On December 9, 2025, the California Air Resources Board (CARB) introduced draft regulations for the state’s climate disclosure laws, specifically SB 253 and SB 261. These regulations aim to clarify how businesses disclose their climate-related data and financial risks.
The new rules include a fee structure and set the first reporting deadline for SB 253 on August 10, 2026. They define key terms like “doing business in California” and “revenue” to determine which companies need to follow these regulations.
Key Definitions
Doing Business in California: This means actively making money through transactions and meeting one of these criteria:
- The entity is based or registered in California.
- It has sales in California exceeding $735,019 or 25% of its total sales.
Revenue: This refers to “gross receipts” as per California tax laws and is calculated based on the lesser amount from the last two fiscal years.
Parent-Subsidiary Relationship:
- A Parent company owns or controls another company.
- A Subsidiary is a company controlled by a parent.
Fee Structure and Recordkeeping
Starting in 2026, covered entities will receive a fee determination each September. Fees must be paid within 60 days. Failure to pay on time results in late fees. Companies must keep records showing they meet the thresholds for five years and provide them to CARB upon request.
Upcoming Steps
CARB is planning a public hearing on February 26, 2026, to finalize these regulations. The public can comment until February 9, 2026. If significant changes occur, a new draft will be available for further public comment.
SB 261 Compliance Issues
Due to a recent court injunction against SB 261, CARB will not enforce this regulation for missed reporting deadlines as of January 1, 2026. They plan to set new deadlines after the legal situation is resolved, which is expected following a court hearing on January 9, 2026.
Insights and Context
Experts believe that effective climate reporting can enhance transparency and accountability among businesses. A recent survey found that nearly 70% of investors consider a company’s climate risk disclosures before making investment decisions. This reflects a growing trend where financial decisions are increasingly influenced by sustainability factors.
In a historical context, California is at the forefront of climate change legislation. When the state adopted its first climate regulations over a decade ago, many industry players were apprehensive. Today, however, those same regulations have led to innovation and growth in the green economy, helping businesses adapt to new market demands.
As these regulations develop, stakeholders are advised to stay informed about any changes and how they might affect compliance efforts.
