announcements and more on policy implementation, where actions matter a lot more than words — and where we need strong leadership the most.
Chart courtesy of the Business Council on Sustainable Energy
