In late February 2026, the California Air Resources Board (CARB) unanimously approved initial regulations implementing the state’s landmark climate disclosure laws, Senate Bills (SBs) 253 and 261. These new rules establish who must comply, what must be reported, and deadlines for thousands of companies doing business in California. Here’s what every organization operating in California needs to know.
New compliance requirements and deadlines
SB 253 (Climate Corporate Data Accountability Act):
- Applies to companies with over $1 billion in annual revenue that do business in California.
- Requires annual public reporting of greenhouse gas (GHG) emissions. The first report, disclosing scope 1 and 2 emissions from the prior fiscal year, is due August 10, 2026.
- Starting in 2026, organizations must also obtain independent third-party assurance on their scope 1 and 2 disclosures at a limited assurance level (meaning an independent review but not a full audit).
- Reporting of full scope 3 (value chain) emissions will be phased in starting in 2027, with scope 3 assurance requirements (i.e., mandatory independent review of those disclosures) expected to phase in through 2030.
SB 261 (Climate-Related Financial Risk Act):
- Applies to companies with over $500 million in annual revenue doing business in California.
- Requires biennial reports on climate-related financial risk (similar to Task Force on Climate-related Financial Disclosures [TCFD]-style disclosures).
- The first climate risk report was originally scheduled for January 1, 2026, but enforcement is currently paused by a court injunction amid ongoing litigation.
- For now, SB 261 reporting is voluntary, though CARB notes that more than 120 companies have already submitted climate risk reports voluntarily (read SB 261 Update: How the Ninth Circuit Ruling Affects Climate Reporting).
Exemptions: The laws exclude certain entities, including tax-exempt nonprofits and government entities as well as companies in the insurance sector (which are regulated separately by California’s Department of Insurance).
Fees and enforcement: To fund these programs, CARB will assess annual flat fees on in-scope companies (invoiced each September with 60 days to pay). Regulators have emphasized a supportive approach in the initial year, promising “enforcement discretion” for first-year reports submitted in good faith. However, noncompliance can still lead to penalties of up to $500,000 per year for SB 253 and $50,000 per year for SB 261, so organizations are strongly encouraged to start preparing now.
Climate transparency is now a regulatory requirement for most large organizations in California. These rules are designed to ensure that investors, customers, and the public get consistent, reliable information on companies’ carbon footprints and climate risks.
“What used to be ‘best practice’ in sustainability is fast becoming the baseline expectation. New regulations, from California laws to international standards, are raising the bar for data quality, transparency, and action on climate.”
-Desmond Zheng, MSSE, Consultant specializing in GHG reporting carbon reduction strategies
How to get ready for 2026
Organizations impacted by SB 253 and SB 261 should begin compliance preparations now. This includes measuring current GHG emissions (Scopes 1, 2, and 3), improving data collection and management systems, and conducting thorough climate-related financial risk assessments (read Demystifying scope 1, 2, and 3 emissions).
Need help? BSI’s sustainability experts have been closely tracking California’s climate disclosure rules and helping organizations prepare for compliance. Our team can guide you through emissions inventory development, climate risk reporting, data verification, and planning best practices.
Meet our experts:
Gouri Ganbavale, PhD, Senior Consultant specializing in climate science: Gouri has 10 years of experience in climate risk assessments; environmental, social, and governance (ESG) analysis; carbon credits; energy policies; and GHG accounting.
Desmond Zheng, MSSE, Consultant specializing in GHG reporting carbon reduction strategies: Desmond has experience in sustainable engineering and renewable energy and has supported organizations in developing GHG inventories and management plans.
