The California Office of Administrative Law (OAL) has approved the Initial Regulation implementing the state’s corporate climate disclosure mandates, the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261).
The California Air Resources Board (CARB) confirmed that the regulation took effect immediately upon approval on October 12, 2026.
The regulatory milestone establishes formal scoping definitions for entities determining applicability ahead of the first mandatory SB 253 Scope 1 and Scope 2 emissions reporting deadline on November 10, 2026.
Key statutory thresholds, reporting mechanics, and compliance parameters include:
- Applicability thresholds: Applies to business entities doing business in California with annual revenues exceeding $1 billion for SB 253 (emissions reporting) and $500 million for SB 261 (climate risk disclosure). Revenue is defined as gross receipts calculated at the individual entity level based on the lesser of the last two fiscal years.
- Consolidated reporting options: Parent companies may submit consolidated emissions reports and cover annual administrative fees on behalf of eligible subsidiaries, though revenue qualification continues to be assessed per entity.
- First-Year SB 253 compliance flexibilities: Regulators will accept existing corporate sustainability reports, third-party disclosure submissions, or CARB’s draft reporting template for the 2026 reporting cycle, with or without third-party limited assurance.
- Enforcement relief: Codifies first-year enforcement discretion for covered entities that were not actively collecting Scope 1 and Scope 2 greenhouse gas data as of December 5, 2024.
- Record retention mandate: Covered entities must maintain supporting California tax records for a minimum of five years to substantiate threshold determinations.
While applicability rules are finalized, CARB is currently developing a separate regulatory framework for 2027 and beyond, which is expected to introduce mandatory Scope 3 emissions reporting, formalized assurance standards, and alignment with the Greenhouse Gas Protocol.
Simultaneously, legal uncertainty surrounds SB 261 following an injunction by the U.S. Court of Appeals for the Ninth Circuit (Chamber of Commerce v. CARB). CARB issued an enforcement advisory pausing the statutory deadline for SB 261 climate risk reports pending judicial resolution, though voluntary submissions remain open via CARB’s online intake portal.
