The California Air Resources Board (CARB) announced that it has approved the adoption of the California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation, a new law requiring thousands of U.S. companies to disclose their value chain emissions and report on climate-related financial risks.
As part of the adoption of the new regulation, CARB established August 10, 2026 as the first-year disclosure deadline for reporting of corporate greenhouse gas (GHG) emissions.
California’s new climate reporting regulations, SB 253 and SB 261, were approved by Governor Newsom in 2023, and signed into law in October 2024. SB 253 requires companies with revenues greater than $1 billion that do business in California to report annually on their direct Scope 1 and 2 emissions, and Scope 3 value chain emissions, including those associated with supply chains, business travel, employee commuting, procurement, waste, and water usage. SB 261 applies to U.S. companies that do business in California and with revenues greater than $500 million to prepare a report disclosing their climate-related financial risk, as well as measures to reduce and adapt to that risk.
The new laws will introduce climate-related reporting requirements for most large companies in the U.S. CARB recently issued a preliminary list of more than 4,000 U.S. companies likely to be required to comply with the new climate reporting laws.
Notably, the regulations are still facing legal challenges, with the U.S. Ninth Circuit appeals court issuing an injunction late last year to pause the implementation of SB 261 pending the outcome of an appeal. Initial climate risk reports under SB 261 had been set to be published by January 1, 2026. Due to the injunction, CARB said that reporting under SB 261 is currently voluntary, and noted that 120 climate-related financial risk reports have already been voluntarily submitted and made publicly available.
While SB 253 requires disclosure of value chain emissions, in its first year of application, reporting requirements under the new regulation only include Scope 1 and 2 emissions, with Scope 3 reporting only mandated from 2027.
CARB Chair Lauren Sanchez said:
“By establishing clear and consistent disclosure requirements, California is ensuring that the state’s investors and consumers have access to reliable information to inform their decisions and is joining other jurisdictions around the world in requiring climate data transparency. Many business leaders are already choosing to engage early, a clear indication they recognize the importance of climate-related risk transparency to inform business and consumer decisions.”
