California’s twin climate disclosure laws—SB 253 and SB 261—task the California Air Resources Board (CARB) with developing regulations for large companies doing business in California to disclose greenhouse gas emissions and climate-related financial risk information. The looming January 1, 2026 statutory deadline for businesses to begin complying with these Acts remains unchanged, yet CARB continues to delay publishing regulations defining who must comply and how to comply with these novel climate disclosure programs. (See our previous blog post discussing these essential unanswered questions.)
This article summarizes the status of CARB’s rulemaking and what companies should be watching for and doing to prepare for the approaching compliance deadlines.
Recap: What the Laws Require
- SB 253 (the Climate Corporate Data Accountability Act): Businesses with ≥ $1 billion in annual revenue doing business in California must publicly disclose Scope 1 & 2 emissions—starting for the prior fiscal year in 2026—and Scope 3 emissions beginning in 2027 (subject to CARB’s phasing and rulemaking).
- SB 261 (the Climate-Related Financial Risk Act): Businesses with ≥ $500 million in revenue doing business in California must publish biennial climate-related financial risk reports (first reports due by statute on January 1, 2026, absent regulatory change).
(See our previous blog post discussing these statutes in detail.)
Key CARB Implementation Developments
1. Frequently Asked Questions (FAQ) document
On July 9, 2025, CARB posted a FAQ document that explains its rulemaking approach, the distinction between the two programs, and what CARB expects for initial reports. The FAQ is intended to help companies interpret statutory terms while CARB completes formal regulations.
Why it matters: In the absence of formal regulations ahead of the upcoming compliance deadlines, businesses will have to rely on the FAQ—and subsequent informal guidance—to determine whether they are covered by the program and to craft their initial reports.
2. Public workshop
On August 21, 2025, CARB held a public workshop during which staff discussed the regulatory timetable, draft conceptual definitions (e.g., “doing business in California,” revenue, parent-subsidiary relationships), assurance considerations, and a proposed approach to phasing Scope 3 reporting. In workshop materials staff noted a possible June 30, 2026 target for initial Scope 1 & 2 reporting (to be finalized in rulemaking/fee regulation).
The workshop revealed CARB’s working assumptions—including a likely mid-2026 timing for Scope 1 & 2--and solicited public feedback on key definitional issues that determine which companies are covered.
3. Additional Implementation Resources
Following the workshop, CARB posted materials in September 2025 to solicit comment and help entities prepare, including:
- a Climate-Related Financial Risk Report Checklist,
- a Preliminary List of Reporting/Covered Entities, and
- a voluntary survey tool for entities to confirm inclusion.
Why it matters: The January 1, 2026 deadline for reporting climate-related financial risks is the first compliance deadline under these laws. The checklist provides practical guidance for companies to determine whether and how to submit the required reports by this deadline in the absence of formal guidance. The preliminary list gives businesses a practical starting point to decide whether they appear on CARB’s radar. However, CARB emphasizes that any business that may be covered by the laws must submit the required reports regardless of whether it is included in the preliminary list.
4. Draft Scope 1 & 2 Reporting Template
On October 10, 2025, CARB posted a draft reporting template and accompanying memo for Scope 1 and 2 emissions reporting (made available as a voluntary tool for the 2026 cycle). The template organizes information on organizational boundaries, inventory methodology, verification, emission totals, and optional sections like emission-reduction actions.
Why it matters: The template shows the report structure CARB expects and highlights open questions (e.g., reporting by source vs by gas, organizational boundary approaches, and what emission-reduction disclosures may look like).
5. CARB delayed initial rulemaking schedule
In mid-October, 2025, CARB pushed its initial rulemaking timeline back and indicated it needs additional time to consider stakeholder comments. CARB signaled it would defer the formal proposed regulation to Q1 2026—previously targeted for the end of 2025—to allow more stakeholder input and to refine who is covered. At the same time, CARB has not rescinded statutory deadlines (e.g., the SB 261 January 1, 2026 public posting requirement).
Why it matters: Schedule shifts increase uncertainty around final definitions and fee regulations, but CARB’s public materials and checklists are intended to bridge that gap.
Practical Takeaways & Recommendations for Companies
1. Assume reportability until proven otherwise.
Any business that may be covered should operate under the assumption that it will be covered. Use CARB’s preliminary list, checklist, and FAQs to assess whether your business could meet the revenue and “doing business” tests.
2. Prepare Climate-Related Financial Risk Reports now.
Businesses must finalize, publish, and submit these reports by January 1, 2026. Use CARB’s checklist to develop and submit your business’ report by the statutory deadline.
3. Prepare Scope 1 & 2 inventories now.
CARB indicates that the first report for Scope 1 and 2 emissions will be due mid-2026. CARB’s draft template shows what will be expected. Businesses should have FY-2025 data (or the “prior fiscal year” data) ready to assemble and, if required, obtain assurance.
4. Start thinking about Scope 3 and systems to capture supplier data.
Even where Scope 3 reporting is phased, early work reduces later resource strain.
5. Document your good-faith efforts.
CARB has indicated it may exercise enforcement discretion for initial reports made in good faith, so document collection processes, methodologies, assumptions, and outreach to suppliers.
6. Watch CARB’s docket and submit comments.
CARB is actively soliciting stakeholder feedback (workshops, dockets, templates). Engaging now can influence final definitions and reporting mechanics.
The Bottom Line
CARB has delayed formal rulemaking timing to allow more stakeholder input, but statutory reporting deadlines—notably SB 261’s January 1, 2026 requirement—remain operative until and unless changed. Companies that may fall within the revenue or “doing business in California” thresholds should treat CARB’s materials as the roadmap for near-term planning, document their good-faith efforts, and engage with CARB through the public docket.
Contact our environmental team if you need help navigating the developing regulations presented in SB 253 and SB 261.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
