CA Climate Disclosures Clarified in CARB's New FAQ for Guest Posts
The California Air Resources Board (CARB) has issued a FAQ document to provide clarity on the reporting requirements for two landmark climate disclosure laws, SB 253 and SB 261. These laws, which were passed in 2023, aim to increase transparency around greenhouse gas emissions and climate-related financial risks for large businesses operating in California.
SB 253: Climate Corporate Data Accountability Act
U.S.-based companies with over $1 billion in annual revenue doing business in California are required to:
- Report their Scope 1 and Scope 2 greenhouse gas emissions starting in 2026, based on 2025 fiscal-year data.
- Report Scope 3 emissions starting in 2027, based on 2026 data.
- Submit these reports with limited assurance initially; limited assurance is required through 2029, and reasonable assurance will be mandated starting in 2030. At that time, CARB will decide on assurance requirements for Scope 3 emissions.
SB 261: Climate-Related Financial Risk Act
Companies with over $500 million in annual revenue must submit biennial public disclosures on climate-related financial risks and mitigation strategies beginning January 1, 2026, based on 2025 data.
CARB's FAQ document, issued on July 9, 2025, offers practical guidance on submitting initial reports and clarifies that reporting deadlines and frameworks remain unchanged. The agency encourages alignment with established disclosure frameworks such as the Greenhouse Gas Protocol for emissions and TCFD or ISSB for climate risk disclosures.
The specific publication dates for SB 253 emissions reporting are still unknown, but SB 261 reports are due January 1, 2026. CARB will post a public docket for covered entities to submit the location of their public link to their first climate-related financial risk report, open from December 1, 2025, to July 1, 2026.
CARB is continuing to solicit feedback on definitions for "doing business" and "revenue" that would define applicability under both laws, as well as allowable exemptions. The agency is also developing the prescriptive reporting requirements and format for both SB 253 and SB 261, with plans to publish prescriptive rules by the end of the year.
The laws require large businesses in California to report greenhouse gas (GHG) emissions and climate-related risks respectively. The California Air Resources Board (CARB) held a public workshop on May 29th, 2025, regarding these climate disclosure laws.
Companies can base their SB 261 disclosures on the best available information, and CARB recognizes that the quality and data sources may change over the course of the year. The guidance is designed as a practical on-ramp, allowing businesses to establish the necessary programs and infrastructure to meet the requirements of the laws.
The clarifications aim to help entities comply with Health & Safety Code § 38532 and 38533, which respectively house the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). The FAQ document is intended to assist companies with initial planning, including for submitting climate-related financial risk reports.
CARB allows reports to reflect FY 2023/2024 data or FY 2025/2025 data for SB 261 first year reports. The agency has also suggested a pragmatic, flexible, and non-punitive approach to help businesses meet the intent of the climate disclosure laws. Despite legal challenges, these laws remain in effect, and companies should continue preparing for compliance.
- Companies with over $1 billion in annual revenue operating in California will need to comply with the Climate Corporate Data Accountability Act (SB 253) by reporting their Scope 1 and 2 greenhouse gas emissions based on 2025 fiscal-year data in 2026, and Scope 3 emissions based on 2026 data in 2027.
- To help increase transparency around climate-related financial risks, businesses with over $500 million in annual revenue must publish biennial disclosures on these risks and their mitigation strategies, starting from January 1, 2026, based on 2025 data.
- As part of corporate sustainability efforts, businesses find it crucial to align with established disclosure frameworks such as the Greenhouse Gas Protocol for emissions and Task Force on Climate-related Financial Disclosures (TCFD) or International Sustainability Standards Board (ISSB) for climate risk disclosures, following the guidelines set by the California Air Resources Board (CARB).
