The California Air Resources Board (CARB) is to develop regulations for Senate Bill 253 (SB 253), the Climate Corporate Data Accountability Act in 2025. The new law requires public and private businesses doing business in California with total annual revenues over $1 billion to disclose their Scope 1 and 2 greenhouse gas (GHG) emissions starting in 2026. Disclosure of their Scope 3 emissions is starting in 2027.
SB 253 Timelines and Potential Penalties
Scope Definitions
Scope 1 emissions result directly from a company’s activities from sources that the company owns or controls, such as vehicles, boilers, and equipment. An independent third party must guarantee these disclosures.
Scope 2 emissions result indirectly, such as those associated with purchasing electricity, steam, heat, or cooling used by the company. An independent third party must guarantee these disclosures.
Scope 3 includes all indirect emissions from a company’s entire supply chain. Scope 3 reporting is due in 2027 based on 2026 data. Scope 3 emissions may require assurance as well.
As well as GHG emissions disclosures, SB 261, the Climate Related Financial Risk Act, requires public and private companies (annual revenues over $500M) doing business in California to prepare and publish climate-related financial risk assessments biennially. These climate risk assessments are to be consistent with recommendations from the Task Force on Climate-Related Financial Disclosure (TCFD) framework, or their successor, the International Financial Reporting Standards. Companies are to publish the reports on their company’s website.
Doing Business in California Definition
The state Franchise Tax Board considers a company to be “doing business” if it meets any of the following criteria:
| CA sales exceed (either the threshold amount or 25% of total sales) | CA real and tangible personal property exceed (either the threshold amount or 25% of total property) | CA payroll compensation exceeds (either the threshold amount or 25% of total payroll) |
| $735,019 | $73,502 | $73,502 |
Educational Resources
There are multiple resources available to help. You’ll find law firms, environmental consultants, and GHG verification service firms among them. The most efficient data collection and reporting is from combining all three because each brings value to your plan and may help provide operational efficiencies as part of the process.
Free Resources Include:
