Navigating California’s Evolving Climate Disclosure Laws: Key Updates on SB 253 & SB 261 for Business Compliance
- amber2964
- 2 days ago
- 2 min read
by Carlos Ortiz
OVERVIEW
California’s climate disclosure framework, SB 253 (emissions reporting) and SB 261 (climate risk reporting) are undergoing significant regulatory and legal shifts. Recent actions by the California Air Resources Board (CARB) and the Ninth Circuit Court of Appeals have created a mix of extended timelines, paused enforcement, and new draft regulations. Organizations should continue preparing while monitoring evolving requirements.
PURPOSE OF THE LAWS
1. SB 261 – Climate Related Financial Risk Reporting. Requires biennial disclosure of climate related financial risks aligned with TCFD style frameworks. CARB update: Enforcement is currently paused due to a Ninth Circuit injunction.
2. SB 253 – Climate Corporate Data Accountability Act. Requires annual disclosure of Scope 1, Scope 2, and Scope 3 greenhouse gas emissions for large companies operating in California. CARB update: Draft regulations released; first reporting deadline extended.
KEY DEVELOPMENTS
1. SB 261 Enforcement Paused
Ninth Circuit injunction temporarily halts enforcement.
Original January 1, 2026, effective date is on hold.
CARB has slowed implementation activities.
Implications for your business: Continue building internal climate risk assessment capabilities, but expect revised timelines once litigation concludes.
2. CARB Releases Draft Regulations (SB 253 & SB 261). Issued December 1 and December 9, 2025, with a public hearing scheduled for February 26, 2026. Draft regulations include:
Recordkeeping requirements
Injunctive relief provisions
Clarified reporting mechanics
Implications for your business: Despite the SB 261 pause, CARB is moving forward. Companies can use draft rules to shape governance, data systems, and compliance planning.
3. SB 253 Reporting Deadline Extended
First emissions reporting deadline moved to August 10, 2026.
First year assurance requirements removed.
Implications for your business: Additional time to build emissions tracking systems and prepare for future assurance obligations.
STRATEGIC CONSIDERATIONS FOR BUSINESSES
Risk posture: Climate related financial risk reporting will likely resume; early preparation reduces future compliance pressure.
Data readiness: Scope 3 emissions remain the most complex requirement—early investment in data systems is critical.
Governance: Cross functional oversight (finance, sustainability, legal, operations) will be essential as regulations finalize.
Scenario planning: Litigation outcomes may shift timelines again; organizations should maintain flexible implementation plans.
MEMBER RESOURCE
Disclaimer: This publication is not a substitute for professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal professional. SBC shall not be responsible for any loss sustained by any person who relies on this publication.
