California Regulations: SB 253, SB 261 and SB 219

/ GHG Emissions, Sustainability, Sustainability Strategy, Uncategorized / By

 The California Air Resources Board (CARB) is providing clarity on California regulations on which companies are covered, what is required, how to comply, and when compliance begins. See below for details on the regulations.

Bookmark this page for updates on the California 200s.

Timelines for future updates: Templates for GHG emissions reporting were released in October 2025. The proposed text of the final rules was released in December 2025 and will be finalized in February 2026.

Currently, SB 261 is on pause based on the Ninth Circuit’s ruling. Hearing for the case will be in January 2026. SB 253 implementation has not been paused. Deadline for SB 253 reporting is now August 10, 2026.

Here are 5 Steps to getting ready for California Regulations:

1. Confirm You Are in Scope

Companies doing business in California with a revenue of greater than $1 billion have to report under SB 253 and with a revenue greater than $500 million have to report to both SB 261 and SB 253.

Definition for doing business in California

To determine whether companies should be considered as ‘doing business’ in California, CARB will include any company that meets one of these criteria:

Actively engaging in any transaction for the purpose of financial or pecuniary gain or profit

AND one of the following conditions:

  • It is legally based or headquartered in California or
  • Its sales in California are above $735,019 (the 2024 threshold, adjusted for inflation each year), which includes sales through agents or contractors.

CARB will publish a list of companies it believes are in scope based on the Secretary of State’s list.

If a parent company and its subsidiaries together exceed $500 million per year in revenue and meet the test of “business in California,” the parent company can file one report covering all entities. Subsidiaries only need to file separately if they individually exceed the threshold and the parent does not consolidate reporting. CARB is encouraging one report per corporate family to avoid duplicate filings. Subsidiaries with non-US-based parent companies doing business in California are still in scope.

Exempted entities include non-profits, companies with only California-based teleworking employees, Government entities, and the CA Independent System Operator.

Revenue Calculations

Revenue is the total global amount of money or sales a company receives from its business activities, such as selling products or providing services. The definition does not deduct operating costs or other business expenses.

Practical Tips

  • Work with your finance team and legal team to understand the in-scope requirements.
    • Look out for CARB updates on the in-scope companies list.
    • Understand the parent-subsidiary reporting requirements to avoid duplicate filings and/or misunderstandings in filing responsibilities.
  • Engage with CARB’s rule-making process and stay aware of enforcement and regulatory requirements.
    • Participate in public comment.

2. Plan Your SB 261 & SB 253 Report

SB 261: Climate Risk Disclosures are due on January 1, 2026. – CURRENTLY PAUSED

SB 253: Scope 1 and Scope 2 Emissions are due August 10, 2026, and limited assurance is not required for 2026 reporting.

Practical Tips

  • Start Early and engage stakeholders
  • Choose the alignment framework (TCFD or IFRS S2). Are you already reporting aligned with an ESG frameworks? If so, identify overlaps and data gaps.
  • Plan your data collection strategy
  • Document internally any disclosure gaps and improvement plans
  • Choose your assurance partner

3. Build Your SB 261 & SB 253 Reports

SB 261 – Climate-Related Financial Risk Disclosure Program – Interim Guidance from CARB (8/21/2025)

CARB asserts that SB 261 is aligned with existing voluntary standards

For climate risk disclosures, the relevant sections of:

CARB Minimum Disclosure Requirements Guidance

“Good faith” disclosures include which reporting framework is being used, which disclosures are included and which are not, and a summary discussion of what the company is doing to mature its reporting.
– Disclose the framework that is used to create the report. For the framework used, discuss which disclosures have been met and which have not. Include discussion and plans for future disclosures.

– Risks AND opportunities are to be evaluated and included per TCFD and IFRS’s definitions.
– “Not including CSA in the initial report is OK. CSA will not be part of minimum requirements CARB is looking for…if you have it, that is great. But it is not part of this initial CARB requirement”.
– A qualitative Climate Scenario Analysis is sufficient for initial reporting.
– Disclose best available data (even if that data is from 2024).
– A company may omit its GHG inventory in its initial 261 report, but must report it by the deadline of 253 if in scope.

The report must be posted to the company website by January 1, 2026. It was implied that a microsite with the report is not acceptable. CARB will open a docket for companies to share the report link on December 1, 2025.

SB 253 – The Climate Corporate Data Accountability Act -Interim Guidance (8/21/2025)

Scope 1 and Scope 2

  • Scope 1 and 2 data must be from 2025 Fiscal Year
  • Third party limited assurance is required from 2027, and is not required for 2026
  • Due date for Scope 1 and 2 limited assurance is August 10, 2026
  • Reasonable assurance for Scope 1 and 2 starts in 2030

Scope 3

  • Scope 3 data to be included in 2027 disclosure for FY 2026
  • Proposed limited assurance for Scope 3 by 2030

4. Complete Assurance Requirements

No explicit assurance is currently required for SB 261.

SB253 requires companies to obtain limited assurance for their Scope 1 and Scope 2 emissions starting in 2027, transitioning to reasonable assurance by 2030. Limited assurance on Scope 3 will begin in 2030.

Limited assurance involves a review of data and processes to determine whether anything appears materially misstated. It is less rigorous than reasonable assurance, which requires a more in-depth audit and testing of controls, data sources and methodologies. 

To meet assurance requirements companies should:

  • Collect robust and accurate emissions data identifying any gaps and estimates used in data collection
  • Use methodologies aligned with standards like the Greenhouse Gas Protocol to compute emissions and
  • Document internal controls and processes to ensure data accuracy and credibility

CARB is exploring third-party limited assurance standards such as ISSA 5000, AA1000, ISO 14060. CARB has not explicitly stated assurer requirements yet. CARB will share templates for submission in September

5. Publish & Submit Your Reports

Publish on the company website and submit the link via the CARB portal. SB 261 reports need to be updated every 2 years after the first report.

Annual fees

The proposed implementation fee is $3,106 (253) and $1,403 (261) per covered entity (adjusted annually). These are annual fees to cover program costs.
o Annual fees are due per subsidiary.

References

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