TPS Reports
Own a sizeable company or sell to one? Get ready to start counting carbon for California.
“I believe you have my stapler.” – Milton Waddams, Office Space
Every few years, a movie captures the zeitgeist so perfectly that it becomes a cult classic. Although initially considered a box office flop, Mike Judge’s 1999 film, Office Space, became one of the early beneficiaries of the DVD and cable television revolutions, with its banal brilliance spreading quickly through those channels via positive word of mouth. The movie resonated deeply with throngs of office workers trapped in meaningless jobs under thoughtless managers. It also captured the drudgery of justifying one’s work to outside consultants, the grating nature of passive-aggressive workplace communication, and the seething, all-too-familiar rage that an error-prone printer—mere spark into this oppressive tinder—could ignite in the hearts of many.
It is an inherent feature of all bureaucracies that their primary mission is to expand. Like cancers invading their hosts, they grow inexorably beyond sustainability. This is how most of the work that goes on in large corporations eventually becomes largely unnecessary and certainly not accretive to shareholders. A crowded calendar stuffed with meetings where nothing gets decided or done is not the sign of an important person, just a busy one.
There can be no more visceral demonstration of the drag that frustrating and futile bureaucracies impose on economic systems than when an entrepreneur comes face-to-face with do-gooder government regulators. Mundane activities grind up against hard-to-get permits, conflicting regulations from various sub-bureaucracies, and convoluted filing requirements that amount to little more than make-work for some unseen person counting the days until retirement.
Perhaps no government exemplifies the destructive nature of late-stage bureaucratic metastasis quite like the one in Sacramento, California. Despite running massive deficits and chasing off critical industries, the Big Blue Machine that runs the Golden State can’t help but make things worse. There is no clearer evidence of this than the two highly controversial laws—signed by Governor Gavin Newsom in October 2023—set to take effect next year:
“California’s new climate disclosure laws, coming into force in 2026, have put companies in the state under pressure to ensure they have clear accountability roles for climate reporting and create cross-functional teams within their finance, legal, and other units...
The Climate Corporate Data Accountability Act (SB 253), signed into law by Governor Gavin Newsom earlier this month, is the first-of-its-kind mandatory climate emissions disclosure rule in the United States. A second bill, SB 261, requires disclosure of climate-related financial risks, in accordance with recommendations from the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures.”
Like so much that emanates out of California, SB 253 and SB 261 might be nothing more than humorous own-goals to observe from a safe distance, if only they didn’t affect virtually every medium- and large-sized business in the US, along with countless others around the world. The obligation to comply with Sacramento’s latest edicts applies even if the state accounts for just a small fraction of a company’s sales or if it has as few as one employee working there. The details are as bad as you think (maybe worse)—let’s take a peek at what’s in store.