Navigating California’s climate disclosure bills: What businesses need to know

Post Date: 27 August 2025
Read Time: 4 minutes

California poppy, California state flower

Climate-focused regulation is increasing worldwide, and in the United States, California is leading the way with pioneering climate disclosure laws. In October 2023, California enacted Senate Bills 253 and 261, which will require large companies doing business in the state to publicly report on their greenhouse gas (GHG) emissions and climate-related financial risks. And despite a recent legal challenge by the U.S. Chamber of Commerce and other California business and farming groups, the laws look set to move ahead [1]. With the initial reporting deadlines rapidly approaching in early 2026, it is crucial for affected companies to begin preparation now.

Requirements of California Bills 253 and 261

SB 253 requires companies with annual global revenue exceeding $1 billion doing business in California to publicly report their GHG emissions. Beginning with 2025 emissions, reported in 2026, companies must disclose Scope 1 and 2 emissions with limited third-party assurance. In 2027, Scope 3 emissions reporting begins, with full (reasonable) assurance requirements ramping up by 2030. The regulation aims to ensure reliable, transparent emission data for stakeholders while promoting accountability and emissions reduction.

In parallel, SB 261 mandates biennial climate-related financial risk disclosures for companies generating over $500 million in revenue and operating in California. These reports, due first by January 1, 2026, must align with established frameworks like the Task Force on Climate-Related Financial Disclosures (TCFD) or the IFRS Sustainability Disclosure Standards, which are already fully or partially implemented by many large U.S. businesses [2]. Reporting in-line with SB 261 requires companies to disclose how they identify and assess climate-related risks relevant to their operations and supply chain; the specific risks they have identified; and how these impact on their strategy and financial planning. Reports must be published on each reporting entity’s website by January 1, 2026, and every two years thereafter. Additionally, the California Air Resources Board (CARB) will open a public docket for companies to submit links to their disclosures.

Recent Regulatory Updates from CARB

At the CARB workshop held on August 21, 2025 [3], staff provided important clarifications and updates:

Companies subject to SB 253 will pay an annual flat fee (estimated at around $3,106 per entity) to cover program administration, with a separate fee for SB 261 (~$1,403). Subsidiaries reporting separately are considered distinct entities for fee purposes.
The definition of “doing business in California” may be based on the Secretary of State’s registration list, and “revenue” will likely mean total global sales.
Reporting timelines remain firm despite ongoing rulemaking: SB 253 Scope 1 and 2 reports are due by June 30, 2026, while Scope 3 deadlines remain under discussion.
SB 261’s first climate risk reports must be published online by January 1, 2026, with the public docket for submission opening on December 1, 2025, and closing on July 1, 2026.
Emissions report assurance must be conducted by independent, accredited verifiers following standards such as ISSA 5000, AA1000, ISO 14060, or AICMA.
CARB allows flexibility for early SB 261 reports, accepting qualitative disclosures and the most recent emissions data as a good-faith effort.

Opportunities Beyond Compliance

Preparing for these disclosures is not just a regulatory exercise. It is a strategic opportunity. Gaining a clearer understanding of your company’s greenhouse gas emissions and climate-related financial risks can unlock insights that aid enterprise risk management, strengthen business resilience, and inform smarter investment and innovative decision-making in light of a continuing global transition toward a low-carbon economy.

Transparent climate reporting builds trust with investors, customers, and regulators, while signaling long-term resilience. Companies that act early are better positioned to attract long-term investment, meet evolving stakeholder expectations, and stay ahead of competitors as disclosure requirements grow globally.

How SLR can help

At SLR, our Corporate Sustainability team supports clients in navigating complex state and federal requirements. We specialize in calculating GHG inventories, facilitating independent assurance processes, conducting climate scenario analyses, and crafting TCFD-aligned disclosures tailored to California’s regulatory requirements. Our experience helping companies comply with SB 253 and SB 261 ensures you can meet deadlines confidently while developing a strategic view of your climate risks and opportunities.

Get in touch to find out more about how we can support your business–

References

[1] https://www.lw.com/en/insights/federal-court-rejects-preliminary-injunction-against-california-climate-disclosure-laws

[2] https://www.ifrs.org/content/dam/ifrs/supporting-implementation/issb-standards/progress-climate-related-disclosures-2024.pdf

[3] https://ww2.arb.ca.gov/our-work/programs/corporate-ghg-reporting/climate-disclosure-meetings-and-workshops