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Where California goes, the world often follows. The state is home to one of the world¡¯s largest economies, and it has a history of driving national and global change. Its two new climate disclosure laws follow this trend, with a ripple effect that reaches well beyond the state¡¯s borders.?

In 2023, recognizing an urgent need to address the physical, human, and financial risks associated with climate change, California passed the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). As a result, thousands of organizations that do business in California will now have to provide assurance-ready reports on their carbon footprints, including scope 3 emissions from up and down their value chains.?

California¡¯s Climate Disclosure Laws: A Timeline

The implementation timeline for California¡¯s climate disclosure laws continues to evolve as CARB completes its rulemaking and the legal challenge to SB 261 proceeds. Here¡¯s a quick timeline to help you keep track of key developments:

• October 2023: California Governor Gavin Newsom signs SB 253 and SB 261 into law. The California Air Resources Board (CARB) is charged with finalizing the requirements.
• July 2024: Newsom proposes a two-year delay, but by the end of the legislative session, SB 253¡¯s implementation date (January 1, 2026) remains unchanged.?
• September 2024: California passes an amendment bill, SB 219, with updates, including extended CARB rulemaking to July 2025, flexibility on administration (in-house or third party), parent-level reporting, and phased Scope 3 disclosures.
• May 2025: , reiterating that statutory timelines remain firm and outlining plans to publish draft regulations by end of year.
• August 2025:?CARB issues on covered entities, exemptions, reporting timelines, fees, and minimum disclosure requirements.
• September 2025: CARB?releases preliminary list of companies that may be impacted by SB 253 and/or SB?261.
• October 2025: CARB publishes draft reporting template for SB?253.
• November 2025: CARB hosts , to provide updates on the development of California¡¯s SB 253 and SB 261 climate disclosure programs, including covered entities, proposed rule changes, and upcoming reporting deadlines.
• December 2025: CARB posts (including a proposed first-year Scope 1 and 2 reporting deadline of August 10, 2026).
• December 2025: CARB issues an following a Ninth Circuit injunction and for voluntary submissions.
• January 2026: , the constitutional challenge to SB 253 and SB 261. The panel focuses on First Amendment questions around SB 261's narrative-style disclosures and the burden of SB 253's Scope 3 requirements. California signals openness to severing Scope 3 from SB 253 if the court finds it constitutionally problematic. As of April 2026, no decision has been issued. The SB 261 injunction remains in effect.
• February 2026: , formally establishing definitions for "doing business in California," revenue thresholds (SB 253: $1B, SB 261: $500M), program fee assessments (to be invoiced on September 10, 2026), and the August 10, 2026 Scope 1 and 2 reporting deadline. A Final Statement of Reasons will follow, incorporating responses to public comments from the hearing and the 45-day comment period.
• March 2026: . Staff present organizational boundary options (equity share vs. control approach), four GHG accounting methods (spend-based, activity-based, supplier-specific, and hybrid), proposed emission factor datasets (EPA eGRID, IPCC EFDB, EPA EF Hub, USEEIO), three approaches for Scope 3 reporting (broad applicability across all 15 categories, sectoral phase-in, or category-based phase-in), and proposed limited assurance standards for Scope 1 and 2 starting in 2027 (ISSA 5000, ISAE 3000/3410, AICPA AT-C 210/205, AA1000AS v3, ISO 14064-3).
• June 2026: CARB withdraws the initial regulation package it submitted to the Office of Administrative Law to make limited clarifying changes. from August 10 to November 10, 2026. The package will be amended, opened for a 15-day public comment period, and resubmitted.
• July 2026: . Staff propose requiring five Scope 3 categories beginning in 2027, limited assurance for Scope 1 and Scope 2 emissions, more detailed methodology disclosures, and an annual November 10 reporting deadline.

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? See how companies like DXC Technology are preparing for SB 253 assurance.

What Happened: California¡¯s Climate Accountability Package

In October 2023, California Governor Gavin Newsom signed SB 253 and SB 261 into law. The bills were first introduced in January 2023 by a group of lawmakers seeking to enhance transparency, standardize disclosures, and provide stakeholders and consumers with transparent and credible climate information. The Climate Corporate Data Accountability Act (SB 253) passed the state Assembly in September 2023 in a 49-20 vote.?

In the 2024 California legislative session, Governor Newsom in the implementation of these laws, spurring discussions on whether companies would have additional time to prepare for the new reporting requirements.

SB 219 maintained the 2026 start date for Scope 1 and Scope 2 reporting, but °ä´¡¸éµþ¡¯²õ implementation details have continued to evolve. In February 2026, the Board approved an initial regulation covering applicability, fees, and the first reporting deadline. CARB later withdrew the package it had submitted to the Office of Administrative Law to make limited clarifying changes and resubmit it.

As part of those changes, from August 10 to November 10, 2026. CARB expects to publish additional reporting guidance, including information about a voluntary online intake platform, by September 1, 2026.

At a , CARB also presented updated proposals for reporting in 2027 and beyond. These include a five-category Scope 3 phase-in, limited assurance for Scope 1 and Scope 2 emissions, and more detailed requirements for emissions calculations, methodologies, data limitations, and recalculations. These concepts remain proposals and are subject to the formal rulemaking process.

? Are you ready for SB 253 &?SB?261? Gain practical tips with our on-demand webinar featuring Albertsons.

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Here¡¯s what you need to know about the two policies:

SB 253: The Climate Corporate Data Accountability Act

The passage of the represents a milestone in the establishment of mandatory emissions reporting regulations. The law requires large public and private US-based organizations that do business in California to disclose their greenhouse gas emissions in accordance with the GHG Protocol. The policy applies to US-based partnerships, corporations, limited liability companies, and other entities with operations in California and annual gross revenue of more than $1B USD ¡ª an estimated organizations.?

Under the law, impacted companies will need to report their full carbon inventories, including . This is pivotal, as scope 3 emissions often account for of an organization¡¯sclimate impact and are notoriously difficult to measure.?

CARB will oversee the program and with expertise in carbon accounting. Under the law, disclosures will ultimately be made available through a digital reporting platform in a format that is understandable and accessible to residents, investors, and other stakeholders. Companies that fail to comply may face administrative penalties of up to $500,000 per reporting year.?

For the first reporting cycle, CARB has proposed moving the Scope 1 and Scope 2 filing deadline from August 10 to November 10, 2026. The agency withdrew its initial regulation package to make limited clarifying changes, so the November deadline remains proposed until the amended regulation completes the rulemaking process.

The fiscal year covered by the first report depends on the company¡¯s fiscal year-end:

• Companies with a fiscal year ending between January 1 and February 1, 2026, will report data for the fiscal year ending in 2026.
• Companies with a fiscal year ending between February 2 and December 31, 2026, will report data for the fiscal year ending in 2025.

A company that follows the calendar year, for example, would generally report its 2025 Scope 1 and Scope 2 emissions.

Companies will not be required to use °ä´¡¸éµþ¡¯²õ draft reporting template or obtain third-party assurance for the initial report. They may submit an existing annual emissions report, information previously reported through another voluntary or regulatory program, or data entered using °ä´¡¸éµþ¡¯²õ optional template. CARB expects to publish additional reporting guidance and information about a voluntary online intake platform by September 1, 2026.

°ä´¡¸éµþ¡¯²õ also provides flexibility for the first reporting cycle. Companies may use Scope 1 and Scope 2 information they already possessed or were already collecting as of December 5, 2024. CARB has said it will not take enforcement action for incomplete reporting when a company makes a good-faith effort to comply and retains the relevant emissions data. This is an exercise of enforcement discretion, rather than an exemption from reporting.

Scope 3 reporting begins in 2027 and will cover the preceding fiscal year. At its July 2026 workshop, CARB staff proposed initially requiring five Scope 3 categories:

• Category 1: Purchased goods and services
• Category 3: Fuel- and energy-related activities
• Category 5: Waste generated in operations
• Category 6: Business travel
• Category 7: Employee commuting

The remaining ten categories would be voluntary for now, and CARB has not proposed a date for requiring all 15. Under the proposal, companies could exclude emissions or categories when the omission would not reasonably be expected to affect a user¡¯s understanding of the inventory, provided they disclose and explain those exclusions.

CARB also proposed requiring limited assurance for Scope 1 and Scope 2 emissions beginning with reports submitted in 2027. Additional proposals include more detailed disclosures about calculation methods, emission factors, data limitations, assumptions, and material methodology changes. Companies would report biogenic carbon dioxide separately from their Scope 1, Scope 2, and Scope 3 totals and disclose carbon credits, offsets, reductions, and removals separately from gross emissions.

These requirements for 2027 and beyond remain proposals and are subject to formal rulemaking.

SB 261: The Climate-Related Financial Risk Act

The (SB 261) requires large businesses to prepare and submit a biannual climate-related financial risk report detailing the physical and transition threats they face as a result of climate change, as well as the measures they¡¯re taking to mitigate and adapt to those risks.

The bill applies to any US corporation or business entity with annual revenue over $500M USD that does business in California ¡ª a lower threshold than SB 253. Submissions will be reviewed by the , which will identify inadequate reports, as well as propose additional policy changes and best practices for disclosure.

According to its sponsors, SB 261 is used by the state¡¯s teachers¡¯ retirement fund (CALSTRS) and hundreds of major financial institutions. It aims to protect consumers and investors from losses due to climate-related disruptions to supply chains, workforces, and infrastructure, which are increasing as climate change worsens.

The bill also addresses the financial risks businesses could face if they are unprepared for the transition to a low-carbon economy. For instance, automobile manufacturers who fail to prepare for consumer demand for electric vehicles will likely experience a decline in market share, resulting in revenue losses.

The initial round of climate risk disclosure reports was due January 1, 2026 under the statute, but that deadline is no longer enforceable. The Ninth Circuit granted an injunction in November 2025 pausing enforcement while a First Amendment challenge proceeds. CARB issued an Enforcement Advisory confirming it will not take action against entities that did not meet the January 1 deadline and will set a new reporting date after the appeal is resolved. Oral argument took place in January 2026; as of April 2026, the court has not issued a decision. Companies should maintain readiness to comply on relatively short notice if the injunction is lifted.

Why It Matters

California¡¯s climate disclosure package heralds a new era for corporate sustainability. Thousands of businesses will now have to publicly share their emissions profiles, which could lead to significant carbon reductions. The laws ratchet up the pressure on large corporations ¡ª the heaviest emitters of greenhouse gases ¡ª to decarbonize. Consumers and regulators will be able to readily identify companies that are falling behind and encourage them to take action. Moreover, the law will protect investors by exposing entities that are vulnerable to substantial climate-related financial risk.

Climate-forward companies stand to benefit from California¡¯s policies. If an organization has already been measuring and mitigating its emissions and climate risks, the new reporting framework will allow it to showcase those initiatives.?

Though the bills apply only to entities doing business in California, they reflect a global push for increased transparency in carbon accounting. This wave of climate disclosure laws includes the European Union¡¯s Corporate Sustainability Reporting Directive (CSRD) and .

These developments answer demand from investors for the consistent, comparable, reliable climate information they need to make informed decisions. As a growing number of companies make commitments to net-zero emissions, enhanced transparency allows stakeholders to assess whether they are greenwashing or genuinely making progress toward these commitments.

Complying with California¡¯s climate disclosure laws can also help companies build value. With accurate carbon data, teams can quickly identify hotspots such as high-emitting suppliers, along with opportunities to improve efficiency and reduce costs. The ability to provide investor-grade climate data can also help attract capital and create a competitive advantage: Many consumers are for sustainable brands and change their buying behavior to reduce their carbon footprints.

California¡¯s new laws make it the first state in the US to require climate transparency at this level, and other states are already following suit. California is also a major player in global markets ¡ª it is rapidly moving up the ranks to become the world's fourth-largest economy, . It has used its market muscle to push for global change before, most notably with its for automakers.

How did it happen?

In 2022, a bill similar to SB 253 faced a close call in the California Assembly, falling short by just one vote after opposition from powerful interest groups. Then the landscape shifted. In 2023, the coalition supporting disclosure ballooned, with heavy hitters like Microsoft, Apple, Adobe, Patagonia, and IKEA joining forces to endorseSB 253. At the same time, the intensity of disasters ravaging California fueled demand for climate action from impatient voters. Against this backdrop, more and more companies initiated voluntary disclosures, and a growing number of investors began demanding net-zero commitments and pushing for increased transparency about climate-related financial risks. This momentum helped push SB 253 and SB 261 over the finish line.?

It's not surprising that Sacramento is leading the charge on corporate climate accountability. In the last decade, California has been hit hard by wildfires, floods, and other climate-related disasters. Without prompt measures to reduce greenhouse gas emissions, the state¡¯s finances, economy, and environment are at risk.

? Sign up and access our on-demand webinar: Answers to your top questions on California¡¯s Climate Laws.

Prepare for GHG Emissions Reporting Under California's New Regulations

The world is rapidly shifting to a low-carbon economy, and California¡¯s climate accountability laws will further speed that transition. Businesses can respond by creating an action plan for climate disclosure now.?

If you¡¯re a large company operating in California, you will need to begin gathering emissions data in 2025 to meet reporting requirements in 2026.?

This data needs to be handled with the same level of care as your other financial data, which requires rigorous internal processes and controls. Â鶹ԭ´´¡¯s ensures that your emissions calculations are traceable, transparent, and reliable. We help you efficiently build auditable, investor-grade reports, so you can confidently disclose under California¡¯s laws ¡ª while preparing for future federal and global mandates.

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Learn more about how Â鶹ԭ´´ can help you get ready for SB?253 and SB?261.

SB?253 &?SB 261 FAQs

Is SB 253 reporting delayed?

The reporting program has not been postponed, but CARB has proposed a three-month extension for the first report. Scope 1 and Scope 2 reporting still begins in 2026, with the deadline proposed to move from August 10 to November 10, 2026. CARB has withdrawn the initial regulation package from the Office of Administrative Law to make limited clarifying changes and resubmit it. Companies should monitor °ä´¡¸éµþ¡¯²õ forthcoming guidance and final rulemaking materials while continuing to prepare for reporting.

Who does SB 253 and SB 261 apply to?

Under °ä´¡¸éµþ¡¯²õ initial regulation, exemptions include tax-exempt nonprofit or charitable organizations; federal, state, and local government entities and companies that are majority-owned by government entities; businesses whose only California activity consists of wholesale electricity transactions; and businesses whose only California activity consists of employee compensation or payroll expenses, including teleworking employees.

Insurance companies are exempt from SB 253 reporting in 2026. However, CARB staff have proposed bringing insurers into the program beginning in 2027. Under the proposal, insurers could submit the same emissions report to CARB and the California Department of Insurance, provided it satisfies all SB 253 requirements, and supplement it where necessary. Insurers would remain exempt from SB 261, as provided by the statute.

What does ¡°doing business in California¡± mean under SB 253 and SB 261?

CARB has proposed aligning with California Revenue & Taxation Code ¡ì23101 and defining ¡°doing business in California¡± for this program as:

• actively engaging in transactions for financial gain (per ¡ì23101(a)); and
• meeting specific criteria under ¡ì23101(b), including being organized/commercially domiciled in California or exceeding the sales threshold (°ä´¡¸éµþ¡¯²õ FAQ notes that property and payroll tests are not included in staff¡¯s proposed definition for these programs).

If we do little business in CA (below the revenue threshold) but exceed the benchmark globally, are we required we disclose?

The bill defines a ¡°reporting entity¡± as a US-based entity with $1B USD in total annual revenue, not just revenue within the US. Please see SEC. 2, Section 38532 of the bill text. Further detail as to the interpretation of ¡°reporting entity¡± and other definitions in the bill are expected to be fleshed out in the implementing regulations to be adopted by CARB.

When are the first disclosures due?

• SB 253:
  • Scope 1 & 2:?CARB has proposed a November 10, 2026, deadline, replacing the previously approved August 10 deadline. Entities with a fiscal year ending on or before February 1, 2026 report FY25¨C26 data; those with a fiscal year ending after that date report FY24¨C25 data.
  • Scope 3: Reporting begins in 2027 for the preceding fiscal year. CARB staff have proposed initially requiring Categories 1, 3, 5, 6, and 7, with the other ten categories remaining voluntary for now.
  • Assurance: No limited assurance is required in 2026. Limited assurance for Scope 1 and 2 begins in 2027 under proposed standards including ISSA 5000, ISAE 3000/3410, AICPA AT-C 210/205, AA1000AS v3, and ISO 14064-3.

• SB 261:
  • Climate risk reports are due January 1, 2026 in statute, and then every two years. CARB has stated it will not enforce the January 1, 2026 deadline due to a court injunction and will provide an alternate date after the appeal is resolved.

What kind of assurance is required?

• SB 253:
  
  • Scope 1 & 2: No assurance required in 2026. Limited assurance begins in 2027 under proposed standards that include ISSA 5000, ISAE 3000/3410, AICPA AT-C 210/205, AA1000AS v3, and ISO 14064-3.
  • Reasonable assurance is required by 2030.
  • Scope 3 assurance requirements and the transition from limited to reasonable assurance are expected to be addressed in subsequent rulemaking.
• SB 261 does not currently require third-party assurance, but disclosures must be complete, specific, and decision-useful.

Where do SB 261 reports need to be submitted?

SB 261 reports must be published on a company¡¯s website. In addition, companies must post the URL to their report in a public docket that CARB will open on December 1, 2025, and keep open until July 1, 2026.

Can we use our parent company¡¯s emissions report if it¡¯s based outside the U.S.?

Yes, it is expected that this will be accepted as long as you are including the emissions from the subsidiary doing business in CA as well. Keep in mind that only US entities are in-scope, so you¡¯ll need to evaluate whether the parent or the subsidiary is in scope first.

Will the inaugural 2026 SB 261 report need to cover 2024 and 2025? And each biannual report thereafter with a two-year look back?

CARB has stated that companies may use data from FY2023¨C2024 or FY2024¨C2025 in their initial SB 261 disclosures, depending on availability. Reports will be required biennially after that.

What fees will companies pay?

CARB is that would assess annual fees on reporting entities (SB 253) and covered entities (SB 261). The proposed regulation establishes a framework for calculating fees annually and includes CPI-based adjustments starting after the base year. Specific fee amounts are not fixed in statute and would be set through °ä´¡¸éµþ¡¯²õ fee program.

What measures / fines are in place for non-What are the penalties for non-compliance with SB 253 or SB 261?

• For SB 253 penalties are defined as up to $500,000 per year. There is a Scope 3 safe harbor if disclosures are made in good faith with reasonable basis
• For SB 261, penalties are defined as up to $50,000 per year
• CARB has referenced its , clarifying that no penalties will be imposed in 2026 for SB 253 as long as companies demonstrate a "good faith effort" in preparing their disclosures.

Will SB 253 impact small businesses?

Companies under $1B USD in revenue will not be directly subject to California SB 253. However, we expect that the inclusion of scope 3 in the law will lead to increased pressure throughout value chains for scope 1 and 2 emissions disclosures, as these help larger companies report on scope 3. Many large companies , with minimal reported burden on small businesses.?

What should companies do now to prepare?

Here are a few recommended steps to help you get started:

• Start collecting emissions data aligned to GHG Protocol standards (for SB 253).
• Identify and assess material climate-related risks using the TCFD framework (for SB 261).
• Build internal collaboration between sustainability, finance, legal, and risk teams.
• Invest in technology that ensures transparency, auditability, and data ownership.
• Document your processes, assumptions, and any data limitations to support a good faith compliance posture.
• Evaluate which organizational boundary approach (equity share or control) best fits your corporate structure, as CARB will require entities to disclose and explain their selection.
• Assess which GHG accounting methods ¡ª spend-based, activity-based, supplier-specific, or hybrid ¡ª you'll use for each Scope 3 category, and begin documenting your rationale.
• Review CARB's three proposed Scope 3 reporting options to understand which categories may apply to your sector in 2027.
• Begin identifying assurance providers familiar with CARB's proposed standards (ISSA 5000, ISAE 3410, AICPA AT-C 210/205, ISO 14064-3) to avoid capacity bottlenecks ahead of the 2027 assurance requirement.