By: Alyssa Zucker, Senior Industry Principal, Workiva
California continues to lead the way on climate action by advancing its critical disclosure laws: The Climate Corporate Data Accountability Act (SB 253) and the Climate Related FInance Risk Act (SB 261). The California Air Resources Board (CARB) recently held its first public workshop on the state’s landmark climate disclosure laws . The clear takeaway: deadlines are firm, reporting requirements are coming, and companies must prepare now. After months of anticipation from the corporates mandated to disclose through these laws, as well as the investors and consumers of this information, here’s what we know following CARB’s late May public workshop.
Timelines Are Firm: What You Need to Know
While CARB now aims to publish definitive rules by the end of 2025 (instead of the initial July 1st target), the core reporting deadlines remain unchanged, a point firmly emphasized during the workshop’s opening remarks by bill architect Senator Scott Wiener.
Key Reporting Requirements and Timelines:
SB 253 – Corporate Climate Data Accountability Act:
Scope 1 & 2 Emissions: Reporting begins in 2026 for Fiscal Year (FY) 2025 data. Limited assurance is required.
Scope 3 Emissions: Reporting starts in 2027 for FY 2026 data..
Assurance: Limited assurance for Scope 1 and 2 is required until 2029; reasonable assurance is mandated starting in 2030, at which time CARB will make a determination on assurance requirements for scope 3 emissions
SB 261 – Climate-Related Financial Risk Act:
Climate-Related Financial Risk Disclosures: Due in January 2026 and every second year thereafter.
CARB encourages alignment with existing frameworks, such as the Greenhouse Gas Protocol (GHG Protocol) for emissions and TCFD or ISSB for climate risk, signaling a desire for practical, actionable disclosures.
Good Faith Enforcement for SB 253 (Since December 2024)
As announced in a December 5, 2024 Enforcement Notice, CARB will exercise enforcement flexibility for SB 253 in 2026 as long as companies demonstrate a “good faith effort” to comply with the laws reporting requirements.This flexibility, currently limited to SB 253, aims to support entities given the delay in finalizing prescriptive rules. No such allowance currently exists for SB 261.
Public Comment Period: Stakeholder Priorities for Implementation Emerge
Prior to the workshop, CARB held a public comment period (December 2024 – March 2025) soliciting stakeholder feedback on how these landmark climate disclosure laws should be implemented.. This deliberate approach underscores CARB’s commitment to robust stakeholder engagement, actively seeking input from both advocates of the laws, like investors demanding standardized, decision-useful information,as well as opponents anticipating compliance burdens. Across the 261 responses, several key themes emerged:
1. Who’s In Scope? Businesses pressed for clarity on the definitions for “doing business in California,” revenue thresholds, and corporate relationships (e.g., parent-subsidiary structures) that ultimately determine which entities are covered by the laws.
Doing business in California: While CARB initially intended to apply the definitions set forth in the California State Revenue and Tax code sections 23101(a) and 23101(b), they are continuing to solicit stakeholder feedback on alternate definitions, following feedback around the broadness of this language that would force disclosure from companies with negligible operations in the state. In response, CARB is thoughtfully exploring definitions to ensure the law primarily regulates entities with significant exposure to the California economy.
Revenue: While the laws characterize the revenue thresholds dictating coverage (>$1 billion/yr for SB 253 and >$500 million/yr for SB 261) as total company revenue, CARB is reconsidering stipulations around revenue following stakeholder feedback, and cited the possibility of refining this definition to reflect revenue earned from California sales alone.
Corporate Relationships: While CARB had initially intended to align definitions of parent-subsidiary relationships based on the California Cap-and-Trade program’s definition (50% or greater ownership or control), they are continuing to solicit feedback and consider alternative definitions.
2. What’s Required?
Streamline with existing protocols and reporting standards:: Persistent across stakeholder feedback was the call for CARB to align rules with existing frameworks, with ISSB IFRS S2 most commonly cited. This alignment is crucial to both ease reporting burdens on corporate entities while also facilitating global comparatability of information.
Costs: Feedback also addressed anticipated costs of compliance and the need for consistency with other regulatory requirements.
Regulatory considerations: Stakeholders urged CARB to consider the approaches and implications of other regulators across the globe, such as EFRAG in the EU and jurisdictions adopting IFRS S1 & S2 reporting requirements.
What Still Remains TBD
Despite these consultations, some definitions and precise requirements are still being finalized. This ambiguity, particularly around prescriptive “how-to” details, makes upfront preparation for compliance challenging but essential. CARB indicated additional opportunities to engage in future public workshops, suggesting an ongoing cadence for stakeholder engagement to further refine outstanding details.
Open questions include:
Exact Reporting Deadlines: Specific dates within confirmed reporting years are still to be determined.
“Good Faith Effort” Definition: The precise definition for SB 253 enforcement flexibility remains to be formally defined.
TCFD vs. ISSB for SB 261: While CARB has indicated that IFRS S2-aligned reports will be acceptable, it remains unclear if they will require this framework,e, or if the less prescriptive recommendations of the now disbanded TCFD will suffice in the long term.
Ongoing Litigation: A Resilient Rule
Like other climate disclosure, California has faced its fair share of legal challenges, but the rule has thus far remained resilient. While lawsuits are ongoing, some claims have been dismissed or ruled in favor of the laws. A U.S. District Court order in February 2025, for instance, dismissed constitutional challenges against SB 253 and SB 261, clearing the path for CARB’s regulatory development.
Threats also remain at the federal level, with potential retaliatory funding holds and other attempts to block the laws, mirroring ongoing challenges seen with California’s automobile emissions rules. Despite these threats, consistent judicial outcomes to date suggest the laws are durable.
Don’t Wait, Prepare Now
Despite the delay in final rules, the message is unequivocal: companies should prepare. Fundamental reporting dates and deadlines remain firm. While prescriptive “how-to” details are still evolving, the “what” and “when” are holding steady – affected entities must maintain their compliance momentum.
My advice to company considering how to move forward- focus on “no-regret decisions” aligning with both the law’s direction and global best practices:
Build an Audit-Ready, GHGP-Aligned Emissions Inventory: Begin or continue compiling a Greenhouse Gas Protocol-aligned emissions inventory. This foundational work is crucial regardless of the final reporting format, and will go a long way towards demonstrating “good faith effort” for SB 253 alignment.
Prepare for Assurance: Work with internal or third party audit teams to ensure your emissions inventory will pass audit. In addition to emissions calculations, focus on internal controls and process descriptions.
Invest in Data Systems: Establish robust systems for collecting, managing, and reporting data that can adapt to evolving requirements. Centralizing and documenting data will reduce rework once specifics arrive.
Assess Climate Risks & Governance: Identify and evaluate material climate-related financial risks and opportunities (for SB 261). Begin establishing and documenting governance structures, strategies, and risk management processes related to these issues.
Consider reporting frameworks: While prescriptive reporting requirements and format remain unknown, Companies should assess their philosophical approach on how to move forward:
Conservative organizations seeking upfront certainty should consider an IFRS S2-aligned disclosure, especially if already subject to ISSB requirements in other jurisdictions.
Compliance-driven organizations that might start with a TCFD exercise should prepare for a “back-end investment” if IFRS S2 alignment becomes a prescriptive requirement.
Turning Compliance into Strategy
Beyond mere compliance, these laws offer a strategic opportunity. Market demand for climate disclosures is high: Workiva’s recent executive benchmark survey revealed that 8 out of 10 executives plan to disclose their greenhouse gas (GHG) emissions, regardless of local politics. Investors are increasingly viewing climate information as material to their investment decisions, providing a more comprehensive picture of risk and valuation. This growing reliance on climate data underscores the crucial role of its accuracy, as 92% of investors consider data accuracy foundational for evaluating organizations.
As developments continue to unfold, it’s clear: California is not backing down on the climate disclosure laws, and companies seeking to remain competitive in the global economy are increasingly expected to provide transparency into climate strategy and metrics. Proactive preparation, unwavering transparency, and a strategic mindset are not just recommended – they are essential.
About the author:
Alyssa Zucker is Senior Industry Principal at Workiva, where she helps lead the company’s strategy for customer-facing climate and sustainability content. Her 15 years of corporate sustainability experience guides the program recommendations, emissions accounting, and sustainability disclosure featured in the Workiva Carbon solution. Previously, Alyssa was Chief Sustainability Officer at Sustain.Life (now part of Workiva), and also directed the sustainability program at Vornado Realty Trust, where she managed green building certifications, waste and recycling, energy efficiency, health, and wellness for over 30 million square feet of commercial office space. Alyssa is accredited as a LEED and WELL AP and holds an MPA in Environmental Science and Policy from Columbia University and a BA in Environmental Studies from Washington University in St. Louis.
