Who is in scope?

There remains uncertainty here of precisely which companies will be in scope for the regulation, given the continued need to clarify definitions. CARB sought views on potential definitions and, following feedback, expects to publish the rules that will codify the scope definition in October this year, with a decision by CARB’s board in December.

CARB’s preliminary analysis shows 4,160 companies will likely be in scope for climate risk disclosure and 2,596 for greenhouse gas emissions (GHG) reporting. CARB intends to publish a list of those entities they have identified as potentially being in scope in the coming weeks.

Fees

CARB will charge an annual fee to cover its costs administrating the regulations. This will be payable by companies in scope for SB 253 and SB 261. Fees will be subject to change, depending on how many companies are in scope in any given year. CARB’s preliminary estimate is that the annual fee for SB 253 entities will be $3,106 and for SB 261 entities it will be $1,403. A company that is in scope for SB 253 is automatically also in scope for SB 261 and so must pay both fees.

Minimum reporting requirements for climate risk disclosure

At yesterday’s workshop, CARB outlined that, at a minimum, businesses should report on the four disclosure pillars established by the TCFD:

Governance

  • Describe your governance structure for identifying, assessing and managing climate-related financial risks, including board oversight.

Strategy

  • Actual and potential impacts of climate-related risks and opportunities on operations, strategy and financial planning, through scenario analysis.

Risk management

  • Describe how you identify, assess and manage climate-related risks, including a qualitative description of the process used and how this is integrated into your overall risk management.

Metrics and targets

  • Disclose the metrics and targets used to assess and manage relevant and material climate-related risks and opportunities.
  • CARB notes that GHG emissions are not required to be disclosed under SB 261 for the first reporting period, despite frameworks such as TCFD recommending their disclosure within a climate-related financial disclosure.

To inform how they report the required information, businesses may use either the TCFD Final Recommendations Report, the IFRS Sustainability Disclosure Standards or another relevant standard as mandated by a regulated exchange or government entity, e.g. CSRD. Companies will also need to state which reporting framework is being used, which elements of that framework have been followed, which elements have not been followed and why, and discuss any plans for future disclosures.

Timelines

Climate risk reports remain due by January 1st, 2026, per the legislative wording. Reports must be published on the company’s website, with a public docket open for submissions from December 1st, 2025, with an objective to make it straightforward for the public to find reports in one place. GHG emissions reporting is proposed June 30th for Scopes 1 and 2, and Scope 3 in 2027. Emissions reporting templates are due to be published in September of this year to support companies with compliance.

Assurance

Third-party assurance is required for SB 253. Yesterday, CARB sought views on the use of potential standards ISSA 5000 (IAASB), AA1000, ISO 14060 family, and AICPA to achieve Limited Assurance.  Further views are sought before CARB will reach a view.

Legal uncertainty remains

Earlier this month, a preliminary injunction of SB 253 and SB 261 was denied by the District Court. The plaintiffs (1) have now appealed, with a hearing scheduled for September 8th and a decision requested by September 15th. Despite the uncertainty a legal challenge poses, the impending January 1st compliance deadline demonstrates that companies must press ahead with preparing their climate risk reports.

Act now

Although yesterday’s workshop was no game changer in terms of additional information, particularly as regards SB 261, there is now sufficient clarity for how best to approach climate risk disclosures. For companies potentially in scope, preparation should start now.

  • To find out how Risilience can support organisations to meet the fast-approaching SB 261 climate risk disclosure deadline, read our dedicated California Climate Acts landing page and download our updated 2025 report: California Climate Acts: what you need to know.

(1) The plaintiffs are: US Chamber of Commerce; California Chamber of Commerce; American Farm Bureau Federation; Los Angeles County Business Federation; Central Valley Business Federation ; and Western Growers Association.