If you’ve been following California’s climate disclosure rules, you know the alphabet soup has given way to what’s now being called “the 200s” – Senate Bills 219, 253, and 261. Together, these three pieces of legislation are reshaping corporate climate reporting for thousands of companies “doing business” in California. Despite ongoing legal challenges, a federal court in California rejected business groups’ requests to block the laws, companies’ preparations should move forward based on the California Air Resources Board (CARB) guidance.
Earlier this month, CARB released its minimum disclosure checklist for SB 261. While the checklist is now closed for comments, it offers the clearest view yet into what companies will be expected to put on the record by 2026. Here’s a quick guide to the highlights and some of the grey areas.
Annual Fees
To fund administration, CARB has proposed annual fees:
- SB 253: $3,106 per covered entity
- SB 261: $1,403 per covered entity
These fees apply per subsidiary and will be adjusted annually, which is an important budget consideration for companies with complex structures.
Doing Business in California: How CARB Defines In-Scope Entities for 2024 Reporting
Who’s “doing business” in California? Determining scope remains one of the most challenging issues. To date, “doing business in CA” means an entity generally must …
- Be a business entity (corporation, LLC, partnership, etc.) organized under U.S. laws (California, other U.S. states or DC, or under a U.S. Congressional act)
- Be engaged in transactions for financial or pecuniary gain or profit (i.e. actively operating in a commercial capacity)
Plus at least one of the following must occur in any part of a reporting year:
- The entity is organized or commercially domiciled in California.
- Its sales in California exceed a threshold — for 2024 that is approximately $735,019 (inflation-adjusted). Its real property + tangible personal property in California exceed either the inflation-adjusted threshold (~ $73,502) or 25% of its real & tangible personal property.
- Amount of compensation paid (payroll) in California exceeds the inflation-adjusted threshold (~ $73,502) or 25% of its total compensation.
Subsidiaries of non-U.S. parents that do business in California are still considered in scope. Exemptions include nonprofits, government entities, the California Independent System Operator, and companies whose only California presence is teleworking employees.
CARB plans to publish a list of covered entities based on the California Secretary of State’s records. If you fall into one of these categories, you may be spared – but don’t assume. In addition, CARB has made clear that even if you are not on the list of covered entities published, it is the responsibility of corporations to determine whether they are in scope of the reporting rules.
The “On-ramp” Approach to SB 261
CARB emphasized that its guidance is meant as an on-ramp: a way for companies to begin reporting in “good faith” and improve over time. Notably, CARB referenced the TCFD-aligned disclosure for the UK public sectors: Application Guidance as a resource for formulating compliance statements. What stands out in this document is the phased approach to implementation and expectations.
Key expectations include:
- Disclose on the reporting framework used (TCFD, IFRS S2 or CSRD, assuming the ESRS disclosures are equivalent; CDP is not sufficient).
- Explanations for missing disclosures along with future plans.
- Climate Scenario Analysis (CSA) is encouraged but NOT required in the initial report.
- Use the best available data – even if it is from 2024
- GHG inventories may be omitted in the first SB 261 filing but are required in subsequent years under SB 253.
- Reports must be posted to the company website (no microsite) by Jan 1, 2026 and shared with CARB by June 30, 2026. CARB will open a public docket for companies to post a link to their public reports on December 1st.
Whether CARB will provide feedback on these reports is not clear.
SB 253 Timelines Confirmed
CARB reaffirmed CA SB 253’s original reporting and assurance timeline:
- Scope 1 & 2 Data: Disclose data and emissions from FY 2025 with limited assurance by June 30, 2026.
- Scope 3 Data: Disclosure beginning in 2027 for FY 2026.
- Future Assurance Timeline: Limited assurance for Scope 3 by 2030; reasonable assurance for Scope 1 & 2 by 2030.
- Assurance standards are still under review, with standards such as ISSA 5000, AA1000, ISO 14060 under consideration. Qualifications for assurers are also being determined, but CARB expects to leverage existing verification body requirements – not create new ones. CARB did indicate that they may choose to internally audit assurance and reporting activities.
- CARB will publish a template for how to report GHG data next week (week of September 22).
California Climate Disclosure Requirements: Practical Steps for CSRD and IFRS Alignment
The direction is clear: disclose in good faith, start with what you have, and build overtime. California has created the most ambitious climate disclosure program in the U.S., designed to align with global frameworks such as CSRD and IFRS S2. The “200s” may feel overwhelming, but the minimum disclosure checklist shows CARB wants to give companies an on-ramp towards compliance. Plan for continuous improvement since a sound climate disclosure is not a one-time exercise but rather is developed over time with careful planning. Practical near-term steps every company can benefit from include:
- Benchmarking against industry peers and trends
- Training and capacity building on GHG data collection and climate-risk identification
- Determining who will champion the disclosures
- Integrating climate data into existing risk management systems
- Building and ensuring robust documentation to support every disclosure
- Evaluate business operations to determine boundaries for a Scope 1 and 2 GHG inventory and understand the processes and systems for tracking data needed for its development.
Stay tuned for insights on turning compliance into a competitive advantage.
Disclaimer: This blog is for informational purposes only and does not constitute legal or compliance advice. Companies should consult with legal counsel and relevant experts to determine specific obligations and develop a tailored compliance strategy.
Sources for all articles:
Climate Related Financial Risk Disclosure Draft Checklist. CARB. Posted September 2, 2025. https://ww2.arb.ca.gov/sites/default/files/2025-09/Climate%20Related%20Financial%20Risk%20Report%20Checklist.pdf.
SB 253/261/219 Public Workshop: Regulation Development and Additional Guidance. August 21, 2025. https://ww2.arb.ca.gov/sites/default/files/2025-08/SB%20253%20261%20workshop%20slides%208-21.pdf.
California State Legislature. Senate Bill No. 253: Climate Corporate Data Accountability Act. 2023. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB253. Accessed 31 Mar. 2025.
California State Legislature. Senate Bill No. 261: Climate-Related Financial Risk Disclosure Act. 2023. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB261. Accessed 31 Mar. 2025.
California State Legislature. Senate Bill No. 219: Climate Accountability Implementation Act. 2024. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB219. Accessed 31 Mar. 2025.
California Air Resources Board. Approved Comments: Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Disclosure (SB 261). California Environmental Protection Agency, https://ww2.arb.ca.gov/approved-comments?entity_id=41096. Accessed 31 Mar. 2025.
