What you need to know about California climate disclosure regulations

California's climate disclosure laws, SB 253 and SB 261, require companies that meet defined thresholds to report greenhouse gas emissions (GHG) and climate-related financial risks.

• SB 253 mandates full-scope emissions reporting.
• SB 261 focuses on financial exposure to climate impacts across operations and supply chains.

Who needs to report?

U.S.-based public or private companies “doing business” in California — defined as having sales, employees or assets in California.

• SB 253: Companies with over $1 billion in annual global revenue.
• SB 261: Companies with over $500 million in annual global revenue.

When do you need to report?

• December 1, 2025 SB 261: California Air Resources Board (CARB) opens online submission portal
• January 1, 2026 SB 261: Companies to submit first climate-related financial risk reports
• 2026
  (exact date TBD) SB 253: Scope 1 & 2 emissions disclosures with limited assurance to be reported annually
• 2027 SB 253: Scope 3 emissions disclosures with limited assurance to be reported annually
• January 1, 2028 SB 261: Second climate risk disclosure due
• 2030
  SB 253: Reasonable assurance for Scope 1 & 2, limited assurance for Scope 3 SB 261: Third climate risk disclosure reports due January 1

How do you report?

Companies subject to these regulations will submit their reports via digital platforms provided by the CARB, which are expected to be available on their program page by late 2025.

For SB 261, CARB allows entities to use one of three frameworks when reporting on climate-related financial risks:

• Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
• International Financial Reporting Standards (IFRS) S2
• A report aligned with a regulated exchange or government entity.

Disclosures must include a summary that identifies the chosen framework, any omissions and the rationale for those omissions.

What do you need to include in your reports for CARB?

Reports for SB 253 must include Scope 1 & 2 and eventually Scope 3 emissions. First submissions require limited assurance, but over time will require reasonable assurance. See the timeline above for details.

SB 261 requires disclosure of climate-related financial risks and strategies for mitigation and adaptation. However, companies are not required to conduct quantitative scenario analyses or report Scope 1, 2 or 3 emissions under the Metrics and Targets section, allowing flexibility in how risks are assessed and communicated. See the checklist on this page for the minimum SB 261 requirements.

Why should you report?

According to CARB, the penalties for noncompliance by a qualifying entity are as follows for each bill:

• SB 253: Up to $500,000 per year for noncompliance (e.g., non-filing or late submissions).
• SB 261: Up to $50,000 per year for insufficient or missing reports.