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In 2023, California enacted two major climate-related disclosure laws aimed at increasing corporate transparency on environmental impact and financial risk. Senate Bill 253 (SB 253) requires large companies doing business in the state to publicly report their greenhouse gas emissions, while Senate Bill 261 (SB 261) mandates disclosure of climate-related financial risks. SB 253 applies to entities with annual revenues of $1 billion or more, and SB 261 applies to those with $500 million or more. These measures are part of California's broader effort to address climate change through corporate accountability.
Despite their passage, implementation has been uneven. SB 261 is currently stalled due to a Ninth Circuit injunction issued on November 18, but the California Air Resources Board (CARB) is moving forward with rulemaking in anticipation of future enforcement. On December 9, CARB released draft regulations for both SB 253 and SB 261, along with a staff report explaining its rationale and a notice of public hearing. The 45-day public comment period will run from December 26, 2025, through February 9, 2026, with a hearing scheduled for February 26, 2026.
CARB's proposed regulation establishes:
- Definitions for terms such "Doing business in California," "Revenue," "Parent," "Subsidiary," and "Covered entity"
- Exemptions for nonprofit organizations, government entities, insurance companies, and businesses whose sole activity in California is limited to payroll or employee compensation
- A formula for calculating fees for both SB 253 and SB 261 programs and a first annual fee deadline of September 10, 2026
- An initial reporting deadline of August 10, 2026, for Scope 1 and Scope 2 emissions under SB 253
- Penalties may be assessed for violations, and CARB has the ability to consult with outside entities, including the Board of Equalization or the California Franchise Tax Board, to obtain data needed to audit fee remittances
Importantly, while CARB continues its rulemaking, CARB does acknowledge the Ninth Circuit's November 18 injunction. On December 1, CARB issued an Enforcement Advisory stating that it will not enforce SB 261.
For businesses, the takeaway is clear: prepare now. Even with SB 261 on hold, CARB's regulatory framework is moving forward, and compliance obligations could resume quickly after court review. Companies should monitor developments and leverage CARB's published FAQs and checklists to avoid compressed timelines.
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