California establishes August 10, 2026 as the first reporting deadline under SB 253, requiring large companies to disclose greenhouse gas emissions.
More than 4,000 U.S. companies doing business in California are expected to fall under the new climate reporting requirements.
Scope 3 emissions disclosures will become mandatory in 2027, while climate risk reporting under SB 261 remains voluntary due to ongoing legal challenges.
California regulators have set August 10, 2026 as the first deadline for large companies to disclose greenhouse gas emissions under sweeping climate transparency rules that could reshape corporate reporting across the United States.
The California Air Resources Board (CARB) approved the adoption of the California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation at its February meeting, establishing key administrative rules for implementing the state’s landmark climate disclosure laws, Senate Bills 253 and 261.
Together, the statutes introduce some of the most expansive corporate climate reporting requirements in the United States. Companies with annual revenues above $1 billion that conduct business in California must report their greenhouse gas emissions, including those generated across their supply chains. Firms with revenues exceeding $500 million must disclose their exposure to climate-related financial risks and outline mitigation strategies.
CARB also finalized administrative mechanisms required to run the reporting programs, including fee structures to fund oversight and regulatory implementation.
Scope and Corporate Impact
The regulations are expected to affect a large swath of the U.S. corporate sector. CARB has published a preliminary list identifying more than 4,000 companies likely to fall under the disclosure requirements.
The first year of reporting under SB 253 will require companies to disclose Scope 1 and Scope 2 emissions only. Scope 1 refers to direct emissions from operations controlled or owned by a company, while Scope 2 covers indirect emissions from purchased electricity, heat, steam, or cooling.
Disclosure of Scope 3 emissions, which account for value chain impacts such as supplier activity, business travel, employee commuting, procurement, and waste management, will become mandatory starting in 2027.
To streamline compliance and verification, CARB confirmed that revenue thresholds determining which companies fall under the regulations will be tied to gross receipts reported to the California Franchise Tax Board.
Entities exempt from reporting include tax-exempt nonprofits, charities, government entities, and insurance businesses regulated by the Department of Insurance.
Climate Financial Risk Reporting Faces Legal Pause
The second pillar of California’s corporate climate transparency framework, SB 261, requires companies to disclose climate-related financial risks and describe strategies to mitigate and adapt to those risks.
However, implementation of that requirement is currently paused due to ongoing litigation. The U.S. Ninth Circuit Court of Appeals issued an injunction late last year halting enforcement while the legal challenge proceeds.
Originally, companies subject to SB 261 were expected to publish their first climate risk reports by January 1, 2026.
Despite the court pause, reporting under SB 261 remains voluntary. CARB maintains a public docket where companies can submit disclosures, and more than 120 climate-related financial risk reports have already been filed by both public and private companies across sectors including technology, manufacturing, healthcare, transportation, finance, and energy.
CARB indicated that its initial enforcement approach will focus on supporting compliance and working with companies as they prepare their first filings.
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Building a U.S. Climate Data Architecture
Regulators argue the rules aim to create consistent and decision-ready climate information for investors, insurers, lenders, and consumers operating in the world’s fifth-largest economy.
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.”
California’s initiative places the state alongside major global jurisdictions that have introduced corporate climate reporting frameworks, including the European Union and the United Kingdom.
For corporate leaders and investors, the practical implications extend far beyond California’s borders. Many companies that operate nationally will need to build internal emissions accounting systems, strengthen supply chain data collection, and develop climate risk assessments capable of withstanding regulatory scrutiny.
As climate disclosure regimes proliferate globally, California’s rules are expected to become a de facto reporting benchmark for large U.S. companies, accelerating the integration of climate risk and emissions data into mainstream financial decision-making.
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