California Climate Disclosure (SB 253 & SB 261): Who Must Report in 2026
California's climate disclosure laws require large companies doing business in the state to start reporting in 2026: SB 253 requires companies with over $1 billion in annual revenue to report Scope 1 and 2 greenhouse gas emissions by November 10, 2026, and SB 261 requires companies with over $500 million in revenue to publish climate-related financial risk reports every two years. Enforcement of SB 261's original January 1, 2026 deadline is paused while a Ninth Circuit appeal proceeds, but CARB has made clear the reporting program itself is moving forward — with per-entity fees assessed starting September 2026 and penalties up to $500,000 a year for SB 253 violations.
What this rule requires — at a glance
- Who must comply
- U.S. companies "doing business in California": revenue over $1B (SB 253) or over $500M (SB 261)
- What's required
- Report Scope 1 & 2 GHG emissions (SB 253) and publish a biennial climate-related financial risk report (SB 261)
- Effective
- January 1, 2026
- Deadline
- November 10, 2026
- Penalty for non-compliance
- Up to $500,000/year for SB 253 violations and $50,000/year for SB 261, plus CARB program fees (~$3,106 SB 253 / ~$1,403 SB 261 per entity)
- Enforcing agency
- California Air Resources Board (CARB)
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What changed
California became the first U.S. state to mandate corporate climate disclosure, and 2026 is the year the obligations become real. Under SB 253, companies with more than $1 billion in annual revenue that do business in California must report their Scope 1 (direct) and Scope 2 (purchased energy) greenhouse gas emissions — the first reports, covering fiscal year 2025, are due November 10, 2026, with Scope 3 (supply chain) emissions following in 2027. Under SB 261, companies over $500 million in revenue must publish a climate-related financial risk report aligned with TCFD, IFRS S2, or an equivalent framework, refreshed every two years.
Two moving pieces matter for 2026 planning. First, litigation: a Ninth Circuit injunction has paused enforcement of SB 261's original January 1, 2026 deadline while the appeal proceeds, and CARB has said it will set an alternate reporting date after the appeal resolves. Second, leniency: for the first SB 253 cycle, CARB's enforcement notice says companies may report with the data they "have on hand" — a company that wasn't collecting emissions data when the notice issued in December 2024 can submit a short statement explaining non-collection instead of full figures.
Who is affected
The thresholds are revenue-based and hinge on "doing business in California" — a deliberately broad test that captures companies headquartered anywhere in the U.S. with meaningful California sales, property, or payroll. If your total annual revenue exceeds $1 billion, both SB 253 and SB 261 apply; between $500 million and $1 billion, SB 261 alone applies. Subsidiaries can generally be covered by a parent's consolidated report.
Even paused, SB 261 should stay on your board's calendar: CARB anticipates assessing program fees (roughly $3,106 per entity for SB 253 and $1,403 for SB 261) beginning September 10, 2026, and companies that wait for the appeal to resolve before starting TCFD-style risk work will be racing a compressed timeline when the alternate date lands. Most companies in scope engage a sustainability consultant or carbon-accounting platform well before their first filing.
How to comply, step by step
- Confirm scope: check consolidated revenue against the $500M / $1B thresholds and assess whether the "doing business in California" test (sales, property, or payroll in-state) captures your company or a parent/subsidiary.
- For SB 253: inventory Scope 1 and Scope 2 emissions for fiscal year 2025 following the GHG Protocol, and prepare for limited-assurance verification — or, if data collection hadn't started by December 2024, prepare the "data on hand" statement CARB's enforcement notice allows for the first cycle.
- For SB 261: begin a TCFD/IFRS S2-aligned climate-risk assessment now, even though the original January 1, 2026 deadline is unenforced pending appeal — CARB will set an alternate date and the underlying analysis takes quarters, not weeks.
- Budget for CARB program fees (estimated at ~$3,106 per entity for SB 253 and ~$1,403 for SB 261), expected to be assessed starting September 10, 2026.
- Monitor the Ninth Circuit appeal and CARB's rulemaking updates — deadlines and formats have already shifted more than once, and the reporting portal details are still being finalized.
Frequently asked questions
Is SB 261 still enforceable given the court injunction?
CARB has stated it will not enforce SB 261's original January 1, 2026 deadline while the Ninth Circuit injunction is in place, and it plans to announce an alternate reporting date after the appeal is resolved. The law itself has not been struck down — companies in scope are widely being advised to continue preparing, because the underlying climate-risk analysis takes far longer than whatever runway an alternate deadline will offer.
When exactly is the first SB 253 emissions report due?
The Scope 1 and 2 report covering fiscal year 2025 is due November 10, 2026, after CARB postponed the original mid-2026 timing. Scope 3 (value-chain) emissions reporting begins in 2027. For this first cycle, CARB's enforcement notice allows companies to report with the data they have on hand — good faith matters more than perfection in year one.
My company is headquartered outside California. Can these laws still apply?
Yes. The laws apply to companies "doing business in California," not companies based there. If your business exceeds the revenue thresholds and has meaningful California sales, property, or payroll, you are likely in scope regardless of where you are incorporated or headquartered — one of the reasons these two state laws function as de facto national climate-disclosure rules.
What does compliance actually cost?
Beyond CARB's anticipated program fees (~$3,106 per entity for SB 253 and ~$1,403 for SB 261, expected from September 2026), the real cost is building a GHG inventory and climate-risk reporting process: carbon-accounting software, third-party assurance for emissions data, and consultant or legal time for the TCFD-aligned risk report. Penalties for non-filing run up to $500,000 per reporting year for SB 253 and $50,000 for SB 261.
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