Corporate climate reporting obligations in California 

California is once again leading the way in corporate climate transparency. On 9 December 2025, the California Air Resources Board (CARB) released draft regulations for two key climate laws: SB 253 – Climate Corporate Data Accountability Act, covering greenhouse gas (GHG) emissions reporting, and SB 261 – Climate-related Financial Risk Act, focused on climate-related financial risk disclosure. 

Although these laws are Californian, their impact goes beyond the United States. International companies, including those based in Europe, may be affected if they generate significant revenue linked to California, even without a physical presence in the state.

The regulatory framework is still developing. SB 253 is currently in force, while SB 261 has been temporarily blocked by the U.S. Ninth Circuit Court of Appeals as part of an ongoing legal challenge. This pause does not cancel the law, but delays its enforcement while the court reaches a final decision. During this period, companies may submit information on a voluntary basis.

The obligations mainly apply to large companies, based on annual revenue and business activity in California:

• SB 253: companies with USD 1 billion or more in annual revenue

• SB 261: companies with annual revenue of USD 500 million or more.

A company is considered to be “doing business in California” if it is organised or domiciled in California, or if its California sales exceed USD 757,070 (2025) or 25% of total sales. Exemptions apply for non-profits, government entities, certain insurance companies, subsidiaries included in a parent company’s report, and businesses whose only California activity consists of wholesale electricity transactions or teleworking employees.

Companies must report Scope 1 and Scope 2 emissions, covering greenhouse gases from their own operations and purchased energy, such as fuel for company vehicles, on-site equipment, and electricity, heating, or cooling in offices and warehouses. Scope 3 emissions are included, but penalties for these will not be enforced until 2030 if reported in good faith. For the first reporting year (2026), companies that had not started collecting emissions data by December 2024 may submit a statement explaining that data collection had not begun. The deadline is 10 August 2026, covering fiscal year 2025. Non-compliance can result in penalties of up to USD 500,000 per year, plus an annual fee and five years of recordkeeping.

SB 261 requires reporting of climate-related financial risks and measures to reduce or adapt to them, including extreme weather, supply chain disruptions, or regulatory changes. Reports should follow TCFD (Task Force on Climate-related Financial Disclosures), ISSB (International Sustainability Standards Board), or ESRS (European Sustainability Reporting Standards), and must explain any parts that are missing and how they will be completed. The original deadline of 1 January 2026 is suspended due to a court injunction. Penalties can reach USD 50,000 per year, plus fees and recordkeeping, but partial reporting is allowed with explanation.