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 November 10, 2026.
- CARB will share more information on the voluntary online intake platform and accompanying guidance document by September 1, 2026.
- Starting in 2027, 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.
- Proposed reporting will include the top five most common Scope 3 categories (1, 3, 5, 6, and 7).
SB 261 (Climate-Related Financial Risk Act):
- Applies to US-formed business entities with more than $500 million in total annual revenue that do business in California.
- Requires biennial public reports disclosing climate-related financial risks and the measures implemented to reduce and adapt to those risks, in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations or an equivalent qualifying reporting framework.
- The first report was statutorily due January 1, 2026, but enforcement is currently paused under a Ninth Circuit injunction while the appeal remains pending.
While the Ninth Circuit’s injunction against enforcement of SB 261 remains in effect, entities may voluntarily submit their climate-related financial risk reports through CARB’s public docket.
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. SB 261 enforcement is currently paused under the Ninth Circuit injunction.
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.
