SB 253 & SB 261
Explore the implications of the California Corporate Greenhouse Gas Reporting Program, commonly referred to as the California Climate Laws.
What are the California Climate Laws?
The California Climate Laws are being developed by the California Air Resources Board (CARB) to promote transparency from companies regarding their greenhouse gas emissions.1
The Bills
The California legislature does not lay out detailed reporting requirements in the bills themselves, but references internationally recognized reporting frameworks to abide by.
SB 253: Climate Corporate Data Accountability Act
California Senate Bill 253 requires businesses to disclose their greenhouse gas (GHG) emissions, including direct and indirect emissions. The legislation aims to improve transparency regarding the environmental impact of corporate activities. By mandating comprehensive GHG reporting, the bill seeks to hold companies accountable for their emissions and support California's climate goals.2
SB 261: Climate Related Financial Risk Disclosure
California Senate Bill 261 requires businesses to disclose their climate-related financial risks and impacts. The legislation aims to enhance transparency and accountability regarding how companies assess and manage risks associated with climate change. By mandating these disclosures, SB 261 encourages businesses to consider the long-term implications of climate change on their operations.3
Applicability
The Bills apply primarily private and public companies formed under U.S. laws4. For the covered entities, two criteria need to be assessed to determine applicability of the laws.
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Revenue
Revenue
An entity must exceed the specified revenue threshold to be covered by the climate laws. The thresholds are different for the two bills:
- SB 253: Total annual revenues in excess of $ 1 billion
- SB 261: Total annual revenues in excess of $ 500 million
The annual revenue figures include all revenue of the entity, not just revenue generated in California. A company that consolidates the revenues of its subsidiaries may also be in scope if it exceeds the thresholds. Applicability shall be determined based on the business entity’s revenue for the prior fiscal year.
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“Doing business in California”
“Doing business in California”
In addition to exceeding the revenue thresholds, a company must also be “doing business in California”. This term is not explicitly defined in the bills, but in the California tax code. An entity is considered doing business in California if it meets any of the following:
- Engaged in any transaction for the purpose of financial gain within California
- Organized or commercially domiciled in California
- California sales, property or payroll exceeding $735,019, $73,502, and $73,502, respectively (2024 thresholds—adjusted annually5)
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Exemption
Exemption
Entities covered by any of the two bills are exempt from their reporting obligations if they are included in the report of a parent company. In such a case, subsidiaries do not have to prepare their own disclosures even if they fulfil the applicability criteria.
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Timeline
Timeline
The climate bills were passed in 2023, and first reporting obligations are due in 2026. The requirements for the two bills are outlined below.
SB 253
Companies are required to disclose their emissions of the prior fiscal year. Starting in 2026, the scope 1 and 2 emissions of the fiscal year 2025 need to be disclosed. These disclosures are subject to limited assurance. Starting from 2027, companies are required to also include their scope 3 emissions in their reporting (no assurance requirement). These requirements stay in place until 2030 when assurance requirements are expanded. Scope 1 and 2 emissions will be subject to reasonable assurance, and scope 3 emissions may be subject to limited assurance (to be determined by CARB6).
SB 261
Companies are required to publish a biennial climate risk report. The first report is due by Jan 1st, 2026, and from there on a new report is required every two years.
Source: S&P Global Sustainable1, 2025. For illustrative purposes.
The Reporting Framework
The California legislature does not lay out detailed reporting requirements in the bills themselves, but references internationally recognized reporting frameworks to abide by.
SB 253 requires companies to follow the GHG Protocol7, the most prominent standard for GHG reporting.
SB 261 requires companies to create a climate risk report that follows the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD)8, or any successor framework. Since the introduction of the bill, TCFD has been disbanded, and its responsibilities handed over to the IFRS Foundation9. The latest standard for climate-related disclosures is IFRS S2. All TCFD recommendations were incorporated into IFRS S210, so that a company reporting alongside IFRS S2 will also cover all elements of TCFD. The standards follow the same basic structure.
How we help
S&P Global can support your organization every step of the way towards complying with the California Climate Laws.
Our Approach
We recognize that every company is at a different stage of maturity in handling their climate-related issues. That’s why we offer a customized approach that fits your purpose. Whether you are in the early stages and are looking for a basic compliance solution, or you are a leader going for excellence – we will design the project accordingly.
End-to-end project support
Our project team will be with you every step of the way.
Heavy lifting by S&P Global
We keep the burden on your organization as low as possible, with as much operational support as you need.
Specialist support
Our teams will guide you with regulatory and analytical intelligence based on decades of experience.
We offer the full range of services to choose from:
Project scoping
We help you determine if your organization subject to California climate laws and decide on the best reporting strategy based on your unique corporate setup.
Data collection
We collect information required for disclosure and can support you in identifying and closing gaps GHG quantification: We quantify emissions for scope 1, 2, and 3.
Climate risk analytics
We help you assess climate risks, including a financial impact quantification.
Report writing
We develop the narrative for your climate risk report.
Report design
We create a publication-ready report in corporate design.
[1] Measures include, among others, a reduction in GHG emissions (AB 32 Global Warming Solutions Act of 2006), achieving 100% renewable electricity by 2045 (SB 100 California Renewables Portfolio Standard Program: emissions of greenhouse gases of 2018), and efforts to adapt to the effects of climate change (California Climate Adaptation Strategy of 2021)
[2] SB 253: Climate Corporate Data Accountability Act
[3] SB 261 Greenhouse gases: climate-related financial risk
[4] “Covered entity” means a Corporation, partnership, limited liability company, or other business entity formed under the laws of the state, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States
[5] See: https://www.ftb.ca.gov/file/business/doing-business-in-california.html
[6] California Air Resources Board
[7] Greenhouse Gas (GHG) Protocol
[8] Taskforce on Climate-related Financial Disclosures (TCFD)
[9] Information on the relationship between ISSB standards (IFRS S1 and S2) and TCFD
[10] IFRS S2 Climate-related Disclosures
[11] The enforcement notice from Dec. 5, 2024, states that “CARB will exercise enforcement discretion for the first reporting cycle, on the condition that entities demonstrate good faith efforts to comply with the requirements of the law.”