New California Climate Bills 253 & 261: What They Mean, How to Prepare, and the Role of Digital Solutions
California has set a new benchmark for corporate climate accountability. Its climate disclosure laws, Senate Bills 253 and 261, now require thousands of large companies to report greenhouse gas emissions and climate-related financial risks. These bills are not just regional regulations, they signal a shift toward transparent, audit-ready climate reporting across the U.S. and globally.
This article breaks down what SB 253 and SB 261 require, practical steps for compliance, and how digital platforms can help organizations manage and scale their climate disclosures.
California is raising the bar on corporate climate accountability. Are you ready?
If you work in sustainability or IT, you’ve likely heard about California Senate Bills 253 and 261. They are more than headline news, they are a turning point for corporate climate disclosure in the U.S. These new laws introduce mandatory reporting of greenhouse gas emissions and climate-related financial risks for thousands of companies. Whether your organization is already deep into ESG or just starting to formalize its strategy, these bills make one thing clear: it’s time to get serious about enterprise-wide carbon data, reporting processes, and compliance planning.
What Are SB 253 & SB 261?
California’s two new climate laws, signed into law in October 2023, are designed to make corporate climate data transparent, comparable, and actionable. They establish clear frameworks for large companies operating in California and signal a broader shift toward regulatory alignment with global standards.
SB 253: Climate Corporate Data Accountability Act
Who it applies to: Companies doing business in California with global annual revenues exceeding $1 billion USD.
What it requires:
Annual public disclosure of Scope 1 (direct), Scope 2 (indirect from purchased energy), and Scope 3 (value-chain) greenhouse gas emissions on a global basis.
Scope 1 & 2 reporting begins in 2026, covering fiscal year 2025. Limited third-party assurance is required at this stage.
Scope 3 reporting begins in 2027 under a phased approach. Reasonable assurance for Scope 1 & 2 is required beginning in 2030.
SB 253 emphasizes accuracy and auditability, ensuring companies provide reliable emissions data aligned with recognized standards like the GHG Protocol and CDP. Large organizations with complex operations will need robust systems to capture and verify emissions data across global operations.
SB261: Climate-Related Financial Risk Disclosure
Who it applies to: Companies doing business in California with global annual revenues over $500 million USD.
What it requires:
A biennial report detailing climate-related financial risks, including physical and transition risks.
Disclosure of mitigation strategies and scenario analysis.
Alignment with TCFD recommendations or equivalent frameworks to ensure standardized, investor-ready reporting.
First report due: January 1, 2026 (covering fiscal year 2025), with subsequent reports every two years.
SB 261 underscores the importance of integrating climate considerations into financial planning and risk management, giving investors and stakeholders standardized, decision-useful information.
Why These Bills Matter (Even If You're Not in California)
California is the fifth-largest economy in the world, and these bills have implications far beyond its borders. Any company “doing business in California” may need to comply, regardless of headquarters location. The requirements also extend to global emissions, particularly Scope 3 value-chain reporting.
Beyond compliance, these laws signal a shift in corporate accountability. They align with global disclosure standards such as EU CSRD, SEC climate rule proposals, and the GHG Protocol. Organizations that start preparing now will not only meet California’s requirements but also position themselves for emerging national and international ESG regulations.
Practical Steps to Comply
Compliance is about more than ticking boxes. It requires building reliable systems and processes to produce accurate, auditable sustainability data. Here’s a structured starting point:
Map Your Emissions Sources: Identify emissions across all categories. Scope 1 comes from direct operations under your control, Scope 2 from purchased energy, and Scope 3 covers all other indirect emissions across your value chain—including suppliers, transportation, business travel, and product use.
Identify Data Owners & Gaps: Work cross-functionally with finance, operations, procurement, HR, and IT to locate data and uncover gaps.
Establish Governance & Roles: Assign leads for sustainability, procurement, IT, and compliance to ensure accountability, workflow management, and data quality.
Select a Reporting Framework: Align with GHG Protocol, CDP, and TCFD to meet SB 253 and SB 261 requirements and ensure global consistency.
Prepare for Assurance: SB 253 requires limited third-party verification for Scope 1 & 2 starting in 2026, with reasonable assurance required in 2030. Scope 3 verification will follow a phased approach as determined by CARB. Having verifiable, traceable data is essential for compliance.
Implement the Right Tools: Manual spreadsheets are no longer sufficient. Digital platforms are critical to streamline reporting, enable automation, and maintain audit-ready documentation.
Choosing the Right Digital Sustainability Platform
Once the “what” and “why” are clear, the next question is: how do we actually do this at scale? That’s where digital platforms come in—especially those designed for carbon accounting, sustainability data management, and reporting automation.
Here’s what to look for:
End-to-End Carbon Accounting- From Scope 1 to Scope 3, your platform should support automated data collection, emission factor application, and dashboards that are audit-ready.
Customizable Frameworks - Look for platforms that support CDP, GHG Protocol, TCFD, CSRD, and others—ideally out-of-the-box, with room to configure for your specific needs.
Data Integration Capabilities - Can it connect to your ERP, utility data, procurement platforms, HR systems, etc.? Integration is key for automating data ingestion.
Collaboration & Workflow Features - Sustainability is cross-functional. Your software should enable task assignments, approvals, and version control.
Audit-Ready Reporting - SB 253 requires third-party assurance. Your tool must support transparency, documentation, and evidence linking.
Modular & Scalable - Your needs will evolve. Choose a platform that grows with you—from early-stage maturity to full ESG integration.
How Sustaira Can Help
At Sustaira, we help companies like yours simplify the complex. Our modular sustainability platform enables:
Carbon accounting aligned with GHG Protocol
Scope 3 supplier engagement and data collection
TCFD and CSRD-aligned reporting
Integration with your existing IT ecosystem
Full traceability and audit support
We're not just another ESG tool—we're a customizable, scalable solution built with IT and sustainability leaders in mind.
