Behind the Research – Q&A on G&A’s Latest Report: California’s Supply Chain: Current Practices & Trends in Climate Disclosure

G&A just released a new report analyzing climate disclosure trends among top suppliers to California, a first-of-its-kind examination of major suppliers to a state government.

Download it here.

To explain the results, we asked Gabriella Leuthner, G&A Climate Analyst and one of the report’s authors, to discuss the motivation for conducting this research and what it means for key stakeholders, including state suppliers, state procurement teams, and policymakers.

Why focus on California?

California has emerged as a national leader in climate action. Because it’s California, the impact can be larger than it seems for just one of 50 U.S. states. In reality, because California has the 5^th largest economy in the world, its climate policies and actions create ripple effects across the U.S.

The state has an ambitious 2045 carbon neutrality goal. Achieving that will require active participation and emissions reduction efforts from not just its own operations but also its suppliers.

Currently, the state legislature is considering a bill (SB 755) that would require state suppliers with greater than $5 million in contracts to report their emissions and climate-related financial risks, making California the ideal case study for our team to dig into current reporting trends.

Why is it important to assess suppliers’ practices around emissions measurement, target setting, and risk assessments?

For any organization – be it a company, university, country, or local government – a robust climate strategy requires understanding both their operations and their supply chain. Supply chain activities typically dominate Scope 3 emissions, and climate risks within the supply chain can directly impact an organization’s financial performance and operations. With more visibility into their suppliers’ emissions, climate targets, and climate-related risks, organizations can enhance their own climate strategies.

This analysis is also important right now because it will allow for tracking supplier practices over time. This report provides an early snapshot of supplier reporting practices. Reporting rates are currently low across industries, demonstrating the potential for legislation like SB 755 to increase visibility into the climate-related risks within the state’s supply chains.

Finally, if you are a supplier, our findings provide the information you’ll need to prepare for forthcoming regulations.

How did you conduct this research?

Our team started by establishing the supplier list using procurement data from the State Contract & Procurement Registration System (SCPRS) portal. Once we had our core list of companies that matched our criteria, we reviewed publicly available company data, mainly sustainability reports, annual reports, and company websites. We searched for disclosures around Scope 1-3 emissions, third-party assurance, target-setting, and climate risk assessments.

Notably, we observed a lack of standardization in climate-related disclosure data – while publicly traded companies often consolidated this information within annual ESG reports, other entities presented metrics across various web pages and documents. It took some digging to find all the information and often required multiple sources to pull the information accurately.

What are the key findings from the report?

The analysis reveals that most companies are not yet disclosing climate-related metrics, indicating a clear opportunity to improve reporting rates. Specifically:

1. Only 25% of California largest (>25 million) suppliers disclose Scope 1 & 2 emissions
2. Only 18% of California largest suppliers report Scope 3 emissions, the largest share of most companies’ carbon footprints.
3. Only 10% of California largest suppliers have obtained third-party assurance for their GHG emissions.
4. Only 11% of California largest suppliers have set science-based emissions reduction targets.
5. Only 17% of California largest suppliers have conducted climate-related risk assessments aligned with TCFD.

How can companies leverage these findings?

For companies looking to position themselves as preferred state suppliers, they need to consistently meet regulatory requirements and align with state priorities in addition to providing competitive products and services. Companies can proactively prepare to align themselves with California, its climate strategy, and new legislation in three ways:

1. Identifying areas where they need to enhance their climate reporting practices.
2. Determining if they are in scope for any of the California regulations, and if so, establish what work needs to be done to be compliant.
3. Implementing best practices for emissions reporting, assurance, and risk assessment.

For companies looking to remain competitive and compliant as a California supplier, improving climate disclosure now will be crucial.”
– Gabriella Leuthner, Climate Analyst, G&A Institute

What should policymakers take away from this analysis?

This report provides policymakers with a clear snapshot of where California climate disclosure currently stands. What it shows is both the need for statewide policies to encourage companies to report and disclose various climate metrics, and also the importance of capacity-building initiatives and support services from state agencies, procurement teams, and climate experts to help companies understand and meet new reporting requirements.

• Our findings underscore that California’s regulatory efforts can significantly enhance climate transparency and action, not only within the state but across the U.S.
  • This is because many companies subject to these regulations operate across the country and may be suppliers to other states. So these climate disclosure mandates shared will improve supply chain transparency in California, other states, and at a national level.

We have been hearing a lot about California and climate lately. What else has the State done?

In addition to the proposed SB 755, California’s legislature has already enacted two other laws that will take effect January 1, 2026, and are aimed at increasing climate transparency.

• SB 253 (Climate Corporate Data Accountability Act): Requires large companies operating in California to report Scope 1-3 emissions and obtain external assurance for them. This is for businesses with over $1 billion in annual revenue.
• SB 261 (Climate-Related Financial Risk Act): Mandates climate risk disclosure for businesses operating in the state. This is for companies doing business in California with greater than $500 million in annual revenue.
• SB 755 was modeled after the SB 253 and SB 261 disclosure requirements. SB 755, if enacted, would be completely interoperable with SB 253 and SB 261.

Are any other states creating similar policies for climate disclosures?

Yes! Currently New York, Colorado, Illinois, Washington and New Jersey have legislation in the works to tackle climate disclosure.

How can readers learn more about this topic or G&A’s services work?

G&A has a world-class team of climate professionals with extensive experience in conducting corporate GHG emissions inventories and climate risk assessments across a wide variety of industries. As experts in climate and sustainability, we can provide your organization with additional resources and expertise to help you achieve your climate targets. You can check out our web page on the California Climate Disclosures, request samples of our services, or contact us at info@ga-institute.com. Our team is available to provide additional insights and discuss the findings in depth.

ABOUT GABRIELLA LEUTHNER 
Climate Analyst, G&A Institute

Gabriella Leuthner is a Climate Analyst on the Climate Consulting team at Governance & Accountability Institute. She supports clients with a wide range of climate projects, including conducting Scope 1, 2, and 3 greenhouse gas inventories, assessing climate physical and transition risks and opportunities, and developing decarbonization strategies.