As California pushes forward with ambitious climate goals, thousands of companies doing business in the state now face new environmental reporting requirements. Two new laws, known as SB 253 and SB 261, will affect about 5,400 organizations that operate in California. These rules apply to corporations, partnerships, LLCs, and other business entities with significant annual revenue.
Companies with over $1 billion in yearly gross revenue must follow SB 253’s greenhouse gas reporting rules. SB 261 casts an even wider net, requiring climate risk disclosures from companies with annual revenue above $500 million. Both public and private companies fall under these mandates if they do business in California.
Starting in 2026, affected companies must report their direct emissions (Scope 1) and purchased energy emissions (Scope 2). By 2027, they’ll also need to disclose their value chain emissions (Scope 3). These reports must follow specific GHG Protocol standards and will be publicly accessible.
The rules don’t just require reporting—they demand verification. Third-party experts must check Scope 1 and 2 emissions data starting in 2026. Initially, this verification will follow a “limited assurance” standard, but by 2030, companies must meet the more rigorous “reasonable assurance” standard.
The California Air Resources Board (CARB) will oversee the entire program, maintaining public records of all reports. CARB has established a public docket for report links that will be open from December 1, 2025, to July 1, 2026. Companies that don’t comply face civil penalties, though the state will show leniency in 2026 for businesses making a “good faith effort.”
The timeline moves quickly. Climate risk assessments must be prepared by the end of 2025. The first emissions reports for Scope 1 and 2 are due in mid-2026, with Scope 3 following in 2027. Companies must file climate risk reports every two years, with the first deadline set for January 1, 2026. Despite discussions about potential delays, California regulators have firmly maintained implementation dates for both laws.
These California regulations represent one of America’s most extensive attempts to track corporate contributions to climate change and assess related financial risks. This aligns with global trends where investment in renewable energy sources now outpaces fossil fuels by a ratio of 10 to 1.
References
- https://www.persefoni.com/blog/california-sb253-sb261
- https://www.scsengineers.com/update-californias-corporate-climate-and-ghg-disclosure-rules/
- https://www.klgates.com/Companies-Must-Prepare-for-Complying-With-Californias-Climate-Disclosure-Laws-Even-Though-California-Air-Resources-Board-Regulations-Are-Not-Final-8-29-2025
- https://ww2.arb.ca.gov/our-work/programs/california-corporate-greenhouse-gas-ghg-reporting-and-climate-related-financial
- https://ww2.arb.ca.gov/sites/default/files/2025-09/Climate Related Financial Risk Report Checklist.pdf
