Climate Disclosure Law Update

California Air Resources Board (CARB) held its third virtual workshop on the state’s climate disclosure mandates—SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act), both amended by SB 219. CARB introduced detailed updates on deadlines, definitions, exemptions, reporting requirements, and litigation status. Final regulations are expected in Q1 2026, and companies are urged to begin compliance preparation immediately.

Updated Compliance Deadlines

SB 253 – Greenhouse Gas Reporting

• Scope 1 & 2 submission deadline:

Extended from June 30, 2026, → August 10, 2026

SB 261 – Climate Risk Reporting

• Public posting deadline: January 1, 2026 (pending litigation)
• Submission to CARB: July 1, 2026

Regulatory Fees (Expected September 10, 2026)

• SB 253: ~$3,106 per entity
• SB 261: ~$1,403 per entity

Updated Important Definitions

Revenue

• Based on “gross receipts” (California Rev. & Tax Code §23120(f)(2))
• Verified via Franchise Tax Board (FTB) filings
• Unitary business groups: subsidiary revenue is rolled into the parent
• Threshold determined by the lower revenue of the last two fiscal years

Doing Business in California

CARB reverted to the narrower definition under Rev. & Tax Code §23101.

An entity qualifies if it:

• Is organized or commercially domiciled in California, or
• Meets any of the following:

o Sales > $735,019 (2024), including agent or contractor sales
o Verified through FTB Schedule R-1

Parent–Subsidiary Rules

• Follows Cap-and-Invest “direct corporate association”
• Parents may file consolidated reports, but each entity must independently determine applicability of SB 253/261

Exemptions & Proposed Exclusions

Statutory Exemptions

• Government and majority-owned government entities
• Insurance companies regulated in California or other states

CARB-Proposed New Exemptions

• Non-profit organizations (IRS tax-exempt)
• Entities with only teleworking employees in California

Updated Reporting Requirements

SB 253 – GHG Emissions Reporting

Fiscal Year Rules

• FY ending Jan 1 – Feb 1, 2026 → Use FY 2026 data
• FY ending Feb 2 – Dec 31, 2026 → Use FY 2025 data

If Not Collecting GHG Data Before Dec 5, 2024

• No need to submit 2026 Scope 1 & 2 data
• Must submit a company letter explaining non-collection

Assurance Requirements

• No limited assurance required for 2026
• Assurance phases in gradually; reasonable assurance expected by 2030

Reporting Template

• CARB updated the template
• Optional for 2026 submissions

SB 261 – Climate Risk Reporting

• January 1, 2026 deadline still in place (subject to injunction)
• Companies may use best available information, including FY 2023/24 or FY 2024/25
• CARB published an updated minimum-requirements checklist

Litigation Update

A coalition led by the U.S. Chamber of Commerce is challenging SB 253 and SB 261.

Ninth Circuit Order – November 18, 2025

• Temporary injunction: SB 261 enforcement paused pending appeal
• No injunction: SB 253 remains fully enforceable
• Oral arguments scheduled for January 9, 2026

Uncertainty continues regarding whether the injunction applies statewide or only to plaintiffs.

CARB’s Next Steps for 2026

CARB plans additional regulatory actions:

• Assurance and verification requirements
• Enforcement mechanisms
• Post-2026 recurring deadlines
• Updated reporting templates
• Scope 3 emissions reporting directives

What Companies Should Do Now

• Confirm whether the organization or subsidiaries fall under SB 253 or SB 261
• Begin collecting FY 2025/2026 GHG emissions data
• Prepare for SB 261 disclosure by January 1, 2026 (if injunction lifted)
• Monitor CARB’s final rulemaking in early 2026
• Track ongoing litigation and its potential impacts