On August 21, 2025, the California Air Resources Board (CARB) hosted its second virtual public workshop. The focus was on how to implement two key pieces of legislation: SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act. These laws are crucial for transparency around greenhouse gas emissions and climate-related financial risks.
CARB has been actively engaging with stakeholders. Earlier, on May 29, 2025, a workshop introduced these laws. An FAQ document was released on July 9, 2025, to clarify regulatory developments, while a draft checklist for compliance under SB 261 was shared on September 2, 2025.
Overview of SB 253 and SB 261
SB 253 mandates that large U.S. companies operating in California, with over $1 billion in annual revenue, reveal their Scope 1, 2, and 3 greenhouse gas emissions. On the other hand, SB 261 requires firms with over $500 million in revenue to generate biennial reports on their climate-related financial risks. This ensures that businesses are held accountable in managing their environmental impact.
One significant update from SB 219, which amended these laws, is that CARB will set a timeline for some Scope 3 emissions disclosures, expected to occur by 2027.
Who’s Affected?
The definition of “doing business in California” is still being refined. Currently, CARB is leaning toward a narrower definition. This could significantly affect which companies are required to comply.
Exemptions
Certain organizations may not be classified as “doing business” in California, including:
- Non-profits
- Companies whose only activity involves remote workers
- Government entities
- Those engaged in wholesale electricity transactions.
Defining Revenue
Initially, revenue was to be gauged by “gross receipts,” but CARB shifted to a broader definition, encompassing total global sales. This adjustment is in line with common practices in financial reporting.
Compliance Fees
At the recent workshop, CARB proposed a single fee for compliance, estimated at $3,106 for SB 253 and $1,403 for SB 261. Subsidiaries filing consolidated reports will incur separate fees.
Important Dates
- August 21 – September 11, 2025: Public comment period
- October 14, 2025: Proposed rulemaking notice
- November 30, 2025: Comment period ends
- December 11-12, 2025: CARB Board hearing to review proposed rules
Compliance Deadlines
For SB 253, companies must submit their Scope 1 and 2 emissions data by June 30, 2026. Meanwhile, SB 261 requires climate risk reports to be published online by January 1, 2026, and every two years thereafter.
Despite the absence of final rules, these deadlines stand firm. Importantly, the initial compliance cycle will not incur penalties as long as good faith efforts to comply are demonstrated.
Current Legal Landscape
Litigation against SB 253 and SB 261 has been ongoing. On August 13, 2025, a federal court denied a motion to halt these laws, emphasizing that reliable information supports investor interests.
Next Steps for Businesses
As the implementation deadline approaches, companies should:
- Evaluate their potential coverage under both laws.
- Compile necessary emissions and risk data from fiscal year 2025.
- Choose a reporting framework and assurance provider.
- Participate in public comment periods.
- Stay updated on CARB’s final rulemaking.
In summary, California’s regulations are pushing companies toward greater transparency regarding environmental impact and financial risk. This legislation reflects a growing global focus on sustainability in business practices.
For detailed information on these regulations, visit CARB’s official page.
