California, August 26, 2025
News Summary
California is set to implement new climate disclosure laws through the California Air Resources Board (CARB). Effective October 14, 2023, companies with revenues exceeding $1 billion must report Scope 1 and 2 emissions, while those with at least $500 million will need biennial climate-related risk reports. The regulations, linked to SB 253 and SB 261, aim to enhance corporate accountability. A preliminary comment period will allow stakeholder feedback before CARB’s December 2023 meeting, as nearly 4,160 firms will be affected by the new requirements.
California is set to make a pivotal move in climate regulation with the California Air Resources Board (CARB) planning to issue a notice of proposed rulemaking for climate disclosure laws on October 14, 2023. This action follows the recent enactment of two significant laws by Governor Gavin Newsom: SB 253, known as the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act, which aim to enhance corporate accountability in climate-related disclosures and risks.
The recently passed SB 253 requires companies with revenues exceeding $1 billion to report their Scope 1 and Scope 2 emissions, while future regulations will expand to include Scope 3 emissions. Meanwhile, SB 261 requires companies with at least $500 million in revenues to produce climate-related risk reports every two years.
Originally, CARB had intended to finalize these regulations by July 1, 2023. However, the timeline has shifted, with board consideration of the regulations now anticipated to take place during the December 11-12, 2023 meeting, following a 45-day comment period that will allow businesses and stakeholders to provide input on the proposed rules.
CARB estimates that approximately 4,160 firms will need to comply with the climate-related risk reporting under SB 261, while around 2,596 firms will be affected by the emission reporting requirements outlined in SB 253. The agency also plans to verify a preliminary list of companies that will fall under these new regulations.
Implementing these new laws is projected to incur a one-time cost of $20.7 million. This cost will be provisionally covered by funds from the Inflation Reduction Act’s Greenhouse Gas Reduction Fund, with an additional ongoing annual cost expected to be $13.9 million.
Annual fees associated with these requirements are forecasted to be $3,106 for companies positioned under SB 253 and $1,403 for those under SB 261, with entities generating over $1 billion in revenue being subject to both fees. Notably, the law does not apply to non-profits, government entities, teleworking-only companies, and certain wholesale electricity businesses.
In an approach that prioritizes compliance, an enforcement notice has been issued stating that CARB will not impose any sanctions during the first year for firms that fail to submit complete data, as long as they demonstrate a good faith effort in collecting relevant emissions information.
Following CARB’s initial public workshop held in May, sustainability experts indicated that the initial 2026 reporting deadlines will remain intact. Given the nature of these regulations, they have faced challenges in court; nonetheless, a recent ruling by a federal judge found no basis for a preliminary injunction against these oversight efforts.
CARB is also actively seeking public feedback through workshops until September 11, 2023, and has made a FAQ document available to address compliance queries, as many companies are gearing up for upcoming reporting requirements. Additionally, financial forecasts indicate potential political shifts could lead to an altered landscape for Environmental, Social, and Governance (ESG) investment perspectives, particularly as a more adversarial stance toward ESG is projected in 2025.
Summary of Key Features
| Feature | Details |
|---|---|
| SB 253 | Requires companies with revenues over $1 billion to report Scope 1 and Scope 2 emissions. |
| SB 261 | Mandates companies with at least $500 million in revenues to prepare biennial climate-related risk reports. |
| Estimated Affected Firms | 4,160 firms for SB 261 and 2,596 firms for SB 253. |
| Implementation Cost | $20.7 million one-time cost, with ongoing costs of $13.9 million. |
| Annual Fees | $3,106 for SB 253 and $1,403 for SB 261. |
| Exemptions | Non-profits, teleworking-only companies, certain electricity entities, and government entities. |
FAQ
What is SB 253?
SB 253 is a law requiring companies with revenues over $1 billion to report their Scope 1 and Scope 2 emissions.
What is SB 261?
SB 261 mandates companies with at least $500 million in revenues to prepare biennial climate-related risk reports.
Who will be affected by these laws?
CARB estimates about 4,160 firms will be affected by SB 261 and about 2,596 firms by SB 253.
What are the costs associated with compliance?
The one-time implementation cost is estimated at $20.7 million, with ongoing costs of $13.9 million, plus annual fees of $3,106 for SB 253 and $1,403 for SB 261.
Are there any exemptions to these laws?
Yes, non-profits, teleworking-only companies, certain electricity entities, and government entities are exempt from these laws.
Deeper Dive: News & Info About This Topic
- ESG Dive: CARB to Propose California Climate Risk Disclosure Rules
- ESG Today: California Releases FAQ for Mandatory Climate Reporting
- Ropes & Gray: Complying with California’s New Climate Disclosure Laws
- Google Search: California Climate Disclosure Laws
- Wikipedia: Environmental, Social, and Governance (ESG)
Author: STAFF HERE CORONADO
The Coronado Staff Writer represents the experienced team at HERECoronado.com, your go-to source for actionable local news and information in Coronado, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Coronado Island Film Festival, productions at Lamb’s Players Theatre, community workshops at John D. Spreckels Center, and iconic celebrations at Hotel del Coronado. Our coverage extends to key organizations like the Coronado Chamber of Commerce and Visit Coronado, plus leading businesses in hospitality, dining, and tourism that drive the local economy. As part of the broader HERE network, including HERESanDiego.com, HEREHuntingtonBeach.com, HERELongBeach.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
