Colorado Legislative Proposal Mandates Transparent Reporting of Organizations' Greenhouse Gas Emissions
Colorado's push towards transparency in greenhouse gas emissions is gaining momentum, with House Bill 25-1119 introducing reporting requirements for businesses. This legislation, introduced on January 28, 2025, targets entities conducting business in Colorado with revenues surpassing a billion dollars annually.
The bill takes a comprehensive approach, dividing emissions into three categories:
- Direct Emissions (Scope 1): These are emissions produced by the covered entity itself, such as fuel combustion or chemical production.
- Indirect Emissions (Scope 2): These emissions come from the energy the covered entity consumes, for example, electricity or heat purchased from a provider.
- Other Indirect Emissions (Scope 3): These involve emissions created during a company's entire value chain, including supply chain activities, transportation, employee commuting, and waste management.
Beginning in 2028, businesses will start reporting Scope 1 and 2 emissions for the previous year. The timeline for Scope 3 emissions reporting is more gradual, with phases scheduled for 2029, 2030, and 2031. In detail, these phases include:
- Reporting induced emissions from purchased goods and services, capital goods, and sold products by 2029.
- Reporting emissions from fuel and energy activities, waste generation, and sold product processing by 2030.
- Reporting emissions from transportation, leased assets, and end-of-life products by 2031.
The Colorado Air Quality Control Commission will be granted the power to adapt the legislation and deadlines as needed. Keeping environmental accountability, the bill also includes a penalty for non-compliance of up to $100,000 per day. Potential violators should prepare themselves for rigorous enforcement by the district attorney or the Colorado Attorney General.
It's essential to highlight that this is still an early stage in the legislative process. The bill's future in the Colorado General Assembly and its eventual enactment into law are closely tied to the parties in control and the lobbying efforts of affected industries. Despite these challenges, the bill's introduction is a clear indicator that Colorado is eager to establish robust emissions reporting requirements.
The bill, in line with ESG (Environmental, Social, and Governance) principles, aims to reduce Greenhouse Gas (GHG) emissions in Colorado. This legislative push towards transparency is concerned with direct (Scope 1) and indirect (Scope 2) emissions from large entities, with a revenue threshold of a billion dollars annually. The reporting commencement for Scope 1 and 2 emissions is set for 2028, leading to a gradual rollout for Scope 3 emissions, starting in 2029.
The Colorado Air Quality Control Commission will play a critical role in setting the standards and adjusting the legislation according to the evolving climate scenario. The bill also includes consequences for non-compliance, with the potential for fines reaching $100,000 per day.
Denver-based businesses, among others, are incentivized to proactively plan for this climate reporting requirement, scheduled for implementation in 2024, to avoid potential penalties and maintain a positive environmental stance. The proposed creditline standardization could further encourage organizations to improve their environmental performance.
The Greenhouse Gas (GHG) reporting standards proposing standardization in credit lines may add to the state's push towards climate change mitigation efforts. Businesses are encouraged to develop effective strategies to manage their GHG emissions in the face of this progressive legislation.
In conclusion, the Colorado state assembly's push for robust emissions reporting will contribute significantly to the global efforts in tackling climate change, setting a precedent for potential future legislation related to greenhouse gas emissions in other US states.
