California’s climate disclosure laws - The emerging “200s” and August CARB workshop takeaways

At its August 21, 2025 public workshop, the California Air Resources Board (CARB) provided updates on deadlines, definitions, fee structures, minimum reporting requirements, and assurance considerations. Workshop materials and recordings are available here.

GHG emissions disclosures timeline announced, existing climate risk deadline holds

• January 1, 2026 - First SB 261 climate-related financial risk disclosures due (biennially thereafter).
• June 30, 2026 - First SB 253 scope 1 & 2 greenhouse gas emissions reports due, covering FY 2025 data, with limited assurance required.
• 2027 - Scope 3 emissions reporting begins, covering FY 2026 data.
• 2030 - Full assurance requirements take effect; reasonable assurance for scope 1 and 2 GHG emissions, limited assurance for scope 3 GHG emissions.

These initial deadlines, now just months away, mark the transition from legislative debate to compliance reality.

Revenue definition

CARB abandoned its initial proposal to use California's gross receipts definition after stakeholder concerns about data confidentiality. The new approach defines revenue as "the total global amount of money or sales a company receives from its business activities, such as selling products or providing services." This definition excludes deductions for operating costs or business expenses and aligns with metrics used by major data tracking industries including Dunn & Bradstreet, Standard & Poor, and Data Axle.

“Doing business in California” criteria update

CARB is evaluating existing databases of US-based companies to establish "doing business in California" standards and coordinating with the Franchise Tax Board (FTB) to align on enforceable criteria. The Secretary of State’s Business Entity database, publicly available and listing all entities with a registered agent in California, may also serve as a reference point.

Corporate structure

Using existing Cap-and-Trade regulations as precedent, CARB defines subsidiaries as businesses where another company owns more than 50% of voting stock. The agency is exploring self-reporting options for corporate relationships to reduce duplicative compliance burdens for large organizations.

Exemptions and special cases

CARB staff indicated that certain categories, such as nonprofits and entities with only limited activity in California, such as companies with only telework employees in the state, and companies whose only business in California is wholesale electricity transactions qualify for an exemption.

Annual fees

An annual compliance fee is currently estimated to be $1,400 for SB 261 and $3,100 per entity will be charged to cover CARB’s administrative costs. Companies covered by both SB 253 and SB 263 will pay both fees.

Covered entity list

CARB plans to release a preliminary list of covered entities in the coming weeks, though they emphasized this would not be a final list and that companies not listed but meeting thresholds are still responsible. CARB estimates around 2,600 companies in scope for SB 253 and SB 261 and 4,100 for SB 261 only.

Timeline overview

SB 253: Climate Corporate Data Accountability Act

SB 253 introduces annual GHG emissions reporting requirements starting in 2026. The first reports, covering scope 1 and 2 emissions for FY 2025 are due by June 30, 2026. Scope 3 emissions reporting will begin in 2027 (covering FY 2026 data). CARB plans to release draft reporting templates in September 2025.

GHG assurance requirements

CARB proposed using existing verification standards including ISSA 5000, AA1000, and the ISO 14060 series. CARB will maintain oversight and audit authority to ensure compliance.

The phased assurance schedule is as follows:

• 2026–2029: Limited assurance required for Scope 1 and 2
• 2027: Scope 3 GHG emissions reporting begins (no assurance required yet)
• 2030 onward: Assurance required for all scopes (1, 2, and 3)
• Reasonable assurance on Scope 1 and 2 GHG emissions
• Limited assurance on Scope 3 GHG emissions

Limited assurance involves a negative opinion, indicating that (e.g., “nothing has come to our attention that causes us to believe the emissions report is materially incorrect”), while reasonable assurance involves a more affirmative conclusion that the disclosures are free from material misstatement. This phased model is intended to give companies time to improve data quality and internal controls while building toward more rigorous external review.

For many companies, this will necessitate early engagement with assurance providers and internal readiness assessments. During the initial implementation period, CARB will accept good faith efforts toward compliance, including disclosure of data limitations and methodologies used.

SB 261: Minimum Disclosure Requirements and Implementation Framework

CARB provided significant clarity on SB 261's climate-related financial risk disclosure requirements, emphasizing flexibility while establishing clear minimum standards for compliance. Reports must be published by January 1, 2026 (biennial thereafter), with CARB opening a public docket on December 1, 2025 for entities to post links to their disclosures.

Framework options

SB 261 allows entities to choose from several established reporting frameworks to meet disclosure requirements:

• Final Recommendations of Task Force on Climate-related Financial Disclosures (2017)
• IFRS Disclosure Standards (including IFRS S2)
• Reports developed in accordance with any regulated exchange, national government, or other governmental entity

This approach recognizes that many companies may already be reporting under existing frameworks and avoids mandating a single standard that could create duplicative compliance burdens.

Minimum disclosure statement requirements

Regardless of which framework companies choose, each report must contain a standardized statement addressing three key elements:

• Framework identification: Which reporting framework is being applied
• Implementation status: Which recommendations and disclosures have been compiled versus which have not been included
• Gap explanation: A summary of reasons why specific disclosures were omitted, along with discussion of plans for future disclosures

This "comply or explain" approach provides transparency about reporting completeness while acknowledging that full implementation may take time.

Key flexibility provisions

CARB emphasized several areas of flexibility to reduce compliance burden:

• Scenario analysis flexibility: Quantitative scenario analysis is not a minimum requirement and was described by CARB as a “nice to have” in initial disclosures; companies may use qualitative approaches where quantitative analysis is not feasible or relevant for initial disclosures.
• No emissions reporting duplication: SB 261 does not require disclosure of scope 1, 2, or 3 GHG emissions to avoid duplicative efforts with SB 253 requirements.

With the SB 261 deadline just months away and SB 253 assured GHG reporting close behind, companies must now:

• Confirm applicability: Assess whether revenue and California presence meet thresholds.
• Assess GHG data: Identify what data is readily available and where gaps exist.
• Prepare for assurance: Start GHG readiness assessments now, strengthen internal controls and engage with potential assurance providers.
• Prepare climate risk disclosures: Select an SB 261 reporting framework (e.g., TCFD, IFRS, or other recognized framework) and begin compiling disclosures.
• Budget for fees: Estimate and plan for annual compliance costs ($1,400 - $4,000) and the internal/external costs of data collection, reporting and assurance.
• Engage in rulemaking: Monitor CARB updates, participate in workshops and provide input on definitions, exemptions and implementation guidance. Feedback can be sent to climatedisclosure@arb.ca.gov.