California's Climate Disclosure Rules: What You Need to Know Now
Changes in the 11th hour to Corporate Climate Disclosures
California continues to position itself as a leader in climate transparency and corporate accountability as demonstrated by two pieces of climate legislation which will require public and private businesses across the United States to adhere to climate-related reporting requirements, assuming specific criteria and thresholds are met. The introduction of these reporting mandates reflects the growing global emphasis on sustainability and the need for organizations to demonstrate their commitment to addressing climate change.
Recently, the California Air Resources Board (CARB) held a virtual workshop that delivered significant, and somewhat unexpected, updates these pieces of climate legislation, while simultaneously facing unexpected legal challenges. Here's what companies need to understand about these developments and how to respond strategically.
Breaking Down SB 253: The Emissions Reporting Requirement
Senate Bill 253 establishes mandatory greenhouse gas (GHG) emissions reporting for subject companies doing business in California. This legislation represents one of the most comprehensive corporate emissions regulations in the United States. While the California Air Resources Board must approve the final proposal which is expected in Q1 of 2026, the expectations are more clear now than ever:
- Revenue Threshold: $1B+
- Requirements: Publicly disclose Scope 1 and 2 GHG emissions by August 10th, 2026, and scope 3 beginning in 2027
- Assurance Requirements: Waived for the first year (2026), but mandatory starting in 2027 for Scope 1 and 2
- Flexibility: Companies may waive 2026 disclosures under specific circumstances
- Definitions Clarified: CARB has provided concrete guidance on what constitutes "doing business" in California and how to calculate "revenue" thresholds
This phased approach gives companies a grace period to establish reporting infrastructure before third-party verification becomes mandatory.
SB 261: Climate-Related Financial Risk Disclosure
Senate Bill 261 takes climate accountability a step further by requiring subject companies to disclose climate-related financial risks in alignment with the Taskforce on Climate-related Financial Disclosures (TCFD) framework. Here are the key details:
- Revenue Threshold: $500MM+
- Requirements: Publicly disclose a climate-related financial risk report by January 1st, 2026 and biennially thereafter
- Minimum Requirements Reporting: Finalized within the Climate Related Financial Risk Disclosures Checklist
The Plot Twist: Legal Uncertainty
Just as CARB provided clarity during their November 18th workshop, the Ninth Circuit Court of Appeals issued a temporary halt on SB 261 enforcement, adding a layer of regulatory uncertainty. However, this shouldn't be cause for alarm.
The Bottom Line: Don't Pause, Prepare
California's climate disclosure rules represent a fundamental shift in corporate accountability. While legal challenges create short-term uncertainty, the long-term trajectory is clear: transparency will become the norm, not the exception.
The time to act is now. Don't let eleventh-hour legal challenges distract from the strategic imperative: climate disclosure is coming, and preparation is your competitive advantage. Companies that begin their journey now will be best positioned to thrive in this evolving regulatory environment.
What's Next?
Bureau Veritas is hosting a webinar to clarify how these rules apply to your organization and answer specific questions.
📅 Tuesday, December 9
🕑 2 PM to 3 PM CST
🎙 Speaker: Brianna Hardy, MBA, Senior Sustainability Consultant
👉 Register for the webinar: https://lnkd.in/gvPRHW38
Resources
📄 California Climate Disclosure Whitepaper
Download our comprehensive guide to SB 253 and SB 261, including timelines, governance considerations, and practical steps for reporting readiness.
🕑 Watch our Latest Webinar: California Climate Reporting Countdown
Our most recent webinar, California Climate Reporting Countdown, breaks down SB 253 and SB 261, the two laws that will reshape how companies disclose greenhouse gas emissions and climate-related financial risks starting in 2026.
📩 Connect with us!
If you would like to arrange a discussion, please contact Brianna Hardy, Senior Sustainability Consultant at Bureau Veritas North America: brianna.hardy@bureauveritas.com