California's Climate Disclosure Bills:
What Will Hit Your
Reporting Cycle

01The Setup

SB-253 (Climate Corporate Data Accountability Act) requires GHG disclosure (Scopes 1, 2, and eventually 3) from companies with $1B+ annual revenue doing business in California. Reporting must follow established frameworks — GHG Protocol for emissions inventory.

SB-261 (Climate-Related Financial Risk Act) requires climate-related financial risk disclosure from companies with $500M+ revenue, following TCFD framework (or successor frameworks).

Both laws have implementation phasing through 2026-2027. Scope 1 and 2 reporting under SB-253 starts in 2026; Scope 3 in 2027. SB-261 risk disclosures phase in similarly. CARB is the implementing agency.

02The Data

The 'doing business in California' definition is broad — physical presence, sales, employees all count. Companies headquartered outside California are still subject if they meet the revenue threshold and have CA operations.

Reporting must be third-party verified. Verification capacity is constrained — the pool of qualified verifiers isn't growing as fast as the in-scope reporter population. Engaging verification partners early matters.

Scope 3 reporting in 2027 is the heavier lift. Most companies don't have scope 3 inventories. Building one is multi-year work — supplier engagement, methodology decisions, data collection systems. Companies starting in 2026 are already behind.

03The Implication

Companies with CA revenue who aren't already doing climate reporting face new reporting obligations starting in 2026. Many private companies, mid-cap public companies, and non-US-headquartered companies with CA operations will be in scope for the first time.

Existing reporters need to verify their methodology meets CA requirements specifically — not just SEC climate rule alignment, not just voluntary framework adherence. CA has its own specifics, and CARB will enforce them.

04The Recommendation

1. Assess threshold applicability. Most companies underestimate their CA revenue exposure. The 'doing business' test is broad. Run it carefully against actual exposure, not against where the company is headquartered.
2. Inventory current reporting capability against SB-253/SB-261 requirements. Identify gaps in scope coverage, framework alignment, and verification readiness.
3. Engage verification partners early. Capacity will tighten as the reporter population grows. First-movers get the qualified verifiers; late-movers get whoever's available.
4. For Scope 3, start the inventory now. This is multi-year work — supplier surveys, methodology decisions, data systems. Starting in 2026 with 2027 reporting deadline is the latest credible start date.

California climate disclosure will catalyze broader US corporate climate reporting in the same way California vehicle emissions standards catalyzed federal standards. The companies that get ahead of it will look prepared. The companies that wait will be doing emergency compliance work in 2026. Sustainability advisors who can navigate the specifics are about to be busy.