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California has enacted the most expansive climate-reporting regime in force anywhere today. With SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act), the state now requires comprehensive climate disclosure from many companies that do business in or through California — including those far outside the U.S.
If your business sells into California, supplies customers there, or operates via distributors, you are now part of this compliance chain. These laws don’t only affect Fortune 500 companies — they pull in upstream suppliers and global exporters.
SB 253 — Climate Corporate Data Accountability Act
What It Does
SB 253 requires covered companies to publicly disclose greenhouse gas emissions across:
- Scope 1: Direct emissions from owned or controlled sources
- Scope 2: Indirect emissions from purchased energy
- Scope 3: All other upstream and downstream value-chain emissions
This makes the law one of the most comprehensive climate-disclosure requirements in the world.
Who’s In Scope
Covered entities include companies that:
- Do business in California, and
- Have global annual revenue greater than $1 billion
Foreign companies with U.S. subsidiaries or sales into California are included if they meet the revenue + “doing business” test.
What Must Be Reported
Companies must disclose:
- Scope 1, Scope 2, and Scope 3 GHG emissions
- Methodologies, data sources, assumptions, and quantification approach
- Plans for reduction and progress metrics
- Independent third-party assurance (verification) of reported data
Timeline & Enforcement
- 2026: First required disclosures for Scope 1 & Scope 2 (based on 2025 data)
- 2027: Mandatory Scope 3 disclosures begin
- Verification: Third-party assurance required for all reported emissions
- Administered by: California Air Resources Board (CARB)
- Administrative penalties: CARB may impose fines of up to $500,000 per reporting year for non-filing or materially inaccurate filings, with enforcement discretion guided by good-faith compliance.
Regulatory alignment: CARB has confirmed that reporting will align with:
- GHG Protocol
- TCFD framework
- ISSB S2 climate disclosure standards
CARB is also building a climate disclosure portal for data submission, with a public beta expected before formal filings begin.
December 2025 Update — SB 253 (Climate Corporate Data Accountability Act)
In December 2025, the California Air Resources Board (CARB) issued draft regulations and rulemaking materials implementing SB 253 alongside SB 261. These draft rules clarify key compliance mechanics, including definitions of “doing business in California” and revenue thresholds, and confirm that the proposed **initial reporting deadline for Scope 1 and Scope 2 emissions remains August 10, 2026, as first signaled by CARB’s guidance. CARB has also updated regulatory text with fee structures and terms that will govern SB 253 reporting and administration once finalized.
Unlike SB 261, SB 253 is still advancing through rulemaking and is not paused; companies in scope should continue preparing for required GHG emissions reporting in 2026.
SB 261 — Climate-Related Financial Risk Act
What It Does
SB 261 requires companies to disclose how climate change could affect their financial condition, and what actions they are taking to manage those risks.
Who’s In Scope
- Companies doing business in California
- With global annual revenues greater than $500 million
What Must Be Reported
Companies must disclose risks related to:
- Physical risks: heatwaves, wildfires, floods, droughts, and other climate impacts
- Transition risks: regulatory change, carbon pricing, shifting markets, technology transitions
- Governance and oversight: board-level awareness, risk management strategies, adaptation planning
Timeline & Enforcement
- 2026: First climate-risk reports due (covering 2025 data)
- Frequency: Biennial filings unless CARB updates exposure rules
- Framework: TCFD-aligned risk disclosures are required; companies may also draw from ISSB S2 or CSRD risk disclosures where consistent
- Administrative penalties: Up to $50,000 per reporting year for non-compliance
SB 261 is designed to integrate climate risk information into mainstream financial reporting in a way that investors and stakeholders can access publicly.
December 2025 Regulatory Update: SB 261 Enforcement Advisory
In December 2025, the California Air Resources Board (CARB) issued an enforcement advisory clarifying the implementation of SB 261 (Climate-Related Financial Risk Act) following federal court action.
On November 18, 2025, the Ninth Circuit Court of Appeals granted an injunction in Chamber of Commerce v. Sanchez, temporarily blocking enforcement of SB 261 while appellate proceedings are pending. The Ninth Circuit heard oral arguments on the appeal of the district court's denial of the preliminary injunction. A decision from the appellate panel is expected by mid-2026.
As a result:
- CARB will not enforce SB 261 for failure to submit climate-risk reports by January 1, 2026
- No administrative penalties will apply during the injunction period
- CARB will announce a revised reporting deadline once the appeal is resolved
- Companies may still submit voluntary disclosures, with CARB opening a reporting docket beginning December 1, 2025
This advisory pauses enforcement only. SB 261 remains valid law, and climate-related financial risk disclosures will still be required once the court process concludes.
For covered companies, this creates a narrow preparation window—not a compliance reset. Climate-risk governance, scenario analysis, and alignment with SB 253 emissions disclosures remain essential to avoid compressed timelines and credibility gaps when enforcement resumes.
Clarifying Note
This enforcement pause applies only to SB 261. SB 253 (Climate Corporate Data Accountability Act) is not affected and continues toward its original Scope 1–3 disclosure timelines.
The Dual-Track System: Disclosure + Risk
Together, SB 253 and SB 261 create a climate transparency framework that asks two complementary questions:
→ SB 253: How much carbon do you emit? → SB 261: How vulnerable is your business to climate change?
Both must be answered publicly, with robust data and clear governance.
Why Global Exporters and Suppliers Must Pay Attention
SB 253 and SB 261 don’t just affect companies with a California address — they create real compliance obligations for global supply chains:
- Scope 3 = Your footprint. If your company supplies to a California-covered entity, their Scope 3 calculations will pull in your emissions and data quality requirements.
- Indirect coverage is real. You can be compliant with local law yet still be required to provide verified data upstream.
- Cross-regulatory synergy. SB 253 and SB 261 draw heavily from EU Corporate Sustainability Reporting Directive (CSRD), ISSB S2, and TCFD, enabling companies to reuse climate datasets across regimes.
- Data curve risk. Building regulated-grade GHG inventories and documented risk frameworks typically takes 12–18 months — meaning teams should embed projects as early as 2025 if they want on-time 2026 filings.
2025 Action Plan for Compliance Teams
To prepare for compliance windows under SB 253 and SB 261:
- Map emissions data sources. Capture Scope 1, 2, and 3 sources — and validate gaps early.
- Engage suppliers now. Build automated workflows for emissions collection, materiality assessment, and assurance readiness.
- Integrate risk and data reporting. SB 253 and SB 261 require consistency between climate data and narrative risk disclosures.
- Secure verification partners. Independent assurance capacity will tighten once CARB finalizes attestation rules.
- Leverage existing ESG frameworks. Reuse CSRD, TCFD, and ISSB datasets to avoid duplication and reduce cost.
How Acquis Compliance Can Help
Acquis Compliance’s agentic platform automates climate and sustainability reporting at enterprise scale:
- GHG data collection from suppliers and internal operations
- Scope 1–3 calculation and audit-ready reports
- Integration with ESG, CSRD, and disclosure workflows
- Version control and risk-disclosure documentation
Book a demo to see how Acquis simplifies SB 253 and SB 261 compliance before CARB’s first filing windows open.
Final Takeaway
California’s climate laws are not just state policy — they are global supply-chain imperatives. Covered companies and their suppliers must move beyond voluntary ESG statements and build data-driven, audit-ready climate disclosures now.
Disclosure without data is compliance risk. SB 253 and SB 261 make that explicit.