San Diego, December 6, 2025
California has enacted two groundbreaking laws aimed at enhancing transparency regarding greenhouse gas emissions among large companies. The Climate Corporate Data Accountability Act mandates companies with revenues above $1 billion to report their Scope 1, 2, and 3 greenhouse gas emissions starting in 2026. Additionally, the Climate-Related Financial Risk Act requires companies making more than $500 million to disclose climate-related financial risk. With strict penalties for non-compliance, it is crucial for companies to prepare for these regulations amidst ongoing legal challenges.
San Diego, California
Understanding California’s New Climate Disclosure Laws
Companies Must Prepare for Significant Reporting Requirements
California has recently implemented two landmark laws aimed at promoting transparency regarding greenhouse gas emissions and climate-related financial risks among large companies. Senate Bill 253 (SB 253), known as the Climate Corporate Data Accountability Act, requires firms with annual revenues exceeding $1 billion, and operating in the state, to report their Scope 1, 2, and 3 greenhouse gas emissions. This legislation establishes clear accountability for emissions, with the initial reporting for Scope 1 and 2 emissions due in 2026, covering the fiscal year 2025. Scope 3 emissions reporting will follow in 2027.
Additionally, Senate Bill 261 (SB 261), titled the Climate-Related Financial Risk Act, mandates that companies with revenues over $500 million must prepare climate-related financial risk reports. These reports should comply with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD) and be made available on the company’s website and submitted to the California Air Resources Board (CARB) by January 1, 2026, with submissions every two years thereafter.
Regulatory Oversight and Compliance Challenges
CARB is tasked with developing the regulations necessary to implement these laws. As of June 2025, CARB has not finalized these regulations, having announced a delay in adopting rules for SB 253 without establishing a definitive timeline. Although the agency held workshops to engage the public and stakeholders, the anticipated adoption of regulations may not occur until 2026, leaving companies in a bind for compliance readiness.
For businesses affected by these laws, the time to prepare is now. Gathering emissions data, setting up internal reporting mechanisms, and understanding the requirements for third-party verification of emissions disclosures will be critical. Companies that fail to comply run the risk of facing substantial penalties, including fines of up to $500,000 annually for SB 253 and $50,000 for SB 261.
Legal Perspectives on the New Regulations
While these climate disclosure laws are presently enforceable, they are subject to ongoing legal challenges. A coalition of business groups, led by the U.S. Chamber of Commerce, has called for a halt to the implementation of these climate reporting requirements through a petition to the U.S. Supreme Court. Despite these challenges, companies are advised to proceed with preparations for compliance to avoid potential penalties.
Summary of Key Requirements
California’s new climate disclosure laws present significant obligations for large companies operating within the state. Prompt action toward compliance will be critical, as the potential penalties for non-compliance remain severe. As the landscape around these regulations continues to evolve due to legal challenges and regulatory changes, companies must stay informed and engaged in their compliance strategies.
How Local Businesses Can Navigate the Changes
In the face of this regulatory environment, local businesses in San Diego and throughout California can leverage innovation and flexibility to adapt to these new requirements. By adopting eco-friendly practices and efficiently managing emissions reporting, companies not only comply with regulations but also enhance their corporate responsibility and public image. Such proactive measures can contribute to a healthier economy and community engagement, underscoring the resilience and entrepreneurial spirit of California’s business landscape.
Frequently Asked Questions (FAQ)
What are the key requirements of California’s new climate disclosure laws?
California has enacted two significant laws: Senate Bill 253 (SB 253) and Senate Bill 261 (SB 261). SB 253 requires companies with annual revenues exceeding $1 billion and operating in California to publicly report their Scope 1, 2, and 3 greenhouse gas emissions, with initial reporting for Scope 1 and 2 emissions due in 2026 and Scope 3 emissions reporting starting in 2027. SB 261 mandates companies with annual revenues over $500 million and doing business in California to prepare and disclose climate-related financial risk reports, aligning with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), with the first reports due by January 1, 2026, and every two years thereafter.
What penalties can companies face for non-compliance with these laws?
Non-compliance with these laws can result in significant penalties. For SB 253, companies can face fines up to $500,000 per reporting year, while for SB 261, fines can reach up to $50,000 per reporting year.
Are there any legal challenges to these climate disclosure laws?
Yes, a coalition of business groups, led by the U.S. Chamber of Commerce, has petitioned the U.S. Supreme Court to halt the implementation of these climate reporting laws. However, as of now, the laws remain enforceable, and companies should proceed with preparations for compliance.
Key Features of California’s Climate Disclosure Laws
| Feature | Details |
|---|---|
| Scope 1 Emissions | Direct greenhouse gas emissions from owned or controlled sources. |
| Scope 2 Emissions | Indirect emissions from the generation of purchased electricity consumed by the reporting company. |
| Scope 3 Emissions | All other indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions. |
| Reporting Deadlines | Scope 1 and 2 emissions reporting due in 2026; Scope 3 emissions reporting due in 2027. |
| Penalties for Non-Compliance | Fines up to $500,000 per reporting year for SB 253; up to $50,000 per reporting year for SB 261. |
| Legal Challenges | Ongoing legal challenges may impact the implementation of these regulations. |
Deeper Dive: News & Info About This Topic
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Author: STAFF HERE SAN DIEGO WRITER
The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
