California’s 2026 Climate Reporting: What You Need To Know
This blog was originally posted on 29th July 2025 and was updated on 3rd April 2026. Further regulatory developments may have occurred after publication. To keep up-to-date with the latest compliance news, sign up to our newsletter.
AUTHORED BY ALEX LI, REGULATORY COMPLIANCE SPECIALIST, AND CORINE LAURIJSEN, SENIOR REGULATORY COMPLIANCE SPECIALIST AND TEAM LEAD, COMPLIANCE & RISKS
Key Insight
California’s SB 253 and SB 261 require U.S. companies doing business in California to disclose greenhouse gas emissions and climate-related financial risks, with the first Scope 1 and 2 emissions reports due August 10, 2026. While enforcement of SB 261 has been temporarily paused pending a court appeal, SB 253 deadlines are confirmed and companies should begin preparing now. CARB is actively finalizing regulations and seeking public input through April 2026.
Table of Contents
- Introduction
- SB 253 – Reporting of Greenhouse Gas Emissions
- SB 261 – Disclosing of Climate-Related Financial Risk
- SB 219 and Next Steps for Climate Disclosures in California
- Key Takeaways
- Frequently Asked Questions
Introduction
In 2023, the US State of California enacted two important climate disclosure laws:
- Senate Bill (SB) 253, the Climate Corporate Data Accountability Act on reporting of greenhouse gas emissions scope 1, 2 and 3; and
- SB 261, the Climate Related Financial Risk Act on disclosing climate-related financial risk and measures adopted to reduce and adapt to this risk.
In 2024, the Acts were amended by SB 219, and in 2025, the California Air Resources Board (CARB) started an informal information-gathering for the development of regulations implementing the Acts.
As the first reporting period approaches, this blog will review the requirements and deadlines for reporting entities based on the Acts. It will also provide updates on the enforcement status and implementing rules on the Acts along with CARB’s rulemaking intents.
SB 253 – Reporting of Greenhouse Gas Emissions
Who Does SB 253 Apply To?
SB 253 applies to United States companies (“reporting entities”) with total annual revenues in excess of one billion dollars ($1,000,000,000) and that do business in California.
The applicable revenue shall be determined by the lesser of the entity’s two previous fiscal years of revenue. The interpretations of “doing business in California” and “revenue” shall be in line with subsections 23101(b)(1) or 23101(b)(2) and section 25120(f)(2) of the California Revenue and Taxation Code, according to the Initial Regulation on SB 253 enforcement approved by CARB in February 2026.
What Needs to Be Reported Under SB 253?
Under SB 253, the following greenhouse gas emissions need to be reported:
- Scope 1 emissions – all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.
- Scope 2 emissions – indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.
- Scope 3 emissions – indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control and may include, but are not limited to, purchased goods and services, business travel, employee commutes, and processing and use of sold products.
A reporting entity must obtain an assurance engagement, performed by an independent third-party assurance provider, of the entity’s public disclosure.
When Does SB 253 Reporting Start?
The Act states that starting in 2026 on or by a date to be determined by CARB, and annually thereafter on or by that date, a reporting entity must publicly disclose to the emissions reporting organization, if contracted for services, or the state board, all of the reporting entity’s scope 1 emissions and scope 2 emissions for the reporting entity’s prior fiscal year, and obtain an assurance engagement of the public disclosure. The deadline for 2026 reporting has been set at August 10, 2026 as per the CARB-approved Initial Regulation.
Starting in 2027 and annually thereafter, a reporting entity must publicly disclose its scope 3 emissions for the prior fiscal year on a schedule to be specified by CARB as part of the regulations. CARB is currently in the process of consulting on its proposals on Scope 3 implementation rules, included in which are organizational boundary setting, approaches for phased-in or broad applicability of reporting, applicable assurances standards, among others.
How Should GHG Emissions Be Measured and Reported?
Beginning in 2026, a reporting entity shall measure and report its emissions of greenhouse gases in conformance with the Greenhouse Gas Protocol standards and guidance, including:
- Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard developed by the World Resources Institute and the World Business Council for Sustainable Development,
- Technical Guidance for Calculating Scope 3 Emissions that detail acceptable use of both primary and secondary data sources, including use of industry average data, proxy data, and other generic data in its scope 3 emissions calculations.
CARB is currently consulting on how flexibility can be introduced into applying the GHG accounting methods, including spend-based, activity-based, supplier-specific or hybrid approaches and other potential alternatives.
Reporting Format and Fee Structure
CARB has issued a draft template for Scope 1 and 2 emissions reporting under SB 253 in October 2025 which is intended as a voluntary formatting guidance for 2026 reporting. CARB reiterated in the March 2026 public workshop that the use of this template is still voluntary and it is in the process of seeking public feedback to improve the current format.
The fee structure for SB 253 reporting entities is provided in the Initial Regulation approved by CARB in February 2026, which shall be finalized soon. Each entity will receive a written fee determination notice on which the amount due shall be provided by September 10 of each year. The entity will have 60 days following the receipt of the notice to pay and violations may result in late fees and other penalties.
Want to dive deeper into global sustainability trends? Watch our on-demand webinars on Asia’s ESG & Sustainability Landscape: Compliance Essentials for 2025 and ESG Regulatory Developments in the US.
SB 261 – Disclosing of Climate-Related Financial Risk
Who Does SB 261 Apply To?
SB 261 applies to United States companies (“covered entities”) with total annual revenues in excess of five hundred million dollars ($500,000,000) and that do business in California.
A covered entity does not include a business entity that is subject to regulation by the Department of Insurance in California, or that is in the business of insurance in any other state.
What Needs to Be Disclosed Under SB 261?
A covered entity needs to disclose its climate-related financial risks. This means the material risk of harm to immediate and long-term financial outcomes due to physical and transition risks, including, but not limited to, risks to
- Corporate operations
- Provision of goods and services
- Supply chains
- Employee health and safety
- Capital and financial investments
- Institutional investments
- Financial standing of loan recipients and borrowers
- Shareholder value
- Consumer demand, and
- Financial markets and economic health
SB 261 Reporting Timeline and Current Enforcement Status
According to the Act, covered entities shall prepare the climate-related financial risk report and publish a copy on its own website on or before January 1, 2026 and biennially thereafter.
On December 1, 2025, the California Air Resources Board (CARB) issued an Enforcement Advisory stating that, based on a Ninth Circuit Court of Appeals Order of November 18, 2025, it will not enforce Health and Safety Code section 38533 (Submission of Climate-Related Financial Risk Reports) against covered entities for failing to post and submit reports by the January 1, 2026, statutory deadline.
For entities that may choose to report voluntarily at this time, CARB has opened a public docket starting December 1, 2025. According to CARB, more than 120 reports have been submitted under the docket by February 2026. CARB indicated that it will provide further information – including an alternate date for reporting, as appropriate – after the appeal is resolved.
How Should Climate-Related Financial Risk Be Disclosed?
Under SB 261, the following information needs to be reported in the form of a climate-related financial risk report biennially:
- Climate-related financial risk in accordance with the TFCD Final Report of Recommendations (June 2017) or its successors or other equivalent reporting frameworks;
- Measures adopted to reduce and adapt to the disclosed climate related financial risk.
If a covered entity cannot submit its report in accordance with the accepted frameworks outlined above, it shall instead provide the recommended disclosures to the best of its ability as well as describe in detail the reporting gaps and next steps in addressing them.
A covered entity is considered to have satisfied the reporting requirement if it prepares a publicly accessible biennial report which includes the relevant climate-related financial risk information disclosed in accordance with a law or regulation incorporating disclosure requirements consistent with SB 261 or voluntarily using a framework that meets the requirements, including the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards as issued by the International Sustainability Standards Board (ISSB).
SB 219 and Next Steps for Climate Disclosures in California
What Changes Does SB 219 Introduce to Climate Reporting?
SB 219 does not change the overall reporting timeline and requirements as prescribed in SB 253 and SB 261. It does, however, introduce several notable changes that have implications on how climate reporting may be carried out and regulated in California. Specifically, SB 219:
- Delays the requirement that CARB shall adopt regulations from 1 January, 2025 to 1 July, 2025 [actual finalized CARB Regulations expected in April/May 2026 due to backlog];
- Authorizes, rather than requires, CARB to contract with an emissions reporting organization to develop a reporting program to receive required disclosures and make certain required disclosures publicly available;
- Requires that the regulations adopted by CARB require, among other things, a reporting entity to make the annual disclosure to either the emissions reporting organization or CARB;
- Requires the reporting entity under SB 253 to publicly disclose its scope 3 emissions on a schedule specified by CARB, rather than no later than 180 days after its scope 1 emissions and scope 2 emissions are publicly disclosed;
- Authorizes both greenhouse gas emissions and climate-related financial risk reports to be consolidated at the parent company level;
- Deletes the requirement that the annual entity’s fee be paid upon filing the disclosure.
Latest Updates from CARB on Enforcement and Rulemaking
As previously mentioned, CARB has already approved the Initial Regulation for enforcing SB 253 which clarifies the meaning of “revenue” and “doing business in California”, outlines the fee structure and confirms the August 10 reporting deadline for 2026. CARB is in the process of producing the final statement of reasons before submitting the rule for scrutiny by the Office of Administrative Law (OAL). While there is still work to be done, the August 10 deadline is essentially set in stone and reporting entities should be preparing their Scope 1 and 2 emissions data before CARB issues the detailed intake documents later. Companies may consult the initial list of reporting and covered entities for SB 253 and SB 261 published by CARB in September 2025 for their own reference also.
Back in December 2024, CARB issued an enforcement notice on SB 253 as amended by SB 219. It informs the public that CARB has decided to exercise enforcement discretion to refrain from enforcement action for incomplete reporting against entities, provided that they “make a good faith effort to retain all data relevant to emissions reporting for the entity’s prior fiscal year”, for the first report due in 2026. As per the notice, companies could use existing data gathered prior to the issuance of the notice for the initial emissions reports. This is, however, an indirect confirmation that CARB decided to proceed with the reporting deadlines as the Act originally prescribed.
CARB published a Frequently Asked Questions (FAQ) document on July 9, 2025 which was subsequently updated on November 17, 2025. The document addresses key concerns on both SB 253 and SB 261 rulemaking and enforcement, including CARB’s rulemaking process and plans, the current status with the Acts, applicability of the Acts, exemptions, and 2026 implementation specifics. CARB has indicated that it plans to update this FAQ document periodically to incorporate the latest developments and address common questions. Businesses are also encouraged to get in touch with CARB if they have specific queries in mind that do not appear in the FAQ.
The latest virtual workshop on SB 253 was held by CARB on March 23, 2026. During the workshop, CARB discussed the rulemaking progress up to February 2026 and clarified that for 2026 reporting the draft template for Scope 1 and 2 emissions and limited assurance are not required. CARB also sought to solicit feedback on proposed concepts for further rulemaking on 2027 reporting and beyond. Key topics include determining organizational boundaries, deciding on GHG accounting methods and approaches, adopting emissions factors standards, approaches to introduce Scope 3 emissions reporting, and assurance options. Comments on the proposals are welcomed until April 13, 2026.
Key Takeaways
Prepare NOW
It has been confirmed that companies that do business in California and fall under the climate reporting Acts will be required to begin reporting their greenhouse gas emissions in 2026, starting with Scope 1 and 2 emissions while the details for Scope 3 emissions are officially in the making. The deadlines are here to stay, so it is time to start preparing now using the GHG Protocol or similar frameworks.
Follow the Rulemaking
While the final rulemaking has only just been completed at the bare minimum for climate disclosures in California and companies that fall under either or both climate reporting programs face significant uncertainties, they are not helpless against the incoming regulatory developments.
Instead, as CARB has been actively seeking public input for the adopted regulations, businesses should take the initiative to voice their opinions and let their perspectives be heard. They are also advised to closely monitor the court decisions in relation to disclosures of climate-related risks and opportunities as new developments may emerge fast.
Seek Help
Well-planned and sufficient preparation, targeted and meaningful engagement as well as accurate and timely tracking of developments are all indispensable for ensuring compliance with the California climate disclosure programs and many more ESG reporting requirements. Regulatory compliance tools like C2P can help alleviate the heavy burden by always staying ahead of regulatory changes.
Frequently Asked Questions (FAQ)
- What is the deadline for the first SB 253 emissions report?
The deadline for 2026 reporting has been set at August 10, 2026, as per the CARB-approved Initial Regulation. This deadline is confirmed and reporting entities should be preparing their Scope 1 and 2 emissions data now. - What is the revenue threshold for SB 253 versus SB 261?
SB 253 applies to U.S. companies with total annual revenues in excess of one billion dollars ($1,000,000,000) that do business in California. SB 261 has a lower threshold, applying to U.S. companies with total annual revenues in excess of five hundred million dollars ($500,000,000) that do business in California. - Is enforcement of SB 261 currently active?
No. On December 1, 2025, CARB issued an Enforcement Advisory stating that, based on a Ninth Circuit Court of Appeals Order of November 18, 2025, it will not enforce the submission of climate-related financial risk reports against covered entities for failing to post and submit reports by the January 1, 2026 statutory deadline. CARB has indicated it will provide further information, including an alternate reporting date, after the appeal is resolved. - When will Scope 3 emissions reporting be required under SB 253?
Starting in 2027 and annually thereafter, a reporting entity must publicly disclose its Scope 3 emissions for the prior fiscal year on a schedule to be specified by CARB. CARB is currently consulting on Scope 3 implementation rules, including organizational boundary setting and GHG accounting methods. - Does SB 219 change the core reporting deadlines or requirements of SB 253 and SB 261?
No. SB 219 does not change the overall reporting timeline and requirements as prescribed in SB 253 and SB 261. It introduces procedural and operational changes – such as delaying CARB’s regulatory adoption deadline, authorizing parent-company consolidation of reports, and removing the requirement to pay fees upon filing – but the substantive obligations remain intact.
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