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VideoCalifornia Climate Reporting Changes Leave Companies with Less Time to Prepare
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Legislation extends the deadline to develop regulations by six months but maintains the January 2026 reporting date.
California Governor Gavin Newsom signed into law Senate Bill (SB) 219, extending by six months the deadline for the California Air Resources Board (CARB) to develop rules for the state’s two climate reporting laws, known as the Climate Accountability Package. Companies must still begin reporting scope 1 and 2 greenhouse gas (GHG) emissions in 2026 and scope 3 GHG emissions in 2027. Disclosures of climate‑related financial risks will still begin in 2026.
With the six-month delay for the rules only, the new law effectively leaves organizations with less time to prepare than under the original timeframe. Newsom previously proposed a two-year delay for both rule development and the reporting deadline to give organizations additional time to refine their data and reporting processes (see Weaver article). Legislators, however, opposed delaying implementation of the law. The new compressed timeframe increases the urgency for organizations to develop the emissions tracking and climate risk reporting systems needed for compliance.
Key Changes
The Climate Accountability Package includes SB 253, which requires companies to disclose their direct and indirect GHG emissions, and Senate Bill 261, which mandates companies to disclose their climate-related financial risks. SB 219 makes several changes to these laws, including:
- Six-month rule delay: CARB has an extension from January 1, 2025 to July 1, 2025 to develop and adopt regulations for SB 253 that will mandate reporting entities to disclose annually their scopes 1, 2 and 3 emissions and obtain a third-party assurance engagement.
- Consolidated reporting: Companies can now consolidate reporting scopes 1, 2 and 3 emissions at the parent company level, and subsidiaries are exempt from preparing a separate report if the parent company qualifies as a reporting entity. This aligns SB 253 with SB 261 in that the latter already allowed for parent level reporting.
- New scope 3 schedule: CARB can now determine when companies must report scope 3 emissions. Originally, SB 253 required companies to report scope 3 emissions no later than 180 days after they report scope 1 and scope 2 emissions.
- Change to climate reporting organizations: CARB has the option, but no longer the requirement, to contract with a third-party climate reporting organization to develop and manage several elements of the program under SB 253 and SB 261.
- No annual fee: companies are no longer required to pay an annual fee when filing climate disclosures under SB 253 and SB 261.
How Organizations Can Prepare
Although CARB will not release the specific regulatory requirements of the Climate Accountability Package until mid-2025, there are several steps companies can take now to prepare. First businesses must determine whether they fall within scope of these regulations. If the regulations are applicable, then conducting readiness assessments for emissions and climate risks reporting is essential to identify any gaps between what they already disclose and what the regulations may require. The Greenhouse Gas Protocol and the Task Force on Climate-Related Financial Disclosures (TCFD) will serve as the key guiding frameworks for compliance with California’s climate laws:
- Greenhouse Gas Protocol: SB 253 requires GHG reporting in conformance with the Greenhouse Gas Protocol standards and guidance. This includes the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain Accounting and Reporting Standard.
- Task Force on Climate-Related Financial Disclosures (TCFD): SB 261 requires companies to report climate-related financial risk in accordance with the TCFD’s Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures, released in June 2017.
Companies should also continue to monitor the ongoing regulatory developments and legal challenges related to the law. While the laws are currently under litigation, unlike the SEC’s regulations, they have not been stayed pending the final verdict. They are proceeding as planned and companies should take note. With the reporting deadline just over a year away, businesses should start preparing now, despite the legal challenges.
The importance of proactive engagement cannot be overstated, as the Climate Accountability Package may serve as the model for future climate laws in other states. Focusing on the Greenhouse Gas Protocol and the TCFD is a key step toward staying ahead of the regulatory curve in California as well as in other jurisdictions with emerging climate laws.
Key Dates
| Senate Bill No. 253: Climate Corporate Data Accountability Act | Entities that do business in CA w>$1B in total annual revenue | Jan 2026 Scope 1 & 2; Jan 2027 Scope 3 | Annually – file w CARB following GHG Protocol – Scope 1, 2 and 3 GHG emissions | NTE to $500K/reporting year; good faith efforts considered for Scope 3 | Yes |
| Senate Bill No. 261: Climate-Related Financial Risk Act | Entities that do business in CA w>$500M in total annual revenue | Jan 2026 | Bi-annually – file CARB following TCFD guidance or equivalent and publicly available on entity's website – climate-related financial risk and measures adopted to reduce and adapt to climate related risk and gaps in reporting | NTE to $500K/reporting year; good faith efforts considered | No |
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