California SB 253 and SB 261: Your 2026 Reporting Countdown
- Gasilov Group Editorial Team
- Aug 27
- 9 min read
California’s landmark climate disclosure laws have shifted from legislation to execution. SB 253 will require large companies doing business in the state to disclose Scope 1, Scope 2, and Scope 3 greenhouse gas emissions. SB 261 will require a public climate-related financial risk report. Both laws are entering their compliance phase with first reports due in 2026.
The California Air Resources Board (CARB) is still finalizing rule text, but timelines and expectations are now visible through public workshops, FAQs, and draft materials. For ESG leaders and compliance teams, the window to build reporting roadmaps and resource the work is closing fast.
What CARB Has Finalized—and What Remains in Flux
SB 261 climate risk reporting. Covered entities must publish their first climate-related financial risk report by January 1, 2026. CARB will open a public docket on December 1, 2025, where companies will post links to their reports. That docket will remain open until July 1, 2026. The dates create a narrow window for governance alignment, risk mapping, and board oversight.
SB 253 emissions reporting. CARB staff have signaled that companies will face a June 30, 2026 deadline for Scope 1 and Scope 2 disclosures, covering fiscal year 2025 data. Draft regulations are expected in October 2025, with final Board consideration targeted for December. This compressed timeline means corporate data programs must be able to deliver audit-ready 2025 emissions within months of fiscal year close.
Procedural backdrop. In 2024, SB 219 gave CARB more time to finalize regulations, shifting adoption deadlines into 2025. That window has now closed, and while final regulations remain pending, compliance dates have not been rescinded. The clear signal is to continue planning for 2026 delivery without delay.
Why These Rules Reshape Operating Models
These mandates are not simply disclosure exercises. They reshape how companies manage data, suppliers, and assurance.
CARB has previewed a phased assurance path, beginning with limited assurance on Scope 1 and Scope 2 disclosures. This means companies will need to establish new controls, evidence trails, and coordination with auditors. Waiting for perfect regulatory clarity risks running out of time.
Experience shows that programs succeed when reporting and reduction planning advance together. Companies that pilot data capture systems and supplier workflows early are better positioned to reduce rework once assurance begins.
Lessons from Public Programs That Map to California’s Rules
Scope 3 requires supplier activation. Walmart’s Project Gigaton demonstrates the scale achievable when suppliers are mobilized with clear guidance. In 2024, Walmart announced that its suppliers had already surpassed the one-gigaton emissions reduction goal initially set for 2030. It published a detailed accounting methodology to ensure consistency across the value chain. For California reporters, the lesson is that Scope 3 progress depends on standardized playbooks and supplier programs.
Supplier energy programs change trajectories. Apple’s results reinforce this point. Between 2015 and 2025, Apple cut global greenhouse gas emissions by more than half, driven largely by supplier renewable energy procurement. In 2024 alone, suppliers avoided tens of millions of tons of emissions by shifting to clean electricity. For SB 253 reporters, supplier electricity data and contracts will be central not only to Scope 3 estimates but also to the SB 261 climate risk narrative.
Granularity matters for assurance. Microsoft’s agreement with Powerex in Washington demonstrates where Scope 2 reporting is heading. By matching hourly datacenter demand with carbon-free power, Microsoft went beyond annual accounting to achieve real-time fidelity. Most California reporters will not deploy hourly matching in 2025, but the example illustrates the type of controls that strengthen assurance environments.
Preparing Now: A Near-Term Work Plan
Given the pace of regulatory developments, the most effective strategy is to lock in a practical plan for 2025. Four priorities stand out:
Governance and authorship for SB 261. Designate the executive sponsor, legal reviewer, and board committee responsible for sign-off. Align disclosures to the TCFD framework—covering governance, strategy, risk management, and metrics—and set weekly internal checkpoints through year-end. Link the final review to CARB’s December docket opening.
Scope 1 and Scope 2 controls. Establish monthly close packages for fiscal 2025 covering energy, fuel, and refrigerants. Each figure should map to an owner and a source document, supported by evidence such as utility invoices, meter photos, and estimation methods. This discipline is the foundation for limited assurance.
Scope 3 materiality and supplier engagement. Use spend-based screening to rank categories, then launch supplier data requests in the top three or four. Borrow from Walmart’s and Apple’s published frameworks to standardize requests. Consistency will reduce the friction suppliers face in responding.
Scenario analysis and risk quantification. Begin with qualitative analysis of physical and transition risks, then add quantitative sensitivity where data is available. Anchor disclosures in board-reviewed assumptions and clearly note data gaps for future improvement.
Teams that start with this baseline will not only stay aligned with CARB’s timetable but also signal credibility to investors monitoring progress. If you want a rapid baseline of your SB 261 disclosure and an assurance ready plan for SB 253, our team can run a four week sprint that tests controls, data pipelines, and draft narratives, then hands back a concrete checklist for the next quarter.
State and Federal Momentum: Why Companies Cannot Wait
Legal challenges have not derailed California’s program. On August 13, 2025, the U.S. District Court for the Central District of California denied a preliminary injunction seeking to halt SB 253 and SB 261. The decision means implementation continues while First Amendment claims proceed through litigation. In short, companies must keep moving toward 2026 delivery.
CARB also provided further clarity in its August 21, 2025 workshop. Staff confirmed a June 30, 2026 deadline for Scope 1 and Scope 2 reporting, draft regulations to be issued October 14, 2025, and Board consideration scheduled for December 11–12, 2025. For SB 261, CARB reaffirmed that the December 1, 2025 public docket opening will align with IFRS S2 and TCFD structures. FAQs published on July 9, 2025, confirm that entities may report using their most recent fiscal year.
These signals leave no doubt: reporting deadlines are firm, frameworks are set, and the time to build compliance infrastructure is now.
Tackling Scope 3: How to Build a Supplier Program That Stands Up to Assurance
Scope 3 disclosures are where most companies struggle. The key is to start small but structured. A two-lane approach works best:
Spend-based baseline. Screen categories by emissions potential, using transparent emission factors and assumptions. This establishes defensible starting estimates.
Supplier data lane. Request targeted data in priority categories, such as purchased electricity, renewable energy contract summaries, and logistics activity. The goal is not perfect coverage in year one but a credible sample that can improve quarter by quarter.
Walmart’s Project Gigaton is a clear demonstration of what’s possible. In February 2024, the company announced it had reduced or avoided more than one billion metric tons of emissions in its value chain six years ahead of schedule. Both highlight the importance of standardized guidance and supplier recognition programs.
Practical experience also shows that supplier requests work best when tied to procurement decisions. Simple templates that require only the data needed for the next quarter’s estimate are more likely to generate responses. By contrast, supplier portals without procurement hooks often stall.
Assurance and Data Lineage: What Limited Assurance Really Tests
CARB has indicated that SB 253 disclosures will begin under a limited assurance model, with reasonable assurance expected in later years. This phased approach gives companies time to build discipline but still demands audit-ready processes from day one.
Assurance providers will test three things above all: evidence, traceability, and controls. That means every reported figure must be backed by a clear source document, a record of estimation methods, and version-controlled emission factors. A practical way to prepare is to build three artifacts now:
Data inventory. A list of all systems, data owners, and reporting boundaries.
Estimates register. A record of methods, assumptions, and uncertainty ranges used in calculations.
Assurance binder. A curated set of files that auditors will review, with each figure mapped directly to evidence.
CARB’s August 2025 workshop slides included explicit references to verifier independence and assurance concepts, which should already be informing internal audit planning. Companies that treat assurance as part of the reporting build, not as an afterthought, will be best positioned when verifiers arrive.
Framework Alignment: Using IFRS S2 to Structure SB 261
CARB has consistently pointed companies toward established frameworks for SB 261 reporting. Both TCFD and IFRS S2 are explicitly referenced, and both are widely used in global reporting.
IFRS S2, published by the International Sustainability Standards Board, builds on TCFD’s four-pillar structure: governance, strategy, risk management, and metrics and targets. Where IFRS S2 goes further is in requiring specificity on transition risks, physical risks, and resilience testing. Companies with international disclosure obligations can leverage this overlap to streamline reporting.
Authoring teams should treat IFRS S2 as a design template. CARB’s July 2025 FAQs and August workshop materials confirm that aligning with IFRS S2 will meet minimum expectations. The result is a disclosure that speaks to regulators, investors, and global stakeholders in a consistent language.
Technology Choices That Improve Auditability Without Slowing Delivery
While hourly matching of electricity demand and supply is not required by SB 253, examples like Microsoft’s agreement with Powerex in Washington show how control environments are evolving. Microsoft’s arrangement matches datacenter demand with carbon-free power on an hourly basis, rather than annually, providing far more accurate accounting.
For most California reporters, the immediate step is not hourly matching but better metering and reconciliation. If companies can align electricity purchases with operational load at finer time steps, they strengthen their assurance narratives. The takeaway is clear: technology investments should focus on auditability, not perfection, in the early years.
A Short, Investor-Ready Timeline
To stay on track, companies should align workplans with CARB’s expected milestones:
September to October 2025. Lock the SB 261 outline to IFRS S2, confirm governance signers, and begin scenario analysis. Establish the link structure that will be posted to the CARB docket on December 1, 2025 (CARB FAQs).
October to December 2025. Respond to CARB’s draft templates for Scope 1 and Scope 2, test monthly closes for fiscal 2025, run a dry assurance walkthrough, and finalize the climate risk report for January 1 (CARB workshop slides).
January to June 2026. Publish the SB 261 report, monitor investor and regulator feedback, and complete SB 253 Scope 1 and Scope 2 disclosures by the June 30 proposed deadline. Use the second half of 2026 to build out Scope 3 data pipelines for 2027.
This sequence closes major disclosure and assurance risks while demonstrating accountability to investors.
Examples That Inform Design Choices
Public disclosures continue to provide proof points for design decisions. Apple’s 2024 and 2025 reports showed that supplier clean energy avoided 18.5 million metric tons of emissions in 2023 and 21.8 million metric tons in 2024, supported by 17.8 gigawatts of renewable energy online (Apple newsroom 2024; Apple newsroom 2025; Apple Environmental Progress Report 2024). Apple’s methodology integrates supplier electricity data, process gas abatement, and assurance-ready quantification.
For California reporters, these examples show how supplier engagement, clear methodologies, and credible verification can underpin both emissions disclosures and climate risk narratives.
Where to Go Deeper Without Slowing Down
Two resources stand out for teams navigating final implementation:
CARB’s meetings and workshops page, which consolidates schedules, materials, and draft guidance (CARB meetings page).
The IFRS S2 standard page, which provides authoritative requirements and supporting resources (IFRS S2 standard page).
Bookmarking both ensures that governance, risk analysis, and reporting stay aligned with the most current expectations.
Closing Perspective and Next Step
California’s rules are demanding but achievable. The timelines are clear, the frameworks are published, and credible examples show how companies can mobilize suppliers and align disclosures with assurance. The biggest risks are waiting too long to act or isolating reporting teams from legal, procurement, and audit.
The companies that succeed will establish a cross-functional cadence now: weekly, not quarterly, and test controls before deadlines arrive. Those that wait will find themselves trying to retrofit governance and data pipelines under pressure.
For organizations seeking targeted support, a short sprint can test draft narratives, control maps, and data pipelines, producing a prioritized checklist in weeks rather than months. Feel free to get in touch with our team via here or the button below to learn more.
Written by: Gasilov Group Editorial Team
Reviewed by: Rafael Rzayev, Partner – ESG Policy & Economic Sustainability
Frequently Asked Questions (FAQ): California SB 253 and SB 261:
What counts as doing business in California for SB 253 and SB 261?
CARB has indicated that applicability will follow Franchise Tax Board criteria for doing business in California. Gross receipts will be the basis for revenue determination, and prior fiscal year revenue will be used to test thresholds. This means companies with significant operations or sales in the state will need to prepare even if headquarters are elsewhere.
When will the SB 261 public docket open for climate risk reports?
CARB plans to open the docket on December 1, 2025. Entities must post links to their climate risk reports during the window, which will remain open until July 1, 2026. This structure gives companies time to finalize reports while providing public transparency.
What is the current signal on the SB 253 Scope 1 and Scope 2 reporting deadline?
CARB staff have proposed June 30, 2026 as the first deadline for Scope 1 and Scope 2 disclosures, covering fiscal year 2025 data. Draft regulations are expected in mid-October 2025, with final Board consideration targeted for December 2025. Companies should prepare audit-ready emissions data now rather than waiting for the final text.
What frameworks can companies use for SB 261 climate risk reporting?
CARB materials allow the use of TCFD and IFRS S2. IFRS S2 is particularly relevant because it expands on TCFD with specific disclosure requirements for transition risks, physical risks, and resilience testing. Aligning with IFRS S2 ensures California reports are compatible with global investor expectations.
What public examples can guide Scope 3 data and reduction strategies?
Walmart’s Project Gigaton surpassed its one-billion-ton reduction target in 2024, six years ahead of schedule, showing the impact of consistent supplier programs. Apple reported in 2025 that supplier clean energy avoided 21.8 million metric tons of emissions in 2024, underscoring the role of electricity data and procurement alignment. These examples highlight how supplier activation drives credible Scope 3 reporting and emissions reductions.
