“Apple endorses California bill to oblige companies to report carbon footprint.” So reads the headline of a Reuters news story written by Isla Binnie and posted on September 8.
Binnie writes:
Wiener’s bill would require public and private companies with annual revenue in excess of $1 billion who do business in traditionally climate-conscious California to disclose independently verified data on their planet-warming emissions.
Let’s see. Apple’s annual revenue in the fiscal year ending September 24, 2022 was $394.33 billion, which is just over 393 times more than $1 billion.
Apple is so large that calculating its carbon footprint will be more expensive than the calculation for a $1 billion firm. But it’s unlikely to be 393 times more expensive.
On this site, I have occasionally discussed what I call “economies of scale in compliance.” I showed in my 1976 Ph.D. dissertation, “The Economics of Safety Legislation in Underground Coal Mines,” that large unionized coal companies and the United Mine Workers lobbied for 1966 and 1969 legislation that wiped out thousands of small, non-union mines. Moreover an event study I reported in my dissertation found that the stock prices of the large mining companies rose after a key legislated hurdle was passed.
The cost of calculating a carbon footprint could hobble a smaller competitor to Apple. Do I think that that’s Apple’s main motive in supporting the legislation? I don’t. My guess is that Apple’s management really believes in this legislation. But it helps that there could be a financial upside from less competition.
HT2 Ross Levatter.
READER COMMENTS
Jon Murphy
Sep 12 2023 at 8:07am
In theory I agree with you, but a billion dollar firm is still very large. Who is the marginal firm here who will be affected? I suspect not many exist right on the $1b line and will be unable, or find it very costly, to comply.
AndrewS
Sep 13 2023 at 5:41pm
According to Ceres (apparently a non profit that supports the bill) there are 5,300 public & private companies that would be affected. And the bill will require reporting of both direct & indirect i.e. suppliers to the company & others emissions. Should be fun calculating that!
https://www.usnews.com/news/us/articles/2023-09-11/california-lawmakers-approve-the-nations-most-sweeping-emissions-disclosure-rules-for-big-business
Additionally, there is another bill affecting companies over $500m in sales regarding disclosure of climate based “risks”.
I can’t see if either of these are “indexed” which if not will draw more companies into reporting (if there are any left in CA by then). And then there’s the old “nose of a camel under the tent” argument…….what is now $1b will become $0.5b, then $0.25b and so on.
Thomas L Hutcheson
Sep 12 2023 at 8:14am
“Carbon footprint” calculations are not especially useful. They do not produce data that anyone can sensibly act on.
It could be useful for firms to publicize just how (little) their bottom line would be affected by a tax on net CO2 emissions. I do think that public’s exaggerated beliefs about how costly the least cost way of reducing and eventually reversing net CO2 emissions is.
Jon Murphy
Sep 12 2023 at 9:50am
Question: if a CO2 tax has a “little” effect on their bottom line, doesn’t that imply either:
A. if the tax falls mostly on the producer, the tax would be ineffective at reducing carbon since it would not provide a sufficent incentive to reduce emissions?
B. If the tax falls mostly on the consumer, then the cost of CO2 reduction is relatively high insofar as it falls predominantly on those less able to shoulder the burdon?
I mean, a Pigouvian tax is only efficient if it actually changes the behavior.
Richard Fulmer
Sep 12 2023 at 10:44pm
Perhaps carbon taxes are like Trump’s tariffs: they don’t cost anyone anything yet they create incentives for people to change their behavior.
Thomas L Hutcheson
Sep 13 2023 at 3:31pm
I mean that the amount of tax stuffient to change behavior is much smaller than I think most people realize.
Jon Murphy
Sep 13 2023 at 6:14pm
That would imply extremely elastic supply or demand curves. What’s the elasticity?
MarkW
Sep 12 2023 at 10:22am
Is this is going to work like California’s pork regulations where companies that are not based in California will still be required to comply if the sell any products in the state?
Mike Burnson
Sep 13 2023 at 7:00pm
More garbage legislation that adds costs to doing business yet provides absolutely zero benefit to anyone, anywhere.
Today’s $1 billion threshold will be reduced until most companies, including small, will be affected. Recall from the Obamadoesntcare atrocity that Walmart supported the terrible legislation even though it was self-insuring. It only hurt competitors, particularly small retailers.
Further, the “impact” is difficult to define and impossible to “measure” in any legitimate mathematical manner. Any such “impact” is arbitrary and wildly varying.
Finally (for this entry), human activity has no impact to start with. Human activity is 0.3% of so-called greenhouse gas emissions, nature is 99.7%. Heck, water vapor is close to 95% in and of itself. Not a single dire warning from global warming fraudsters over forty years has actually come to pass.