The California Air Resources Board (CARB) has approved the California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation, marking the first step in implementing the state’s corporate climate disclosure laws under SB 253 and SB 261.
The regulation sets out how administrative fees will be assessed, defines key terms for programme application, and establishes initial reporting timelines. It enables CARB to administer and fund the statutory reporting requirements under the two laws.
CARB Chair Lauren Sanchez said the rules aim to provide “clear and consistent disclosure requirements” so that investors and consumers have access to reliable climate-related information.
The regulation applies to large companies doing business in California with annual revenues above $500 million or $1 billion, depending on the statute. It introduces a flat-rate fee structure and sets 10 August 2026 as the first-year reporting deadline for SB 253. In the first year, companies will be required to report Scope 1 and Scope 2 emissions only. Scope 1 covers direct greenhouse gas emissions from owned or controlled sources, while Scope 2 relates to indirect emissions from purchased electricity, steam, heat or cooling.
The rules clarify that revenue thresholds will be based on gross receipts reported to the California Franchise Tax Board.
CARB said more than 120 climate-related financial risk reports have already been submitted voluntarily through its public docket by companies across sectors including manufacturing, technology, healthcare, energy, finance and transport.
The agency stated it will prioritise supporting compliance through stakeholder engagement and will exercise enforcement discretion for good-faith submissions in the first year.
Certain entities are exempt, including non-profit organisations, government entities and insurance businesses regulated by the Department of Insurance.
Under a court order, CARB is not currently enforcing SB 261, and related reporting remains voluntary.
California’s climate disclosure framework was established in 2023 when Governor Gavin Newsom signed SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act. SB 253 requires companies with over $1 billion in annual revenue to report Scope 1 and 2 emissions from 2026 and Scope 3 emissions from 2027. SB 261 requires companies with more than $500 million in revenue to publish biennial reports on climate-related financial risks and mitigation measures.
