Navigating California’s Climate Disclosure Rules: A Practical Guide for Businesses
By 2026, thousands of companies operating in California will face a choice. They can treat SB 253 and SB 261 as yet another compliance burden. Or they can embrace them as the opening act of a new era where climate transparency becomes a competitive advantage.
California is no longer just setting environmental policy. It is redefining what it means to do business responsibly. This change reaches far beyond state borders and represents a glimpse of the future of corporate climate regulation.
The Scale of the Change
SB 253 and SB 261 together create one of the most ambitious climate reporting regimes in the United States. The scope is extensive:
SB 253 requires greenhouse gas disclosures from companies with $1 billion or more in annual revenue doing business in California, affecting around 2,600 organizations.
SB 261 expands this requirement to companies with $500 million or more in revenue, targeting close to 4,100 organizations.
These are not minor obligations. They represent systemic change that will touch operations, finance, strategy, and reputation.
For multinational corporations, California is effectively setting a new global standard. If your business operates in California, you will be expected to demonstrate, with hard data, how your business impacts the planet and how you manage that impact.
See Sustaira in Action
Get exclusive access to our latest demo and explore how Sustaira’s modular, AI-powered sustainability solutions can work for your organization
Key Deadlines and Requirements
Understanding timelines is critical to avoiding compliance risk.
For SB 253, companies must publish their initial Scope 1 and Scope 2 emissions disclosures by June 30, 2026, with Scope 3 disclosures required starting in 2027. These disclosures will require third-party assurance, starting at a “limited assurance” level and progressing toward “reasonable assurance” by 2030. This phased approach means businesses must prepare their verification systems well in advance.
SB 261 requires qualifying companies to deliver a biennial climate-related financial risk report by January 1, 2026. That report must be publicly posted on your website, with a link submitted to CARB’s public docket between December 1, 2025, and July 1, 2026. CARB has emphasized that early preparation will be essential to meeting this tight timeline.
Why This Is a Turning Point
Compliance is not the ultimate goal. Transparency at scale is. That means:
Tracking and verifying emissions across a sprawling supply chain.
Connecting climate-related risks to financial planning.
Building resilience before it is mandated.
CARB’s recent workshops have highlighted important details. For example, the definition of what it means to “do business in California” is still under discussion. Factors under consideration include revenue, property, payroll, and even whether a company has a registered agent in the state. These definitions will determine which companies fall under SB 253 and SB 261, making early engagement essential.
Another complexity is the parent-subsidiary relationship. Subsidiaries are generally treated as separate entities, but CARB allows parent companies to file consolidated reports. This flexibility can reduce reporting duplication but requires strategic planning.
Companies should also note that “total annual revenue” includes all global revenue without deductions for expenses, which could broaden the number of organizations subject to disclosure.
How to Get Ahead
The path forward starts with clarity.
First, determine if your business falls under the scope of SB 253 or SB 261. CARB will publish definitive guidance soon, but waiting is not a strategy.
Second, invest in climate data and risk reporting infrastructure. This includes emissions tracking, climate risk assessments, and assurance readiness, especially for SB 253’s third-party verification requirements.
These requirements are not bureaucratic hurdles. They are signals to reframe your climate governance strategy. The sooner you integrate climate risk into your core business strategy, the better positioned you will be for both compliance and competitive advantage.
Why Sustaira is Your Strategic Advantage
Meeting California’s SB 253 and SB 261 requirements is not just a compliance exercise. It is an opportunity to turn climate disclosure into a strategic asset. Sustaira is built for businesses that want to move beyond ticking boxes and instead lead the future of climate governance.
We deliver clarity, speed, and confidence. Our platform empowers you to:
Automate and integrate data so your emissions reporting is accurate, auditable, and effortless.
Transform complexity into insight by linking climate risk directly to financial strategy and business resilience.
Embed assurance readiness into your reporting process so you are always prepared for evolving third-party verification requirements.
With Sustaira, climate reporting becomes a competitive differentiator. You will not only meet California’s disclosure standards, but also demonstrate leadership, build stakeholder trust, and position your organization ahead of the curve.
Compliance is the baseline. Leadership is the goal. Sustaira gives you the tools to achieve both.
Accelerated Reporting Compliance for the 2025 California Climate Bills
In this webinar we explore the key challenges & solutions for preparing your organization for the new Californian sustainability reporting legislation. This session will delve into how firms both large and small across the California are transitioning to meet these requirements whilst also accelerating their positive impact.
