California SB 253 and SB 261: The 2026 Climate Disclosure Compliance Guide

California's climate disclosure laws are now live obligations, not proposals. The first SB 261 climate risk reports were due January 1, 2026, a federal court paused enforcement days beforehand, and close to 100 companies filed anyway, while SB 253 greenhouse gas reports are due to the California Air Resources Board (CARB) on November 10, 2026.

This guide is deadline-first: who is in scope, what must be filed and when, what the first wave of SB 261 reports teaches, where the litigation stands as of July 2026, and what to do between now and November.

Where do SB 253 and SB 261 stand right now (July 2026)?

The story since 2023 is CARB rulemaking racing litigation. California enacted the two laws in October 2023 and amended both in September 2024 through SB 219, which gave CARB more scheduling flexibility, allowed subsidiaries to report through a parent company on a consolidated basis, and decoupled fee payment from filing.¹²

On the rulemaking side, CARB issued a December 2024 enforcement notice promising good-faith leniency for the first SB 253 cycle, published a voluntary Scope 1 and 2 reporting template in October 2025, released FAQs and a climate-risk report checklist, and unanimously adopted its initial regulation, the California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation, on February 26, 2026.^3,5 On June 24, 2026, CARB announced limited clarifying amendments and moved the first SB 253 deadline from August 10 to November 10, 2026.⁴ A second rulemaking, expected later in 2026, will settle details beyond 2027, including Scope 3 specifics and assurance standards.⁵

On the litigation side, the US Chamber of Commerce's First Amendment challenge produced a split result: on November 18, 2025 the Ninth Circuit enjoined enforcement of SB 261 pending appeal but declined to enjoin SB 253.⁹ No decision has issued since, so SB 261 reporting remains voluntary while SB 253 remains fully enforceable.^10,6

The practical read: the next binding date is November 10, 2026, and nothing in the courtroom is likely to move it.

What is the difference between SB 253 and SB 261?

One is a data law; the other is a narrative law. SB 253, the Climate Corporate Data Accountability Act, requires an annual, independently assured greenhouse gas inventory filed with CARB. SB 261, the Climate-Related Financial Risk Act, requires a biennial report, published on the company's own website, describing climate-related financial risks and the measures adopted to reduce and adapt to them.⁶ The two are often conflated, but a company over $1 billion in revenue is almost always subject to both.

Both laws test total global revenue, not California revenue: measured, under CARB's regulation, as the lesser of the two most recently completed fiscal years.³ Both permit consolidated reporting, so a qualifying subsidiary can be covered by its parent's filing.¹²

Who must comply? What does "doing business in California" actually mean?

This is where companies headquartered in Texas, New York, London, or Tokyo get caught. Neither law requires incorporation, headquarters, or an office in California. Under the February 2026 regulation, an entity "does business in California" if it engages in any transaction for financial gain in the state and either (a) is organized or commercially domiciled there, or (b) has California sales exceeding an inflation-adjusted threshold, $735,019 for 2024.³

Read that threshold again: roughly $735,000 of California sales. For a company with $1 billion in global revenue, that is 0.07% of turnover. A distributor with one large California customer, a SaaS company with a few hundred California subscriptions, or a manufacturer selling through a California reseller can all qualify. Here is the two-part test for a typical mid-cap:

A $1.2B-revenue company with $50M of California sales clears both revenue thresholds and the $735,019 sales gate 68 times over, both laws apply, wherever it is headquartered.

In practice, the operative question for most large US companies is not "do we do business in California?" but "are we over the revenue line?"

Which companies are exempt or treated differently?

The regulation carves out nonprofits, government entities, and companies whose only California activity is teleworking employees. Insurance companies are exempt from SB 261 by statute; CARB maintained that exemption while directing staff to coordinate with the California Department of Insurance on equivalent reporting.^7,3

Everyone else over the line, private equity portfolio companies, family-owned businesses, US-formed subsidiaries of foreign groups, is in scope. There is no public-company limitation, which is why SB 253 reaches an estimated thousands of companies the SEC never touched.

What happened with the first SB 261 reports due January 1, 2026?

The deadline arrived with enforcement suspended, and a substantial share of corporate America filed anyway.

On November 18, 2025, a Ninth Circuit motions panel granted the US Chamber of Commerce an injunction pending appeal against SB 261, finding the compelled-speech challenge serious enough to pause the law.^9,11 CARB responded on December 1, 2025 with an enforcement advisory: it would not enforce the January 1 deadline while appellate proceedings are in progress, and it opened a public docket for voluntary submissions.^5,1

The voluntary docket filled quickly. PwC's analysis found roughly 94 reports on CARB's docket by January 30, 2026. Among those early filers: 91% structured the report around the TCFD recommendations; 63% were publishing their first-ever standalone climate risk disclosure, mostly private companies; 91% described board-level oversight of climate risk; 56% ran qualitative scenario analysis and 21% attempted quantitative analysis; and 34% openly acknowledged gaps against the full TCFD framework.⁸

Three lessons stand out. First, TCFD is the de facto template, companies did not wait for CARB to invent a bespoke California format. Second, honest partial disclosure is acceptable: CARB's checklist contemplates describing what you have not yet done and when you will do it, and a third of filers did exactly that.² Third, the report is public-facing, it sits on your website where customers, investors, insurers, and plaintiffs' lawyers can read it, putting a premium on internally consistent, evidence-backed statements.

What must an SB 261 climate risk report contain?

The statute requires disclosure of climate-related financial risk consistent with the TCFD's four-pillar framework, or an equivalent standard such as IFRS S2, the ISSB climate standard that absorbed and extended TCFD, plus the measures adopted to reduce and adapt to those risks.^7,2 Per CARB's disclosure checklist, that means:

• Governance: board and management oversight of climate-related risks;
• Strategy: material physical risks (wildfire, flood, heat, water stress) and transition risks (policy, market, technology, reputation) over short, medium, and long horizons, ideally tested against climate scenarios;
• Risk management: how climate risk is identified, assessed, and integrated into enterprise risk management;
• Metrics and targets: the measures used to track risk, which in practice pulls in GHG emissions data and any reduction targets.²

The overlap with SB 253 is deliberate: the metrics pillar leans on the same Scope 1–3 inventory that SB 253 requires. Companies treating them as one program, not two projects, are doing this more cheaply.

What does SB 253 require for GHG reporting in 2026?

Scope 1 and 2 first, Scope 3 a year behind. SB 253 requires covered companies to disclose Scope 1 and Scope 2 emissions in the first cycle and add Scope 3, all fifteen categories of value-chain emissions under the GHG Protocol's Corporate Value Chain standard, from 2027.^4,6 The inventory basis is the GHG Protocol: CARB's guidance references its Corporate Standard for organizational boundaries, and the voluntary reporting template (October 2025) is built around it.^7,5

For the first cycle, due November 10, 2026, CARB has built in meaningful flexibility:^7,5

• Good-faith standard. Per the December 2024 enforcement notice, first-year reports may be based on information the company already possesses or was collecting, with no penalties for good-faith efforts.
• No-data letter. A company not collecting emissions data when the enforcement notice issued (December 5, 2024) may submit a statement to that effect instead of a full inventory, a one-time accommodation, not a strategy.
• Fiscal-year flexibility. Reporting maps to the company's fiscal year, with at least six months after year-end to prepare, so first reports will cover fiscal 2025 data for most filers.
• Voluntary template. CARB's Scope 1–2 template, with required and optional fields, is voluntary for 2026 but signals the structure CARB expects going forward.

Fees come separately: CARB is implementing a flat annual fee per covered entity to fund the program, with invoices expected roughly a month after the SB 253 deadline; parents can pay for subsidiaries on a consolidated basis.⁵

When is Scope 3 reporting required?

Scope 3 disclosure begins in 2027, on a schedule CARB will fix in its second rulemaking, SB 219 gave CARB discretion here, replacing the original 180-days-after-Scopes-1-and-2 rule.^4,12 That sounds distant; it is not. Scope 3 typically represents the large majority of a company's footprint and takes the longest to build: supplier data requests, spend-based estimation, category screening across all fifteen GHG Protocol categories, and documentation to defend every factor and assumption.

The statute contemplates a good-faith safe harbor for Scope 3, recognizing its reliance on estimates, but good faith still means a documented, methodologically defensible inventory. Companies starting Scope 3 in mid-2027 will not have one.

What are the SB 253 assurance requirements?

Assurance is where SB 253 differs most sharply from voluntary reporting: and from most companies' current practice. CARB has confirmed that no assurance is required for the first 2026 cycle; from 2027, Scope 1 and 2 data must carry limited assurance from an independent third party, escalating to reasonable assurance, the same rigor as a financial audit opinion, in 2030. Scope 3 assurance remains open: CARB's further rulemaking will decide it, and CARB has consulted on which attestation standards (such as AICPA attestation standards or ISSA 5000) it will accept.^7,5,10

What will assurance providers actually check?

An emissions number in a spreadsheet, with no record of where each activity-data point came from or which emission factor was applied, will not survive limited assurance in 2027, let alone reasonable assurance in 2030. Assurers work backward from the reported figure: boundary tested against the GHG Protocol Corporate Standard, activity data traced to source documents, emission factors verified as recognized and correctly applied, estimates and exclusions documented and justified.

Assurance-readiness is an evidence problem before it is a carbon-math problem, the gap purpose-built tooling exists to close. EcoLedger, for example, pairs full Scope 1–3 accounting on recognized emission factors with an evidence register and audit trail designed for assurance, so every figure traces back to its source document. In short: build this year's inventory as if next year's assurer were already looking over your shoulder.

What about the lawsuit? Can companies just wait it out?

The challenge is real, but waiting is not a strategy. Chamber of Commerce v. California Air Resources Board argues both laws unconstitutionally compel speech under the First Amendment. The district court refused to block either law; the Ninth Circuit's November 2025 order split the difference, pausing SB 261 (whose open-ended narrative "discussion" requirements troubled the panel) while leaving SB 253's factual data reporting in force.^9,11 At the January 9, 2026 oral argument, judges probed whether emissions figures are uncontroversial factual information, which government can more readily compel, or ideologically loaded speech.^10,13 No decision has issued as of July 2026, and whichever side loses is likely to seek further review.

Three reasons not to wait. First, SB 253 is not enjoined: the November 10, 2026 deadline binds regardless of how the SB 261 appeal ends. Second, the injunction pauses enforcement, not the law; if lifted, the obligation revives, and CARB has said only that it will issue updated guidance after resolution.⁵ Third, the first-wave filings changed the competitive baseline, when nearly 100 peers have published climate risk reports on a public docket, absence is itself a disclosure.⁸

The defensible posture: build the SB 261 report, keep it board-approved and ready to post, and treat the injunction as schedule risk rather than an exemption.

How do SB 253 and SB 261 interact with CSRD, ISSB, and other state laws?

For multinationals, California is one node in a converging network. The efficient move is one inventory and one climate-risk analysis, mapped outward:

• GHG data: SB 253, the EU's CSRD (ESRS E1), and IFRS S2 all build on GHG Protocol accounting. One Scope 1–3 inventory, prepared to assurance standard, feeds all three, the deltas are formatting, boundaries, and filing mechanics, not the data.
• Climate risk: SB 261 explicitly accepts TCFD- or IFRS S2-aligned reports.⁷ A company preparing ISSB-aligned disclosure, increasingly the global baseline as jurisdictions adopt IFRS S1/S2, can satisfy SB 261 with the same document plus the California filing and website posting.
• Other states: California is being copied. New York's Climate Corporate Data Accountability Act (S9072/A4282) passed the state Senate with a $1B threshold and full Scope 1–3 reporting; Illinois has a pending Climate Corporate Accountability Act (HB 3673); Colorado and New Jersey bills failed in 2025 but signal direction.¹³

Building California compliance as a repeatable system, rather than a one-off filing, is cheap insurance against the next statute.

SB 253 and SB 261 compliance action plan: July to November 2026

For a company confirming scope today, the practitioner sequence:

1. Confirm applicability in writing (July). Test revenue against the $1B/$500M thresholds using the lesser of your two most recent fiscal years, then the California nexus test ($735,019 in-state sales or California domicile). Document the analysis, it is your first line of defense and determines which entity files under parent-level consolidation.³
2. Lock the reporting boundary (July). Choose operational or financial control under the GHG Protocol Corporate Standard, consistent with any existing reporting, and map every facility, fleet, and energy account into it.
3. Build the Scope 1–2 inventory against CARB's template (July–September). Structuring data to its fields now avoids a rework cycle in 2027. Capture evidence, utility bills, fuel records, factor sources, as you go, because 2027's limited assurance will test this year's process.⁵
4. Run internal review and sign-off (September–October). Treat the filing like a financial disclosure: controllership review, legal review of accompanying statements, and a dry run of the submission well before November 10.
5. File by November 10, 2026: and calendar the CARB fee invoice expected about a month later.^4,5
6. Keep the SB 261 report warm (ongoing). If you filed voluntarily, log lessons against CARB's checklist and the first-wave benchmarks (scenario analysis and quantified metrics are the differentiators). If not, draft now: governance, strategy, risk management, metrics, board-reviewed and ready to post within weeks of a Ninth Circuit decision.^2,8
7. Start Scope 3 screening now (Q3–Q4). Rank the fifteen categories by likely materiality, launch supplier data collection for the top ones, and fall back to spend-based estimates elsewhere. The 2027 deadline is one budget cycle away.

Frequently asked questions

Who must comply with California SB 253 and SB 261?

SB 253 applies to US-formed companies, public or private, with total annual revenue over $1 billion that do business in California; SB 261 applies from $500 million. "Doing business" means transacting for financial gain in the state and either being organized or commercially domiciled there or exceeding roughly $735,000 in California sales. Headquarters location is irrelevant.³

What is the deadline for SB 253 reporting in 2026?

November 10, 2026. CARB's regulation originally set August 10, 2026 for the first Scope 1 and 2 reports, but a June 24, 2026 CARB bulletin deferred the deadline three months while clarifying amendments are finalized. Scope 3 reporting begins in 2027.⁴

Is SB 261 still required after the court injunction?

Enforcement is paused, the Ninth Circuit enjoined SB 261 on November 18, 2025, and CARB is not enforcing the January 1, 2026 deadline during the appeal. But the law was not struck down, CARB's voluntary docket is open, and roughly 94 companies filed in the first wave. If the injunction lifts, the obligation revives, so prudent companies keep a board-reviewed report ready.^9,8

What are the penalties for non-compliance with SB 253 and SB 261?

Up to $500,000 per reporting year under SB 253 and up to $50,000 per reporting year under SB 261. For the first SB 253 cycle, CARB has committed to penalty relief for companies making good-faith efforts using data they already possess.⁵

Does SB 253 apply to private companies?

Yes. There is no public-company limitation in either law. In the first wave of SB 261 filings, private companies modestly outnumbered public ones, and 63% of filers were publishing their first standalone climate risk report.⁸

If we already report under CSRD or ISSB, do we still have to comply with the California laws?

Yes, but the incremental lift is small. SB 253 runs on GHG Protocol accounting, the same basis as ESRS E1 and IFRS S2, and SB 261 accepts TCFD- or IFRS S2-aligned reports. You still need the CARB filing, the website posting for SB 261, and compliance with California's assurance schedule from 2027.⁷

References

1. California Air Resources Board, Climate-Related Financial Risk Reports (SB 261) Docket, accessed July 2026.
2. California Air Resources Board, Climate-Related Financial Risk Disclosures: Draft Checklist (September 2025), accessed July 2026.
3. Greenberg Traurig LLP, CARB Adopts Initial Climate Disclosure Reporting Regulations to Implement SB 253 and SB 261 (March 2026), accessed July 2026.
4. ESG Dive, CARB delays emissions reporting deadline by 3 months (June 2026), accessed July 2026.
5. Deloitte, California Climate Legislation Update, Status of CARB Rulemaking and Next Steps (December 4, 2025; last updated July 1, 2026), accessed July 2026.
6. Nixon Peabody LLP, California climate disclosure laws, SB 253 and SB 261 status update (March 2, 2026), accessed July 2026.
7. K&L Gates LLP, California Climate Disclosure Regulations Update: CARB Provides Additional Clarifications on Implementation and Ninth Circuit Stay of SB 261 Enforcement (December 8, 2025), accessed July 2026.
8. PwC, Inside the first wave of California SB 261 disclosures (2026), accessed July 2026.
9. Jones Day, Ninth Circuit Enjoins SB 261's Climate-Related Risk Reporting Requirements, Declines to Enjoin SB 253 (November 2025), accessed July 2026.
10. White & Case LLP, California climate disclosure laws: Ninth Circuit hears oral argument; no ruling yet (January 2026), accessed July 2026.
11. Harvard Law School Forum on Corporate Governance, California Climate Disclosure Law SB 261 Implementation Halted: Ninth Circuit Grants Injunction Pending Appeal (December 3, 2025), accessed July 2026.
12. Katten Muchin Rosenman LLP, SB 219 Makes Important Updates to California Climate Disclosure Regime (2024), accessed July 2026.
13. Squire Patton Boggs, frESH Law blog, Emerging State-Level Greenhouse Gas Emissions Reporting Frameworks (March 25, 2026), accessed July 2026.