California’s climate disclosure legislation signals new expectations for food and agriculture

Priorities around sustainability are shifting in the United States. Climate-focused action items are broadening to place particular emphasis on supply chain resilience, operational productivity, and risk mitigation. At the same time, the current federal administration has deprioritized many climate-related policies and withdrawn from the Paris Agreement. This scenario presents both challenges and opportunities for food and agribusiness companies.

For large businesses, climate disclosure will soon be a requirement to operate in California. The state's influence on resources and consumer goods warrants attention from all companies in the United States, regardless of whether they currently conduct business in the state or not. Other states have proposed similar legislation, and the European Union has already acted on climate disclosure. To maintain market access in these regions, businesses will need to allocate additional resources for data collection and reporting. Small to midsize companies can expect a longer timeline before reporting is legally required but may see an increase in requests for climate data from their buyers or customers because of the legislation.

Preparing for impending climate disclosure legislation at home and abroad will add costs, especially for those who are in the early stages of their carbon-accounting journeys. However, inaction could ultimately prove costlier, and an expanded understanding of climate-related impacts and pressures within complex agri-food supply chains will unlock opportunities for increasing efficiency, preserving market access, and strengthening resilience to manage future risks.