California’s Senate Bill 253 (SB-253) and Senate Bill 261 (SB-261) represent a major turning point for corporate climate accountability in the United States — but as of late 2025, they are moving on different implementation tracks.
SB-253 requires large companies doing business in California (generally $1B+ in annual revenue) to disclose greenhouse gas emissions on an annual basis, aligned with the GHG Protocol. CARB has proposed an initial Scope 1 and Scope 2 reporting deadline of August 10, 2026, with Scope 3 reporting expected to begin for reporting year 2027, subject to final regulations.
SB-261 is intended to require companies doing business in California with $500M+ in annual revenue to publish biennial climate-related financial risk reports aligned with TCFD-style frameworks. However, SB-261 enforcement is currently stayed, and CARB has confirmed it will not enforce the statute’s original reporting deadline while litigation is pending.
For enterprise sustainability leaders, CTOs, and legal teams, the takeaway is clear: SB-253 execution should be underway now — and SB-261 readiness should be treated as a strategic preparation window, so your organization can move quickly if enforcement resumes.
California SB 253: Climate Corporate Data Accountability Act
What are the reporting requirements for SB 253?
SB 253 will require reporting entities to report all Scope 1, 2, and 3 emissions from the prior fiscal year. Reports must comply with the Greenhouse Gas Protocol standards and guidance. These emissions are defined as follows:
- Scope 1 emissions: All direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.
- Scope 2 emissions: Indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.
- Scope 3 emissions: Indirect upstream and downstream greenhouse gas emissions, other than Scope 2 emissions, from sources that the reporting entity does not own or directly control and may include, but are not limited to, purchased goods and services, business travel, employee commutes, and processing and use of sold products.
Reports are expected to be verified by an independent, experienced third-party assurance provider. Under the phased approach set in statute — and subject to final CARB regulations — companies should plan for limited assurance for Scope 1 and Scope 2 emissions in the initial reporting cycles, with reasonable assurance phased in by 2030. Scope 3 reporting is expected to begin for reporting year 2027, with assurance expectations for Scope 3 phased later, consistent with CARB rulemaking.
Note on SB-261: California’s separate climate-risk law (SB-261) is designed to require biennial climate-related financial risk reports aligned with TCFD-style frameworks.
As of December 2025, SB-261 enforcement is stayed, and CARB has confirmed it will not enforce the statutory deadline while litigation is pending. Companies can use this period to align governance, scenario analysis, and reporting processes so they can respond quickly if enforcement resumes.
Leveraging the voluntary carbon market for residual emissions
As companies prepare in advance for SB 253 compliance and the disclosure of full Scope 1, 2, and 3 emissions, many are also exploring the role of the voluntary carbon market (VCM) in their broader decarbonization strategies.
While carbon offsets won’t replace the need for actual emissions reductions, high-quality credits—particularly those tied to nature-based or removal-focused projects—can serve as a supplemental tool to address unavoidable emissions.
For enterprise leaders, investing in the VCM now can not only support climate goals but also demonstrate proactive climate leadership ahead of mandatory reporting deadlines. Preparation should begin today to meet the demands of these impending requirements.
Which companies will be impacted by SB 253?
The reporting requirements of SB 253 will apply to any parent company as well as any partnership, corporation, LLC, or any other business entity formed in the US that:
- Had total annual revenues of more than $1 billion in the prior fiscal year, and
- Does business in California.
These criteria remain somewhat ambiguous, so it is important to stay abreast of the legislative guidelines and resources California is making available. It’s not clear whether the revenue threshold will include revenues of affiliates or how “doing business in California” will be determined.
It’s estimated that over 5,000 businesses will be impacted by SB 253, so it's critical that companies begin getting ready before these rules go into effect.
When do SB 253’s requirements begin?
CARB has proposed an initial Scope 1 and Scope 2 reporting deadline of August 10, 2026, subject to final regulations. Scope 3 reporting is expected to begin for reporting year 2027, reflecting the phased approach to value chain disclosure.
When Governor Gavin Newsom signed Senate Bill 261 (SB 261) into law in October 2023, he expressed concerns that the implementation deadlines were too tight for the California Air Resources Board (CARB) to effectively carry out its responsibilities under the bill. He indicated that the timelines might be infeasible and directed his administration to work with the legislature to address these issues.
How will SB 253 be enforced?
By 2026, CARB will create a public digital platform to access reports provided by reporting entities. Reporting entities must pay a fee in connection with implementation of SB 253. The fees will be deposited in a Climate Accountability and Emissions Disclosure Fund.
In addition to maintaining the disclosure platform, CARB will also verify data provided by reporting entities through a registry or experienced third-party auditor. If a reporting entity fails to file, files late, or otherwise violates reporting requirements, CARB is authorized to impose administrative penalties of up to $500,000 per year. However, penalties may only be imposed after a formal administrative hearing process.
For reporting of Scope 3 emissions, reporting entities are only subject to administrative penalties if they fail to file Scope 3 emissions disclosures altogether through 2030. After 2030, reporting entities are only subject to penalties with regard to Scope 3 disclosures if they were not made in good faith and with a reasonable basis. CARB will have substantial discretion to adjust oversight and penalties as Scope 3 reporting practices develop.
💡 Navigating proliferating ESG disclosures isn’t for the faint of heart. Check out our deep dive on how to streamline reporting using data as your superpower.
California SB 261: Climate-Related Financial Risk Act
What are the reporting requirements for SB 261?
SB 261 will require reporting entities to publish biennial (once every two years) public reports disclosing:
- Climate-related financial risks in accordance with the TCFD recommendations, and
- Measures adopted to reduce and adapt to these risks.
“Climate-related financial risks” are defined quite broadly – they include any “material risk of harm to immediate and long-term financial outcomes due to physical and transition risks.” This may apply to “risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, consumer demand, and financial markets and economic health.”
Reports that contain a description of an entity’s greenhouse gas emissions or voluntary mitigation of those emissions must be verified by an independent third-party provider.
Which companies will be impacted by SB 261?
The reporting requirements of SB 261 will apply to any company (including partnerships, corporations, LLCs, or any other business entity formed in the US) that:
- Had total annual revenues of more than $500 million in the prior fiscal year, and
- Does business in California.
The wording of these criteria is the same as in SB 253, and it is estimated that over 10,000 businesses will be impacted by SB 261.
When do SB 261’s requirements begin?
SB-261’s statute originally set an initial reporting deadline of January 1, 2026. However, as of December 2025, SB-261 enforcement is stayed, and CARB has issued an enforcement advisory confirming it will not enforce the statutory deadline while litigation is pending.
CARB has also opened a voluntary submission pathway during this interim period and is expected to provide updated timing guidance following resolution of the appeal.
How will SB 261 be enforced?
CARB will contract with a non-profit climate reporting organization to prepare a biennial public report on the climate-related financial risk disclosures made during that period. It will also identify any inadequate or insufficient reports.
SB-261 authorizes administrative penalties of up to $50,000 per year for non-compliance when enforceable. However, because enforcement is currently stayed, penalties are not currently being imposed. Companies should still treat SB-261 as a readiness priority given its alignment with investor expectations and global disclosure norms.
With that said, reporting entities that prepare public reports either voluntarily or as a result of a separate legal requirement will be deemed to have satisfied SB 261 as long as the reporting requirements are consistent with those in SB 261. For example, a reporting entity that voluntarily discloses information in compliance with other approved frameworks, including the ISSB standards, will be considered to be in compliance with SB 261. This is intended to avoid duplicative reporting requirements.
SB-253 is advancing — SB-261 is paused. Here’s how to plan.
How did the CCDAA and CRFRA get passed?
In January 2023, California Senators Scott Wiener and Henry Stern introduced SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act, to the California legislature as a part of the Climate Accountability Package. The bills passed in both the State Assembly and Senate with strong support. On October 7, 2023, Governor Gavin Newsom signed both bills into law.
The quick momentum of these bills reinforces California’s ambition to move forward with implementing climate disclosure rules while progress towards finalizing the SEC’s proposed climate-related disclosure rule has stalled. These bills will have major implications for thousands of companies doing business in California. Companies should begin preparing now for the implementation of these rules in the near future.
Has there been pushback to SB 253 and SB 261?
SB-253 and SB-261 have faced legal challenges, and as of late 2025 SB-261 enforcement is stayed pending appeal. While the underlying policy intent remains, implementation timing and enforcement posture may continue to evolve through litigation and CARB guidance. Companies should monitor developments closely while continuing to build durable, audit-ready disclosure capabilities.
These concerns are likely to be revisited during the rulemaking process, as agencies clarify the scope and format of required disclosures. However, supporters counter that the transparency requirements serve a compelling public interest and align with longstanding corporate disclosure norms regarding documenting material financial and non-financial corporate risks that have withstood constitutional challenges.
Get ahead of California’s climate disclosure mandates with Pulsora
Pulsora helps enterprise sustainability and technology teams streamline data collection, manage climate risk disclosures, and meet the complex reporting requirements of SB 253 and SB 261 with confidence.
From audit-ready GHG inventory management to TCFD-aligned risk reporting, our platform is purpose-built to handle the scale and complexity of enterprise compliance—without the spreadsheet chaos.
Pulsora helps enterprise sustainability and technology teams execute SB-253 emissions disclosure with audit-ready rigor — and stay prepared for SB-261 climate-risk reporting so you can activate quickly if enforcement resumes.
Schedule a demo to see how Pulsora can help your team get ahead of California’s climate mandates—and turn compliance into a competitive edge.
Regulatory status reflects publicly available guidance as of December 29, 2025 and remains subject to ongoing CARB rulemaking and litigation.
