UPDATE: California’s Corporate Climate and GHG Disclosure Rules
August 28, 2025
California Air Resources Board Signals Intentions for Climate Regulations
At their August 21st public workshop, California’s Air Resources Board (CARB) significantly advanced implementation of the state’s climate disclosure laws. We are in the countdown!
These are SB 253 (Corporate GHG Reporting), SB 261 (Climate-Related Financial Risk Disclosure), and SB 219 amendments. Aimed at large companies formed in the U.S. and doing business in California, these require disclosure of greenhouse gas (GHG) emissions and climate-related financial risks starting in 2026.
Four months remain in 2025 for companies to prepare a first climate risk assessment for reporting. Companies have 10 months to compile Corporate Scope 1 and 2 reporting in mid-June, 2026.
NEW: CARB’s Current Regulatory Direction
For public comment, CARB provided their current thinking on draft rule language identifying a wide range of key details for implementation of the ‘200s’, as they referred to the 3 laws.
Definition of covered companies – the “Who”
NEW – Alternative definition of annual Revenue consistent with Dunn & Bradstreet, Standard & Poor, and Data Axle. [Thresholds – Risk >$500M; GHG: >$1B]
NEW – Update on definition of Doing Business in CA: Companies in CA Secretary of State Business Entity public database.
NEW – Update on definition of Parent and subsidiary: Use existing AB 32 definition. Working on process for companies to avoid reporting for multiple entities under same parent company.
NEW: Allows parent companies to report at a consolidated level when appropriate. Proposed specific exemptions were identified.
Due Dates
Climate Risk: NO change since a legislative requirement: First climate-related financial risk report is due January 1, 2026, then biennially.
GHG Emissions: NEW – Corporate Scope 1 and 2 reporting is due June 30, 2026 (covering FY 2025) with verification at Limited Assurance.
Disclosure/Reporting Content
Climate Risk: NEW – May meet one of several standards: TCFD, IFRS, or report developed under other regulations. And, CARB to host a public docket open from December 1, 2025 to July 1, 2026 for entities to post the public link to their reports.
For 2026, GHG Inventory basis can be 2024 or 2023, if 2025 is not available. Scope 3 reporting is not mandatory for 2026 but recommended if material.
GHG: NEW – CARB will post draft reporting templates for Scope 1 and 2 reporting by the end of September 2025 for public feedback.
Preliminary Estimate of Covered Companies and Estimated Annual Fees
Risk: NEW – 4,160 companies with $1,403 annual fee
GHG: NEW – 2,596 companies with $3,106 annual fee
Assurance by 3rd parties
GHG: NEW – CARB’s initial concepts provided include potential alignment with existing international standards: ISSA 5000 (IAASB); AA1000; ISO 14060 family and AICPA. CARB may opt to audit assurance and reporting. CARB retains authority for review and enforcement actions.
Next Steps
Public comment period – ends Sept 11, 2025
Notice of Proposed Rulemaking – Oct 14, 2025
45-day Public Comment period – Oct 17 – Nov 30, 2025
Board consideration of proposed rulemaking: Dec 11 — Dec 12, 2025
