COMPLIANCE

California Climate Disclosure Regulations

Affecting approximately 10,000 companies, the California Senate bills require companies that do business in California to report on their emissions, climate risks, and carbon offsets.

Last updated: 7 March 2025

COMPLIANCE

California Climate Disclosure Regulations

Governor Gavin Newson signed SB 253 and SB 261 into law in October 2023, forming part of California's "Climate Accountability Package." Although there have been several lawsuit challenges, the Court's dismissal of complaints in February 2025 bodes well for the survival of SB253 and SB261.

SB 253

Requires businesses with annual revenues of more than $1B that do business in California to disclose:

Scope 1 and Scope 2 GHG emissions, starting in 2026

Score 3 GHG emissions, starting in 2027

SB 261

Starting January 1, 2026, SB 261 applies to businesses with annual revenues of more than $500M that do business in California and mandates:

Disclosure of climate-related financial risks

Mitigation measures taken to address such risks

Legislation Updates: SB219

In September 2024, Newsom introduced limited amendments to SB253 and SB261 that were ultimately enacted as California Senate Bill 219 (SB219). Some key amendments include:

Parent-Level Reporting Consolidation

SB261 stated consolidation (and reporting) at the parent-level if both a parent and one or more of its subsidiaries fell within the scope of SB261.

Amendment: SB219 clarified that companies subject to SB253 can also consolidate at the parent-level.

Extended Rulemaking Deadline

SB253 required the California Air Resources Board (CARB) to develop and adopt implementing regulations by January 1, 2025.

Amendment: Under SB219, this deadline has been extended to July 1, 2025.

Scope 3 Reporting Flexibility

SB253 required reporting entities to disclose Scope 3 GHG emissions within 180 days of Scope 1 and 2 disclosures.

Amendment: SB219 allows CARB to set this deadline at its discretion. However, the Scope 3 GHG emissions disclosures are still required to be made during in 2027.

CARB's Use of Third-Party Organizations

Originally, CARB was required to engage a third-party organization to undertake certain duties to develop a reporting program to receive disclosures under SB253.

Amendment: Under SB219, CARB has flexibility and may (but isn't required to) engage a third-party organization to undertake certain duties.

Set a plan in action today as regulations approach

If you haven't started sustainability reporting, now is the time to start preparing for upcoming compliance requirements.

Stay Informed

Review whether you have to comply with CCDAA and/or other sustainability-related requirements and legislation (e.g. CSRD, SEC) and monitor compliance timelines.

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Engage Stakeholders

Proactively engaging stakeholders with materiality assessments can enhance relevance and effectiveness within your sustainability strategy.

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Build a Sustainability Roadmap

Start developing your sustainability roadmap with an approach that is the right-size for your company to ensure you meet compliance requirements.

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