SB 253 D-Day: Inside California's First Wave of Corporate Emissions Filings

California's SB 253, the Climate Corporate Data Accountability Act, hit its first-year reporting deadline in August 2026. Roughly 5,300 companies with more than US$1 billion in global gross revenue doing business in California owe Scope 1 and Scope 2 emissions for their most recent fiscal year, but a CARB enforcement notice materially changed what "compliance" looks like in year one. This is what filers, and the Wave 2 SB 261 cohort behind them, actually need to know.¹

Last updated 9 August 2026. Reflects CARB's initial regulations approved March 2026 and the December 2024 enforcement notice.

Who has to file, and against what threshold?

The scope test is deliberately blunt. Under SB 253, any US company (including subsidiaries of foreign parents that are themselves US entities) with more than US$1 billion in global gross annual revenue that "does business in California" is caught. "Does business" is interpreted broadly, sales into California above a threshold, property in California, or payroll in California all qualify under the Franchise Tax Board definition adopted by CARB.²

Revenue means gross, not net. Global gross annual sales, before deductions for operating costs, cost of goods sold or business expenses. This is a wider net than most sustainability regulations use, and CARB has made clear in guidance that groups cannot subdivide entities to fall below the threshold.

What does CARB's enforcement discretion actually cover?

The 5 December 2024 enforcement notice is the single most important document filers need to read. CARB stated that for the first reporting cycle it would exercise enforcement discretion for companies acting in good faith. In practical terms, this means:

• No monetary penalties in year one for companies that make a reasonable, good-faith effort to comply and to submit whatever emissions data they had systems to collect as of December 2024.
• Companies that were not collecting Scope 1 and 2 data as of the notice date can file a statement to that effect in lieu of a full report for year one, without triggering penalties.
• The obligation to file remains. Enforcement discretion is not an exemption. Non-filers who ignore the deadline entirely, or filers who materially misstate their emissions, remain subject to administrative penalties.
• The good-faith window is one year only. The second reporting cycle (2027, covering FY2026 emissions) does not benefit from the same discretion.

SB 253 phase-in: what happens when

How many companies are in scope, and by sector?

CARB's own estimates put SB 253 scope at roughly 5,300 companies, and SB 261 at roughly 10,000. The overlap is substantial: any company caught by SB 253 is also caught by SB 261 (the risk report threshold is lower). The chart below shows the estimated cohort by broad sector.

What Wave 2 (SB 261) filers should do now

SB 261 catches a much larger cohort, companies with more than US$500 million in global gross revenue. Its first biennial climate-related financial risk report was due 1 January 2026. Wave 2 filers should take the D-Day moment to stress-test three things.

• Confirm your revenue tier. If you clear US$500m gross but not US$1bn, you owe an SB 261 risk report but not (yet) SB 253 emissions data. If you clear US$1bn, you owe both.
• Lock the boundary now. The consolidation boundary for SB 253 is the same as for financial statements. Getting the boundary decision, and the entities inside it, signed off before the reporting period saves the reconstruction exercise that catches out first filers.
• Start Scope 3 data collection. Scope 3 becomes mandatory in the 2027 report (covering FY2026 emissions). That means the data has to be captured through the year that is already running. Waiting for the 2027 deadline is not an option.

Frequently asked questions

When is the first SB 253 reporting deadline?

The original deadline set in CARB's initial regulations was 10 August 2026. CARB has proposed moving this to 10 November 2026 to give filers additional time. The obligation is to report Scope 1 and Scope 2 emissions for the most recent fiscal year.

Which companies are in scope of SB 253?

US companies (including US subsidiaries of foreign parents) with more than US$1 billion in global gross annual revenue that do business in California. Revenue is measured on a gross basis, global sales without deductions for operating costs or expenses.

What penalties apply for first-year non-compliance?

CARB has stated it will exercise enforcement discretion for the first reporting cycle. No monetary penalties will be imposed on companies acting in good faith. Non-filing, late filing and material misstatements remain sanctionable, but data quality issues in good-faith filings will not trigger penalties in year one.

When does Scope 3 reporting start under SB 253?

Scope 3 emissions reporting becomes mandatory in 2027, covering emissions for the fiscal year 2026. This means Scope 3 data has to be collected through the year currently running for the second reporting cycle to be complete.

How does SB 253 interact with SB 261?

Both are part of California's climate accountability package. SB 253 requires GHG emissions disclosure for companies over US$1bn revenue. SB 261 requires a biennial climate-related financial risk report for a broader cohort of companies over US$500m revenue. Companies caught by SB 253 are also caught by SB 261.

What if my company was not collecting emissions data as of December 2024?

CARB's enforcement notice permits such companies to file a statement explaining they were not collecting or planning to collect emissions data as of the 5 December 2024 notice date, in lieu of a full Scope 1 and 2 report for year one. This does not exempt the company from future reporting obligations.

Does SB 253 apply to non-US companies?

SB 253 applies to US-formed companies, including US subsidiaries of foreign parents. A non-US parent company itself is not directly in scope, but a US subsidiary that meets the revenue threshold and does business in California is caught.

References

1. California Air Resources Board, Climate Corporate Data Accountability Act (SB 253), accessed August 2026.
2. Sullivan & Cromwell, California Air Resources Board Approves Initial Regulations for SB 253 and SB 261, March 2026.
3. Persefoni, California SB 253 and SB 261: What Businesses Need to Know, accessed August 2026.

This guide is general information, not legal advice. Deadlines and enforcement approaches described are current at the date shown; check the primary sources above for the current position.