Dive Brief:
- The California Air Resources Board, the state agency responsible for implementing the state’s climate-risk disclosure laws Senate Bills 253 and 261, is planning to issue proposed rules for the two regulations on Oct. 14, CARB said Thursday at its second public workshop on the laws.
- The agency also issued a projected cost of compliance for the laws and shared the disclosure timeline for companies covered by SB 253 to disclose their scope 1 and scope 2 emissions for the first time. Companies covered by SB 253 should expect to report their scope 1 and scope 2 emissions by June 30, 2026, according to the meeting’s slides.
- The Aug. 21 meeting was the second public workshop on the pair of climate-risk disclosure laws, and CARB looked to clarify issues of how to report under SB 261, who is scoped into each law and how it will define “revenue” and “doing business in California.”
Dive Insight:
California Gov. Gavin Newsom first signed SBs 253 and 261 — the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act, respectively — in 2023 and greenlit the laws the following year by signing another bill that kept the laws’ original 2026 reporting deadlines but gave CARB additional flexibility to promulgate the regulations.
SB 253 requires companies with more than $1 billion in revenue to report scope 1 and scope 2 emissions, with eventual scope 3 disclosures, and SB 261 requires companies with at least $500 million in revenues to make biennial climate-related risk reports.
CARB was supposed to have issued the final regulations for both laws by July 1, but — after issuing the rules Oct. 14 and allowing 45 days to comment — now expects its board to consider the regulations on Dec. 11-12, according to the slides.
CARB estimated — based on data from the California Secretary of State’s office and law firm Dunn & Bradstreet — that 4,160 firms would be affected by SB 261’s requirement to issue climate-related risk reports and 2,596 firms would be impacted by SB 253’s requirements, according to the slide deck. The agency plans to begin a process to validate the preliminary list of covered entities.
CARB estimates that implementing the laws will require a one-time $20.7 million cost, that will temporarily be funded through the Inflation Reduction Act’s Greenhouse Gas Reduction Fund, and an ongoing cost of $13.9 million.
CARB estimates covered entities affected by SB 253 will have to pay an annual fee of $3,106 and SB 261-covered entities will have an $1,403 annual compliance fee. Covered entities with more than $1 billion in revenue will be subject to both fees, CARB said.
The agency plans to exclude non-profits, companies whose only business in the state is the presence of teleworkers, government entities and any “California Independent System Operator or a business entity whose only activity within California consists of wholesale electricity transactions that occur in interstate commerce” from the scope of the two laws, according to an analysis by law firm Ropes & Gray.
CARB previously issued an enforcement notice that said it expects companies covered by SB 253 to “make a good faith effort to retain all data relevant to emissions reporting for the entity’s prior fiscal year,” but would not take enforcement action in the first year.
After CARB’s first public workshop in May, KPMG sustainability leaders previously told ESG Dive that they walked away with the understanding that, despite delays and uncertainty, the 2026 reporting deadlines were there to stay.
“Those reporting dates are not going to be pushed back; that is abundantly clear,” Department of Professional Practice Sustainability Reporting Leader Julie Santoro said at the time. “So don’t pray that they will be. Start preparing.”
The laws have also survived multiple legal challenges, and a federal judge recently declined to issue a preliminary injunction on the regulations. That ruling reaffirmed that “companies won’t get a reprieve from fast-approaching reporting deadlines,” Crowell & Moring Partner Juge Gregg told ESG Dive last week.
CARB is seeking feedback on the concepts from both workshops until Sept. 11. In July, the agency released FAQ guidance on complying with the laws.
