CARB climate reporting update: On Thursday May 29, the California Air Resources Board (CARB) hosted a workshop covering the major comments it received during the informal solicitation period which took place from December 16, 2024 to March 21, 2025. The workshop was highly anticipated with over 3,000 people signed up to attend across five continents.
The workshop (where presented information can be found here) was the first significant communication from CARB about the rulemaking status since the enforcement notice that was issued in December 2024. While the presentation provided useful insight into how CARB is thinking about major questions preparers have, it was also clear that much remained to be determined before the quickly approaching 2026 deadline. Below are a few of the major themes that emerged from the workshop.
CARB’s commitment to collaborate with key stakeholders
Throughout the workshop, CARB emphasized that it would rely heavily on comments and key stakeholder input to draft and refine the final rules. As part of the formal rulemaking process, a 45-day comment period will be held once the draft regulatory text is released. The agency is fielding comments and insights at any time through its designated email address, ClimateDisclosure@arb.ca.gov.
Firm Timelines, Growing Questions
CARB reiterated that reporting timelines under SB 253 and SB 261 are fixed. The following deadlines were confirmed:
- Scope 1 and 2 GHG emissions reporting: To be reported in 2026 for 2025 emissions
- Scope 3 GHG emissions reporting: To be reported in 2027 for 2026 emissions
- Climate-related financial risk disclosure (SB 261): To be reported in 2026
However, many commenters expressed concern that specific filing dates have not yet been clarified. Given the complexity of developing complete GHG inventories—particularly for companies reporting Scope 3 emissions—there were calls to ensure that deadlines are not set too early in the calendar year.
In addition, while the law calls for limited assurance on 2025 data, CARB has indicated that audit requirements may be deferred until later in 2026, providing preparers with more time to meet assurance expectations.
Need for Alignment and Definitions
As companies seek to align with multiple frameworks, stakeholders have requested clarification on how California’s climate risk disclosure requirements (SB 261) will align with global standards, such as the International Sustainability Standards Board (ISSB) and the EU’s Corporate Sustainability Reporting Directive (CSRD). Senators Scott Wiener and Henry Stern—authors of the legislation—confirmed that international alignment remains a top priority and noted ongoing evaluation of standards from Australia, Japan, the UK, and New Zealand as well.
While CARB has tried to allay fears from preparers about a potentially tight reporting timeline by saying that “CARB will exercise enforcement discretion for the first reporting cycle, on the condition that entities demonstrate good faith efforts to comply with the requirements of the law”, several stakeholders—including GSI Principal Becky Twohey—pressed CARB for clarity on what constitutes a “good faith disclosure” under SB 261. While the agency acknowledged the importance of this definition, it has not yet provided further guidance.
The disbanding of the Task Force on Climate-related Financial Disclosures (TCFD) also fueled additional questions, as stakeholders emphasized the need for a clear path forward on which standards companies should use when preparing their disclosures. There remain open questions about whether there are disclosures that are optional in TCFD or IFRS that will become mandatory under SB261.
Defining Who’s in Scope
CARB is currently exploring whether to use California’s Revenue and Taxation Code to define what constitutes “doing business in California”—a key determinant of which companies are subject to the new disclosure rules. However, stakeholders raised concerns about this approach. One recurring theme was the risk of unintended consequences, such as companies choosing not to hire remote workers in California to avoid triggering disclosure obligations. Additionally, there was skepticism about the relationship between having “business in California” and producing emissions in the state.
This uncertainty underscores the urgency for clear guidance, especially as CARB prepares to issue an updated draft rule by July 1, 2025, as required under SB 219. Reporting entities are actively watching for these updates, hoping for clarification on scope, timing, and implementation strategy.
GSI’s Position
GSI Environmental fully supports CARB’s efforts to bring standardized, transparent climate disclosure to California. We recognize the magnitude of the challenge ahead and the complexity of harmonizing state mandates with international expectations. While we look forward to reviewing the forthcoming draft rules, we also anticipate that delays or clarifications may be necessary to ensure feasible and effective implementation.
As we move forward, we remain committed to partnering with CARB, our clients, and fellow stakeholders to advance climate resilience, data quality, and regulatory preparedness across all sectors operating in California.
