Guide
California SB 253 / SB 261 climate disclosure readiness
California's SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act), as amended by SB 219 (2024), pull thousands of US companies doing business in California into mandatory climate disclosure. SB 253 requires Scope 1, 2, and 3 GHG emissions reporting for companies with global revenue over $1B. SB 261 requires climate-related financial risk disclosures aligned with TCFD/IFRS S2 for companies over $500M. CARB is the implementing regulator; first reports begin 2026. This guide maps the obligations and a readiness path.
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Who is in scope
SB 253 applies to any US-formed entity 'doing business in California' with total annual revenue >$1B (global, not California-only). SB 261 applies at the >$500M threshold. 'Doing business' adopts the California Franchise Tax Board test — even a modest CA sales footprint or property holding can trigger it. Subsidiaries roll up to the ultimate parent for revenue tests but report at the consolidated parent level. Insurance companies are exempt from SB 261; non-profits and government are out of scope.
SB 253 — Scope 1, 2, and 3 GHG reporting
Quantify and disclose GHG emissions per GHG Protocol Corporate Standard. Scope 1 (direct: combustion, process, fugitive, fleet) and Scope 2 (purchased electricity, steam, heat, cooling — both location- and market-based) reporting begins 2026 for FY2025 data with limited third-party assurance, escalating to reasonable assurance by 2030. Scope 3 (purchased goods/services, business travel, employee commute, use-of-sold-products, end-of-life, upstream/downstream transport, investments) reporting begins 2027 for FY2026 data with limited assurance by 2030. CARB publishes a reporting platform; filing fees apply. Penalties up to $500,000 per reporting year for non-filing or material misstatement; Scope 3 has a safe harbour for good-faith estimates through 2030.
SB 261 — climate-related financial risk
Biennial public report on climate-related financial risk and mitigation/adaptation measures, aligned with TCFD recommendations (now IFRS S2). Four pillars: governance (board oversight, management role), strategy (climate risks/opportunities, scenario analysis including 1.5°C and 3°C+ scenarios, business impact), risk management (identification, assessment, integration), metrics and targets (Scope 1/2/3 where material, transition plan, internal carbon price). First report due January 1, 2026 covering FY2024-2025; biennial thereafter. Published on the company's public website with link reported to CARB. Administrative penalty up to $50,000 per reporting year.
Assurance, double-counting and federal/EU overlap
SB 253 third-party assurance progression: limited (2026 Scope 1+2, 2030 Scope 3) → reasonable (2030 Scope 1+2). Assurance providers must meet CARB qualification standards (likely AICPA, ISO 14065, or equivalent). Companies already reporting under EU CSRD (ESRS E1), IFRS S2, SEC climate rule (where in force), or California voluntary registries can leverage the same inventory. SB 219 added flexibility: CARB may accept consolidated reports from a parent covering subsidiaries; CARB may align with federal/international frameworks to reduce duplication. Watch CARB rulemaking — implementing regulations finalized through 2025-2026 will define the data schema, assurance scope, and Scope 3 calculation methodology.
A 180-day SB 253 / SB 261 readiness path
Days 1–30: scope confirmation (revenue test, CA nexus, parent/subsidiary rollup); appoint accountable executive. Days 31–60: data inventory and gap analysis (Scope 1 source list, electricity meter coverage, Scope 3 spend categorisation). Days 61–120: build the GHG inventory for FY2025 baseline using GHG Protocol; document calculation methodology and data quality. Days 121–150: draft the SB 261 climate-risk report (governance, strategy, risk, metrics); board review. Days 151–180: engage assurance provider for SB 253; CARB platform onboarding; publish SB 261 report.
Standards covered in this guide
Each standard, retailer code or assurance scheme referenced above has its own deep-dive page with scope, audit detail and common pitfalls.
Where this lives in V5 Ultimate
The clauses above aren't theoretical — every one maps to a shipped module and an industry profile. Jump to the parts of the product that turn this guide into evidence on a Monday morning.
Modules that do the work
Industries this hits hardest
Frequently asked
Is California-only revenue the threshold, or global revenue?
Global total annual revenue — $1B for SB 253, $500M for SB 261. California-only revenue is irrelevant to the threshold; the trigger is 'doing business in California' under the Franchise Tax Board test combined with the global revenue test.
When is the first SB 253 report due?
CARB regulations as of 2025 set first Scope 1+2 disclosures in 2026 covering FY2025 data, with Scope 3 beginning in 2027 covering FY2026 data. Exact dates and the reporting platform are confirmed by CARB rulemaking; companies should track CARB notices through 2025-2026.
Does SB 253 align with IFRS S2 or SEC climate rules?
SB 253 mandates GHG Protocol-aligned Scope 1/2/3 reporting, which is the same emission accounting standard underlying IFRS S2 and the SEC climate rule. The inventory work is largely shared; SB 261 climate-risk reporting maps directly onto TCFD/IFRS S2 pillars. Companies already reporting under those frameworks can leverage the same data.
What is the safe harbour for Scope 3?
SB 219 added a Scope 3 safe harbour through 2030 — good-faith estimates based on the best available data do not trigger penalties even if subsequently restated. The safe harbour does not cover Scope 1 or 2.
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Related reading
- 10 CFR 35 medical use readiness — NRC licensing for radiopharmaceuticals
- 21 CFR 111 Readiness: Dietary Supplement cGMP Subparts E & F
- 21 CFR 211 Drug cGMP Readiness Guide
- 21 CFR 212 PET drug cGMP readiness — FDA inspection playbook
- 21 CFR 589 BSE / Ruminant Feed Ban Readiness Guide
- 21 CFR 820 to ISO 13485 Mapping Guide (Including QMSR Harmonisation)
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