California’s groundbreaking climate disclosure laws are set to transform how businesses report on climate-related risks and greenhouse gas emissions. With the first compliance deadline just a few months away, companies need to act now to ensure they’re ready.
These new requirements from the California Air Resources Board (CARB) apply broadly — even if your company doesn’t have a physical presence in California but meets the state’s “doing business” criteria under tax law.
On September 24, CARB published a preliminary list of approximately 4,150 business entities it believes will need to comply with SB 253 and SB 261. You can now check if your company appears on CARB’s preliminary company list here.
Note: This list is based on California Secretary of State data through March 2022 and may be incomplete. Companies should continue to assess independently whether they are in scope for SB 253 and SB 261. Learn more about certain cautions to consider here.
Whether you’re already operating in California or planning to enter the market, understanding the new CARB rules is critical for compliance and strategic planning. With the deadlines for compliance fast approaching, here are the key tactical steps your company needs to take now to avoid surprises down the road.
The following CARB compliance timeline requirements guide will also help you budget properly and position your disclosures under state scrutiny.
Critical CARB deadlines to mark on your calendar
January 1, 2026: First climate risk disclosures (SB 261) are due. Companies must make these disclosures public and submit them to CARB. Subsequent reports are required every two years.
June 30, 2026: Proposed deadline for first greenhouse gas (GHG) emissions reports (Scope 1 and 2 under SB 253). CARB is seeking public feedback on this proposed date.
2027: Scope 3 emissions reporting begins.
2030: Reasonable assurance for Scope 1 and 2 emissions and limited assurance for Scope 3 emissions will be required by 2030 (final date to be revealed).
CARB plans to have report templates available in late September 2025 to streamline the reporting process. The finalized regulatory framework should be available by the end of the year.
Which Companies Must Comply with California Climate Laws?
Your company falls under California’s climate disclosure regulations if it does business in California and meets certain revenue thresholds:
- SB 261 (Climate Risk Disclosures): Global annual revenue exceeding $500 million
- SB 253 (GHG Emissions Reporting): Global annual revenue exceeding $1 billion
“Doing business” in California is still broadly defined and includes companies that:
- Maintain a principal office or is incorporated in California.
- Generate more than $735,019 in California sales.
- Sell via independent contractors or agents in California.
Parent companies meeting the revenue thresholds can file consolidated reports to reduce administrative burden, though subsidiaries may still need to file separate reports in certain circumstances. Non-profits, government organizations and companies whose only California presence is remote workers are generally exempt.
California Climate Disclosure Requirements: What to Report
Climate risk disclosures (SB 261) Companies must publicly report how climate change impacts their business, generally every two years. These disclosures should align with established frameworks such as:
- Task Force on Climate-Related Financial Disclosures (TCFD)
- International Sustainability Standards Board (ISSB)
- Any other reporting framework you consider appropriate.
Reports must address both physical risks (extreme weather events) and transition risks (shift to low-carbon economy), along with mitigation strategies.
GHG emissions reporting (SB 253) Annual reporting of greenhouse gas emissions is required, covering:
- Scope 1: Emissions coming from owned or controlled sources
- Scope 2: Emissions from purchased electricity or energy
- Scope 3 (starting in 2027): Indirect emissions throughout the value chain, including suppliers and product use.
All emissions calculations must follow Greenhouse Gas Protocol standards to ensure reporting consistency and reliability.
How much will California climate compliance cost?
CARB estimates that its climate disclosure program will cost about $13.9 million annually, funded by company compliance fees. These fees are set as flat annual amounts per entity, adjusted annually for inflation:
- SB 261 (Climate Risk): Approximately $1,400 per company annually
- SB 253 (GHG Emissions): Approximately $3,100 per company annually
- Combined Reporting: Approximately $4,500 annually in fees alone
Total compliance costs, however, can extend far beyond these fees. Companies should budget for:
- System implementation and configuration
- Data collection and management infrastructure
- External assurance services
- Ongoing operational costs
- Internal resource allocation
All told, up-front tax compliance costs could be substantial, potentially exceeding $1 million for complex organizations.
Expect ongoing or renewal costs to be relatively high as well. Gathering accurate data, using external assurance providers, and paying for the tools you need to report will quickly add to these costs.
Why Start Preparing for California Climate Reporting Now?
While CARB has indicated enforcement discretion in the first year for companies demonstrating reasonable efforts, reports still need to be accurate and timely. The data collection requirements — particularly for Scope 3 emissions — are substantial and complex. Establishing efficient data collection processes now will:
- Ensure accuracy and completeness of disclosures
- Enable consolidated reporting across subsidiaries
- Reduce compliance costs over time
- Position your company ahead of regulatory scrutiny
Success requires early preparation, robust data management and strategic alignment with broader ESG teams and objectives. Companies that act now will be better positioned to meet California’s requirements while building capabilities that support future climate disclosure mandates.
Ready to streamline your climate disclosure compliance? Tracera’s comprehensive platform makes collecting climate data, reporting and assurance more efficient and accurate.
Schedule a demo today to see how we can help your company prepare for California’s climate disclosure rules.