S4117

An Act concerning greenhouse gas emissions and supplementing Title 26 of the Revised Statues.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the "Climate Corporate Data Accountability Act."

2. The Legislature finds and declares that:

a. New Jersey has demonstrated leadership in the battle against climate change and the climate actions of the State have inspired and contributed to bold actions in other states and across the globe.

b. New Jerseyans are already facing devastating wildfires, sea level rise, excessive rainfall, and other impacts associated with climate change that threaten the health and safety of New Jerseyans, undermines the sustainability of our communities, particularly those communities most affected by the negative effects of climate change, and the economic well-being of the State and its residents, including threatening many of the State's largest industries.

c. Climate change also poses a significant risk to companies' long-term economic success and disrupts the value chains on which they rely. Managing these risks requires investments in decarbonization strategies that lead to emissions reductions and provide economic benefits for New Jerseyans and the State economy.

d. New Jersey has doubled its real gross domestic product growth rate since 2018, is on track to be the 31st largest economy in the world, and is a highly desirable market for the globe's most profitable companies.

e. New Jersey investors, consumers, and other stakeholders deserve transparency from companies regarding their greenhouse gas emissions to inform their decision-making.

f. United States companies that have access to New Jersey's tremendously valuable consumer market by virtue of exercising their corporate franchise in the State also share responsibility for disclosing their contributions to global greenhouse gas emissions.

g. Companies can increase the State's climate risk through emissions activities that include, but are not limited to, company operations, supply chain activities, employee and consumer transportation, goods production and movement, construction, land use, and natural resource extraction.

h. Accurate and comprehensive data that is subject to an assurance engagement by an independent third-party assurance provider is required to determine a company's direct and indirect greenhouse gas emissions, also known as its carbon footprint, and to effectively identify the sources of the emissions and develop means to reduce the emissions.

i. The current approach for the disclosure of climate emissions from public and private corporate enterprises relies largely on voluntary reporting of greenhouse gas inventories, goals, commitments, and agreements, and lacks the full transparency and consistency needed by residents and financial markets to fully understand these climate risks.

j. The people, communities, and other stakeholders in New Jersey, facing the existential threat of climate change, have a right to know about the sources of carbon pollution, as measured by the comprehensive greenhouse gas emissions data of those companies benefiting from doing business in the State, in order to make informed decisions.

k. The Greenhouse Gas Protocol is the globally recognized greenhouse gas emissions accounting and reporting standard developed and updated by the World Resources Institute and the World Business Council for Sustainable Development and provides the framework for corporate greenhouse gas emissions accounting and reporting. The framework defines and categorizes emissions as scopes 1, 2, and 3 emissions. Many companies already partially or fully disclose their emissions data.

l. Mandating annual, full-scope greenhouse gas emissions data reporting to the emissions reporting organization for all United States companies with total annual revenues in excess of $1 billion that do business in New Jersey, as well as ensuring public access to the data in a manner that is easily understandable and accessible, will inform investors, empower consumers, and activate companies to improve risk management in order to move towards a net-zero carbon economy and is a critical next step that New Jersey must take to protect the State and its residents.

3. As used in this act:

"Assurance engagement" means a report, produced by an assurance provider, which certifies the accuracy of a greenhouse gas emissions report.

"Assurance provider" means an environmental consultant or other entity with expertise and experience in measuring and verifying scope 1, scope 2, and scope 3 emissions of reporting entities or other, similar organizations.

"Department" means the Department of Environmental Protection.

"Emissions reporting organization" means a nonprofit emissions reporting organization contracted by the Department of Environmental Protection pursuant to section 6 of this act that currently operates a greenhouse gas emission reporting organization for organizations operating in the United States, and has experience with greenhouse gas emissions disclosure by entities operating in New Jersey.

"Limited assurance level" means the degree of verification of greenhouse gas emissions data that may reasonably be obtained by an assurance provider using exclusively data that is provided by the reporting entity.

"Reporting entity" means a partnership, corporation, limited liability company, or other business entity formed under the laws of this State, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States, which has total annual revenues in excess of $1 billion and that does business in New Jersey.

"Reasonable assurance level" means the degree of verification of greenhouse gas emissions data that may reasonably be obtained by an assurance provider that validates data provided by a reporting entity.

"Scope 1 emissions" means all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.

"Scope 2 emissions" means indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.

"Scope 3 emissions" means indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control and may include, but are not limited to, purchased goods and services, business travel, employee commutes, and processing and use of sold products.

4. a. (1) Commencing three years after the effective date of this act, a reporting entity shall annually disclose to the emissions reporting organization and the department all of the reporting entity's scope 1, scope 2, and scope 3 emissions for the prior fiscal year.

(2) Commencing four years after the effective date of this act, a disclosure of scope 1 or scope 2 emissions made pursuant to this subsection shall include an assurance engagement performed by an independent third-party assurance provider, which verifies the accuracy of the reported emissions. The reporting entity shall ensure that a copy of the complete assurance provider's report on the greenhouse gas emissions inventory, including the name of the third-party assurance provider, is provided to the emissions reporting organization as part of or in connection with the reporting entity's disclosure. The assurance engagement for scope 1 emissions and scope 2 emissions shall be performed at a limited assurance level until eight years after the effective date of this act, and at a reasonable assurance level thereafter.

(3) No later than four years after the effective date of this act, the department shall review and evaluate trends in third-party assurance requirements for scope 3 emissions. No later than five years after the effective date of this act, the department may adopt, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as necessary to implement an assurance requirement for third-party assurance engagements of scope 3 emissions, provided that the rules and regulations require that the assurance engagements for scope 3 emissions be performed at a limited assurance level and commence eight years after the effective date of this act.

b. Commencing four years after the effective date of this act, and each year thereafter, a reporting entity shall publicly disclose all of the reporting entity's scope 1 and scope 2 emissions for the prior fiscal year.

c. Commencing five years after the effective date of this act, and each year thereafter, a reporting entity shall publicly disclose all of the reporting entity's scope 3 emissions no later than 180 days after its scope 1 emissions and scope 2 emissions are publicly disclosed to the emissions reporting organization for the prior fiscal year.

d. A partnership, corporation, limited liability company, or other business entity shall annually calculate its revenue for the prior fiscal year in order to determine if it qualifies as a reporting entity pursuant to this act.

e. (1) Commencing four years after the effective date of this act, a reporting entity shall measure and report its emissions of greenhouse gases in conformance with the Greenhouse Gas Protocol standards and guidance, including the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard developed by the World Resources Institute and the World Business Council for Sustainable Development, and including guidance for scope 3 emissions calculations that detail the acceptable uses of both primary and secondary data sources, including the use of industry average data, proxy data, and other generic data in scope 3 emissions calculations.

(2) Commencing 10 years after the effective date of this act and every five years thereafter, the department may survey and assess currently available greenhouse gas accounting and reporting standards. This assessment shall include consultation with appropriate industry stakeholders. At the conclusion of this assessment, the department may adopt, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as necessary to implement a globally recognized alternative accounting and reporting standard if it determines its use would more effectively further the goals of this act.

f. No later than eight years after the effective date of this act, the department shall update, as necessary, the public disclosure deadlines established in subsection c. of this section to evaluate trends in scope 3 emissions reporting and consider changes to the disclosure deadlines to ensure that scope 3 emissions data is disclosed to the emissions reporting organization as close in time as practicable to the deadline for reporting entities to disclose scope 1 emissions and scope 2 emissions data. The public disclosure deadlines shall consider industry stakeholder input and shall take into account the timelines by which reporting entities typically receive scope 1, scope 2, and scope 3 emissions data, as well as the capacity for an independent assurance engagement to be performed by a third-party assurance provider.

g. A reporting entity shall format a public disclosure made pursuant to this section in such a way as to maximize access for consumers, investors, and other stakeholders to comprehensive and detailed greenhouse gas emissions data across scopes 1, 2, and 3 emission, and in a manner that is easily understandable and accessible. A reporting entity's public disclosure shall include the name of the reporting entity and any fictitious names, trade names, assumed names, and logos used by the reporting entity.

h. Reporting entities that are required to report mandatory industrial emissions pursuant to section 5 of P.L.2007, c.112 (C.26:2C-41) may provide that data with the disclosure required pursuant to this section.

i. A reporting entity's disclosure shall take into account acquisitions, divestments, mergers, and other structural changes that can affect the greenhouse gas emissions reporting.

j. A third-party assurance provider utilized pursuant to this section shall have significant experience in measuring, analyzing, reporting, or attesting to the emission of greenhouse gases and sufficient competence and capabilities necessary to perform engagements in accordance with professional standards and applicable legal and regulatory requirements. The assurance provider shall be able to issue reports that are appropriate under the circumstances and independent with respect to the reporting entity, and any of the reporting entity's affiliates for which it is providing the assurance report. No later than seven years after the effective date of this act, the department shall review and, no later than eight years after the effective date of this act, shall update as necessary, by adopting rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), the qualifications for third-party assurance providers, based on an evaluation of trends in education relating to the emission of greenhouse gases and the qualifications of third-party assurance providers.

5. A reporting entity, whenever it files a disclosure to the department pursuant to subsection a. of section 4 of this act, shall pay an annual fee to the department for the administration and implementation of this section. The department shall set the fee in an amount sufficient to cover the departments full costs of administrating and implementing the provisions of this act. The total amount of fees collected shall not exceed the department's actual and reasonable costs to administer and implement this section.

6. a. No later than two years after the effective date of this act, the department shall contract with an emissions reporting organization to develop a reporting program to receive and make publicly available disclosures required by section 4 of this act.

b. The emissions reporting organization shall create a digital platform, which shall be accessible to the public, that will feature the emissions data of reporting entities and the report prepared for the department pursuant to section 7 of this act. The digital platform shall be capable of featuring individual reporting entity disclosures, and shall allow consumers, investors, and other stakeholders to view reported data elements aggregated in a variety of ways, including multiyear data, in a manner that is easily understandable and accessible to residents of the State. All data sets and customized views shall be available in electronic format for access and use by the public.

c. The emissions reporting organization shall make the reporting entities' disclosures and the report available on the digital platform no later than 30 days after receipt.

7. No later than five years after the effective date of this act, the department shall contract with Rutgers, the State University of New Jersey, or another equivalent academic institution in the State to prepare a report on the public disclosures made by reporting entities to the emissions reporting organization pursuant to section 4 of this act and the regulations adopted by the department pursuant to section 10 of this act. In preparing the report, consideration shall be given to, at a minimum, greenhouse gas emissions from reporting entities in the context of State greenhouse gas emissions reduction and climate goals. The entity preparing the report shall not require reporting entities to report any information beyond what is required pursuant to the other provisions of this act.

8. Notwithstanding any provisions of this act to the contrary, a copy of a report submitted to satisfy the requirements of the California "Climate Corporate Data Accountability Act," California Health and Safety Code s.38532, for the appropriate fiscal year, may be utilized in order to comply with the provisions of this act.

9. If a reporting entity violates the provisions of this act or any rule, regulation, or order promulgated or issued pursuant to the provisions of this act, the department may institute a civil action in a court of competent jurisdiction for injunctive or any other appropriate relief to prohibit and prevent this violation and the court may proceed in the action in a summary manner.

b. Any reporting entity who violates the provisions of this act or any rule, regulation or order promulgated pursuant to this act is liable to a civil administrative penalty of not more than $10,000 for the first offense, not more than $20,000 for the second offense, and up to $50,000 for the third and each subsequent offense. If the violation is of a continuing nature, each day during which it continues subsequent to receipt of an order to cease the violation constitutes an additional, separate and distinct offense. No civil administrative penalty shall be levied except subsequent to the notification of the violator by certified mail or personal service. The notice shall include a reference to the section of the statute, regulation, order or permit condition violated; a concise statement of the facts alleged to constitute the violation; a statement of the amount of the civil penalties to be imposed; and a statement of the violator's right to a hearing. The violator shall have 20 days from receipt of the notice within which to deliver to the commissioner a written request for a hearing. Subsequent to the hearing and upon a finding that a violation has occurred, the commissioner may issue a final order, after assessing the amount of the fine specified in the notice. If no hearing is requested, the notice shall become a final order upon the expiration of the 20-day period. Payment of the penalty is due when a final order is issued or when the notice becomes a final order. The authority to levy a civil administrative penalty is in addition to all other enforcement provisions in this act, and the payment of a civil administrative penalty shall not be deemed to affect the availability of any other enforcement provision in connection with the violation for which the penalty is levied.

c. The department is authorized and empowered to compromise and settle any claim for a penalty under this section in such amount in the discretion of the department as may appear appropriate and equitable under all of the circumstances, including the posting of a performance bond by the violator.

d. Any reporting entity who violates this act or an administrative order issued pursuant to subsection b. of this section or a court order issued pursuant to subsection a. of this section or who fails to pay a civil administrative penalty in full pursuant to subsection b. of this section is subject, upon order of the court, to a civil penalty not to exceed $10,000 per day of the violation, and each day's continuance of the violation constitutes a separate and distinct violation. Any civil penalty imposed pursuant to this subsection may be collected with costs in a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.), or may be collected in a civil action commenced by the commissioner. In addition to any penalties, costs, or interest charges, the Superior Court may assess against the violator the amount of economic benefit accruing to the violator from the violation.

10. a. The Department of Environmental Protection shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to implement this act.

b. The rules and regulations shall:

(1) ensure that the emissions reporting required by this act is structured in a way that minimizes duplication of effort and allows a reporting entity to submit to the emissions reporting organization reports prepared to meet other national and international reporting requirements, including any reports required by the federal government, as long as those reports satisfy all of the requirements of this act; and

(2) ensure that the assurance process minimizes the need for reporting entities to engage multiple assurance providers and ensures sufficient assurance provider capacity, as well as timely reporting implementation as required pursuant to subsection a. of section 4 of this act.

11. This act shall take effect immediately.

STATEMENT

This bill, to be known as the "Climate Corporate Data Accountability Act," would require certain business entities to publicize data about their annual greenhouse gas emissions.

Specifically, the bill would apply to "reporting entities," defined by the bill to mean any partnership, corporation, limited liability company, or other business entity formed under state or federal law that has total annual revenues in excess of $1 billion and that does business in New Jersey. Reporting entities would be required to provide a report on their greenhouse gas emissions to the Department of Environmental Protection (DEP) and a nonprofit organization selected by the DEP annually, commencing three years after the bill's enactment. Reporting entities would be required to publicly disclose their scope 1 and scope 2 greenhouse gas emissions commencing four years after the bill's enactment, and they would be required to publicly disclose their scope 3 greenhouse gas emissions five years after the bill's enactment. "Scope 1 emissions" refers to the direct emissions of a reporting entity's facilities. "Scope 2 emissions" refers to the emissions attributable to the electricity, heat, and cooling used by a reporting entity's facilities. "Scope 3 emissions" refers to the total greenhouse gas emissions of the reporting entity, including purchased goods and services, business travel, employee commutes, and the processing and use of sold products.

The bill would authorize the DEP to collect a fee along with each annual disclosure made by a reporting entity. The fee would be required to be set at a sufficient level to pay the DEP's administrative costs for implementing the bill's provisions, and no higher. The bill would require the DEP to contract with a nonprofit organization to manage and publicize the reports required under the bill. The bill would also require the DEP to contract with Rutgers or another academic institution in the State to produce a report on the public disclosures required under the bill.

The bill would allow reporting entities to use reports they provide to the California state government under the California "Climate Corporate Data Accountability Act" to satisfy the provisions of the bill, in order to ease compliance. Business entities that violate the bill's provisions would be liable for civil administrative penalties of up to $10,000 for the first offense, $20,000 for the second offense, and $50,000 for the third and each subsequent offense. A reporting entity could also be liable for civil penalties, under the bill.