Key Impact Points:
- GHG and climate risk reporting will begin in 2026 for large companies operating in California, regardless of regulatory delays by CARB.
- SB-253 and SB-261 impose mandatory GHG and financial risk disclosures on companies meeting revenue thresholds; AB-1305 adds offset-related transparency requirements.
- Assurance for Scope 1 and 2 GHG data begins in 2026, with full reasonable assurance required by 2030.
California Sticks to 2026 Climate Disclosure Timeline
California’s sweeping climate laws will go into effect as planned in 2026, with no delays to reporting requirements despite the California Air Resources Board (CARB) falling behind on regulatory development. KPMG’s June 2025 update confirms that reporting under SB-253 (GHG emissions) and SB-261 (climate-related financial risk) will begin in 2026, and Scope 3 emissions will follow in 2027.
Who’s Affected
The laws apply broadly:
- SB-253 targets U.S. entities (including subsidiaries of foreign firms) earning over $1 billion annually and doing business in California.
- SB-261 covers entities with revenue above $500 million.
- AB-1305 applies to all entities—U.S. and international—that sell or use voluntary carbon offsets in California or make climate-related claims.
As KPMG states: “SB-253 and SB-261 apply to US businesses that meet specified revenue thresholds and do business in California,” while AB-1305 applies regardless of company size.
Disclosure Requirements
Each law brings unique mandates:
- SB-253: Requires disclosure of Scope 1, 2, and 3 emissions in line with the GHG Protocol.
- SB-261: Requires disclosures aligned with TCFD or successor frameworks (including ISSB).
- AB-1305: Requires detailed data on carbon offset projects and the GHG emissions behind any marketed climate claims.
Failure to comply with reporting deadlines may incur significant penalties, including up to $500,000 annually under SB-253.
Assurance Expectations
CARB will require limited assurance for Scope 1 and 2 emissions starting in 2026, escalating to reasonable assurance by 2030. While Scope 3 is not immediately subject to assurance, CARB must decide by January 2027 whether to require it from 2030.
The legislation specifies that assurance providers must have “significant experience in measuring, analyzing, reporting, or attesting to the emission of greenhouse gases.”
CARB Process Underway, But Lagging
CARB missed the July 1, 2025 deadline to adopt regulations under SB-253. However, it has launched public workshops and will continue refining the rules throughout 2025 under California’s Administrative Procedure Act (APA). These include:
- Drafting regulations and issuing a Notice of Proposed Action
- At least 45 days for public comment
- A year-long deadline to finalize regulations once the public process starts
Early Reporting Relief
CARB has promised leniency for companies that cannot provide complete Scope 1 and 2 data in 2026, provided they demonstrate good faith efforts in retaining emissions data. No penalties will apply to Scope 3 misstatements made in good faith between 2027–2030.
Looking Ahead
Despite regulatory delays, companies must prepare now for compliance. SB-253 and SB-261 reporting is annual and biennial, respectively, and will rely heavily on platforms and assurance mechanisms yet to be finalized by CARB.
As KPMG notes, “To facilitate reporting before regulations are final, CARB will not seek to impose penalties for ‘good faith efforts.’” Nonetheless, entities operating in California or making climate claims should act now to align with the GHG Protocol, TCFD, and voluntary carbon market disclosure standards.
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