On May 29, 2025, the California Air Resources Board (CARB) hosted a virtual public workshop to launch the rulemaking process for California's groundbreaking climate disclosure legislation: SB 253 (Climate Corporate Data Accountability Act), SB 261 (Climate-Related Financial Risk Act), and amendments made under SB 219.
This blog post breaks down key information shared during the session to help your organization stay informed and prepared.
What Was the Purpose of the Workshop?
CARB’s workshop served as the official "kickoff" of its rulemaking efforts. It laid out the legal requirements of SB 253 and SB 261, outlined CARB’s proposed regulatory development timeline, surfaced key implementation questions under discussion, and summarized public feedback collected in December 2024.
What Do These Laws Require?
SB 253 requires U.S.-based companies with over $1 billion in annual revenue that do business in California to disclose their Scope 1 and 2 greenhouse gas (GHG) emissions starting in 2026. In 2027, these companies will also need to report Scope 3 emissions based on 2026 data.
SB 261 applies to companies with over $500 million in annual revenue doing business in California. It mandates a biennial climate-related financial risk report aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework, with the first report due by January 1, 2026.
SB 219 updated the rulemaking deadlines for CARB but did not change the reporting deadlines for companies. In other words, the clock is still ticking.
Timeline and Rulemaking Updates
CARB confirmed that the statutory reporting deadlines for SB 253 and SB 261 remain unchanged. The agency intends to release draft regulations for SB 253 by the end of 2025, with final adoption expected in late 2026. For SB 261, CARB is still deciding whether to adopt formal regulations or issue interpretive guidance instead.
What About Enforcement?
In its December 2024 Enforcement Notice, CARB emphasized that it will not impose penalties for SB 253 disclosures in 2026 if companies demonstrate a "good faith effort" to comply. This signals that flexibility will be prioritized early on as companies work to understand and implement these new requirements.
Key Implementation Questions Under Discussion
CARB previewed several areas that require clarification, including:
- What constitutes "doing business in California"? CARB proposes aligning with Section 23101 of the California Tax Code, which includes thresholds for sales, property, and payroll. Stakeholders are encouraged to weigh in on whether additional exemptions are needed.
- How should "total annual revenues" be defined? CARB recommends using the "gross receipts" definition in Section 25120(f)(2), but questions remain about how to account for revenue from subsidiaries.
- How will corporate relationships be assessed? A 50% ownership threshold—used in California’s cap-and-trade program—may be applied to determine reporting entities, but more input is needed on how this would work in practice.
- What will Scope 3 reporting look like? While Scope 3 disclosures will be mandatory in 2027, CARB acknowledged concerns around complexity and materiality. Additional guidance may be provided to help companies navigate these challenges.
Public Engagement and What’s Next
Over 3,000 participants attended the workshop, demonstrating the high level of interest and concern among stakeholders. CARB allocated significant time for questions and comments and announced that further public engagement opportunities will be scheduled.
To follow updates or participate in future events, visit CARB’s SB 253 & 261 Implementation page.
In Summary: What Your Business Should Know
- The deadlines for SB 253 and SB 261 remain in effect.
- Draft regulations for SB 253 are expected by the end of 2025.
- SB 261 may be implemented through guidance rather than formal regulations.
- CARB will offer flexibility for early reporters that show a good faith effort.
- Stakeholder feedback is vital, and more engagement opportunities are on the way.
If your organization is subject to SB 253 or SB 261, now is the time to prepare. Whether you're just starting to track your emissions or formalizing your climate risk disclosures, aligning early with CARB’s direction can position you for success.
