California eases initial GHG reporting and seeks feedback for climate disclosures

The California Air Resources Board (CARB) has exercised enforcement discretion to allow companies reporting under the Climate Corporate Data Accountability Act (SB 253) to base their 2026 greenhouse gas (GHG) emissions reports on data they already possess or were collecting as of Dec 5, 2024.  CARB will not enforce against companies for incomplete reporting in the first year, provided they demonstrate good faith and retain all data relevant to emissions reporting for the relevant fiscal year.

CARB also is soliciting feedback from stakeholders through Feb 14, 2025 on how to implement California’s new climate-related disclosure rules.

These two updates are part of CARB’s implementation of California’s Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261). CARB must publish implementing regulations by July 1, 2025, with companies’ first reports on GHG emissions and climate-related financial risks due in 2026. See here for more background on the laws and compliance planning.

Solicitation

On December 16, CARB issued Information Solicitation to Inform Implementation of California Climate-Disclosure Legislation: Senate Bills 253 and 261, as amended by SB 219 seeking comments on five topics relating to the laws’ regulatory implementation. The comment deadline is February 14, 2025. Comments may be submitted to the Corporate Climate Data Reporting and Financial Risk Programs Comment Docket here.

SB 253 requires all US business entities – public and private – that “do business” in California and have total annual revenues of more than $1bn to disclose their GHG emissions for Scopes 1, 2 and 3.  SB 261 requires US business entities with an annual revenue threshold of $500mn that do business in California to prepare biennial reports on climate-related financial risks posed by their operations.

The five topic areas for which CARB is seeking input are:

• applicability of both regulations, including how CARB should define companies that “do[] business in California”; whether certain types of entities should be included; how to identify reporting entities; and how to track parent/subsidiary relationships for the purpose of reporting requirements
• standards for both regulations, including how to both ensure the regulations address California-specific needs and stay aligned with international standards incorporated into the laws; how to minimize companies’ duplicate efforts with other mandatory regimes and protocols; and whether flexibilities in the reporting methods companies use should be limited
• data reporting for both regulations, including what factors affect the costs of compliance for companies; how CARB should estimate costs and fiscal impact; and whether CARB should contract out to a non-profit or private company for reporting services
• SB 253-specific questions, including whether CARB should standardize/limit reporting flexibilities under the GHG Protocol; what options exist for assurance and which assurance standards should be used; and how voluntary emissions reporting schemes should inform CARB’s approach, including by timelines and software
• SB 261-specific questions, including timeframes for reporting; whether to require advance disclosures for new filers; and information about other climate financial risk disclosure obligations

Commenters may also provide additional information they feel is important to inform CARB’s work to implement the statutes.

Enforcement discretion

On December 5, CARB published an Enforcement Notice (Dec. 5, 2024) for the Climate Corporate Data Accountability Act (SB 253) that “recognizes that companies may need some lead time to implement new data collection processes to allow for fully complete Scope 1 and Scope 2 emissions reporting.” As such, CARB announced that companies may base their 2026 reports on information they already possess or were collecting as of December 5, 2024.  CARB qualified this exercise of enforcement discretion by providing that companies must make a good-faith effort to comply with the reporting obligations and retain all data relevant to emissions reporting for the relevant fiscal year.

SB 253 requires that companies’ emissions data are reported in conformance with the Greenhouse Gas Protocol standards and guidance, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). 

This enforcement discretion does not reflect an interpretation of statutory requirements for future reporting periods, and CARB will provide further details on future reporting periods as part of its implementing regulations in July 2025. 

CARB was originally required to publish implementing regulations by January 1, 2025. However, minor amendments enacted in September 2024 by SB 219 extended CARB's deadline to July 1, 2025. The amendments did not delay the 2026 compliance date for reporting entities, and so effectively shortened the time companies will have to prepare for compliance once the regulations are published.