WHAT CALIFORNIA’S NEW CLIMATE DISCLOSURE RULES MEAN FOR YOUR BUSINESS, EVEN IF YOU’RE NOT IN CALIFORNIA

Jun 26
3 min read

California has taken a major step that is already reshaping corporate climate reporting across the U.S., and while these new rules technically apply to large companies, their impact will reach far beyond California, and far beyond billion-dollar firms. If your organization is part of a larger company’s value chain, the question is no longer if this affects you, but how soon.

WHAT’S CHANGING?

California recently passed two major laws that will require companies doing business in the state to publicly disclose their greenhouse gas emissions and climate-related financial risks:

SB 253 (Climate Corporate Data Accountability Act) - Requires companies with more than $1 billion in revenue to disclose Scope 1, 2, and 3 emissions annually. [ww2.arb.ca.gov ]
SB 261 (Climate-Related Financial Risk Act) - Requires companies with more than $500 million in revenue to report on climate-related financial risks and mitigation strategies. [ww2.arb.ca.gov ]

Initial emissions reporting is still expected to begin in 2026, with Scope 1 and Scope 2 reported first. However, CARB has updated its regulatory proposal to defer the first-year Scope 1 and Scope 2 reporting deadline from August 10, 2026, to November 10, 2026. This proposed three-month deferral is intended to give reporting entities more time after formal adoption of the Initial Regulation, if approved by the Office of Administrative Law. Scope 3 reporting is still expected to phase in shortly after. These laws are widely seen as landmark U.S. climate disclosure requirements, and similar policies are already emerging globally.

Important timing note: The November 10, 2026 deadline is proposed, not yet final. CARB has indicated it will make limited clarifying changes available for a 15-day public comment period before resubmitting the regulation for OAL review.

WHY THIS MATTERS FOR SMALL AND MID-MARKET COMPANIES Even if your business doesn’t meet the revenue thresholds, you’re likely still impacted in three key ways:

1. Supply chain pressure is still coming. Large companies must now report Scope 3 emissions which include emissions from suppliers, vendors, and partners. That means:

You may be asked to provide your emissions data
Sustainability questionnaires will become more detailed and frequent
Carbon transparency could become a requirement to win or retain business

2. Expectations are shifting. Investors, customers, and stakeholders are increasingly expecting:

Clear emissions data
Climate risk awareness
Demonstrated progress toward reduction goals

Organizations that can’t provide this information risk falling behind.

3. This is a preview of what’s next. California often sets the direction for national policy. These requirements are expected to influence:

Federal regulations
Other state-level policies
Industry standards

Preparing now puts your organization ahead of the curve.

WHAT YOU SHOULD DO NOW

You don’t need to solve everything overnight, but you do need to start. Here are the most practical next steps:

1. Get a baseline understanding of your emissions. Start with:

Scope 1 (direct emissions)
Scope 2 (electricity use)
- Even a rough estimate is better than waiting for perfect data.

2. Identify your biggest impact areas. Focus on:

Energy use
Transportation
Key suppliers
- This helps prioritize where to act first.

3. Prepare for data requests from customers. Expect increasing requests for:

Emissions data
Sustainability policies
Reduction targets
- Having a basic framework in place will make these requests much easier to respond to.

4. Build internal ownership. This isn’t just a sustainability function. It touches:

Finance
Operations
Procurement
Leadership
- Assign clear ownership early to avoid scrambling later.|

5. Don’t wait for perfect guidance. Regulations are still evolving, but organizations that start building systems now will have a significant advantage as requirements solidify.

HOW SBC CAN HELP

At SBC, we’re already working with members who are navigating these exact challenges many of whom are beginning to receive pressure from customers and partners tied to these new requirements.

We offer practical support to help you move forward with confidence, including: