California climate reporting: CARB previews rulemaking plans and launches public consultation

The California Air Resources Board (CARB) held a virtual workshop on March 23, 2026 to provide more detail on the implementation path for mandatory greenhouse gas (GHG) emissions reporting under SB 253. While the US Securities and Exchange Commission has refused to defend its climate-related disclosure rules in federal court and may rescind those rules, California is advancing its own rules and other states may follow. CARB voted on February 26, 2026 to finalize initial regulations for the state’s landmark climate disclosure laws SB 253 and SB 261, covering applicability, deadlines, and fees (see our prior update). 

The session provided logistical guidance for the initial reporting deadline (set on August 10, 2026), including extension requests, and launched a "pre-rulemaking" consultation on the more rigorous requirements slated for 2027, with a deadline to submit public comments by April 13, 2026. 

Year 1 compliance (2026)

In line with CARB's prior guidance, staff explained that the initial reporting deadline under SB 253 obliges entities to report only Scope 1 and 2 emissions data collected and reported in a manner already "in process" as of CARB's 5 December 2024 enforcement notice. Although a draft reporting template has been released, staff emphasized that its use is optional for the first year. 

Staff promised further guidance on intake procedure to follow, alongside reporting format and reporting portal launch. Additionally, staff alluded to a forthcoming guidance on extension requests in limited cases where companies cannot meet the August 10 reporting deadline. If companies are concerned about their ability to meet that deadline, staff indicated that now is the time to discuss.

Substantive requirements for 2027

CARB previewed staff's thinking about the high-level contours of a regulation to govern reporting for 2027 and onward. Much of the flexibility of Year 1 reporting would disappear. 

Mandatory templates

CARB plans to require use of a mandatory reporting template. CARB is refining the draft from October 10, 2025 on the basis of comments received, with an updated draft expected in summer 2026, while soliciting input on additional information that should be requested via the template. 

Organizational boundary

Importantly, CARB’s staff proposal preserves the flexibility of the GHG Protocol in accepting different methods of determining organizational boundary (e.g., equity share or control). CARB plans to require reporting entities to describe and explain their choice of organizational boundaries and approach. 

GHG accounting method flexibility

CARB proposes flexibility in accounting methods for Scope 3, allowing for spend-based, activity-based or supplier-specific accounting, and permitting the use of a hybrid combination of those three approaches to report more specific data where available and fill in the remainder with spend-based data. 

Emissions factors

CARB’s staff proposal contemplates setting criteria for acceptable emissions factors for use in calculations, and requiring reporters to explain their choice of factors and changes from prior years. CARB’s proposal lists several potential sources (EPA eGRID, IPCC EFDB, EPA EF, USEEIO) for emissions factors, but also shows openness to the use of proprietary models with documentation and explanation. 

Additional points

CARB has requested input on whether anything from the just completed fee and applicability regulation should be revisited:

• Applicability Definitions: Whether certain definitions approved by CARB’s board in February, such as “doing business in California” and revenue thresholds, should be revisited;
• Exemptions: Whether specific industry carve-outs, such as the exemption for insurers, should be re-evaluated; and
• Timeline Feasibility: Whether the August 10 deadline for future years remains practical, particularly if the assurance process proves more complex than anticipated.

Scope 3 proposals

CARB staff discussed three possible approaches for phasing in Scope 3 reporting in 2027 and requested stakeholder input on these options. 

1. Broad approach: beginning 2027, all entities would report on all Scope 3 categories, with de minimis exceptions.
2. Sectoral phase-in: limited to transportation and industrial sectors initially, covering transportation, technology, energy, cement production and other manufacturing activities.
3. Category-based phase-in: limited to the five most commonly reported categories (e.g., business travel, purchased goods and services, waste) for the first year, phasing in the rest over time. 

This directional choice will impact whether all entities must report and the scope of data that must be collected for 2027 reporting. 

The assurance process

CARB proposes to recognize a range of assurance standards and assurer qualifications, including some accepted for other jurisdictions' reporting. We recommend companies review with their assurer. The proposed list leaves space for companies to consider a comment to CARB on including additional standards which they might prefer or already use in their sustainability reporting.

Economic impact

Because the rule's impact will exceed $50m, CARB must conduct a standardized regulatory impact assessment (SRIA) to consider economic impact and regulatory alternatives. CARB's economic analysis estimates compliance costs for companies (reporting Scope 1, 2 and 3 emissions with limited assurance on Scope 1 and 2) at approximately $135,000 to $152,000 annually per entity, depending on the Scope 3 option chosen. CARB is soliciting input on whether the estimate is accurate and on alternatives that could accomplish the statutory goals with lower impact. 

Practical takeaways

While we await the Ninth Circuit Court of Appeals pending decision in the legal challenge against SB 253 and SB 261, CARB continues to advance its rulemaking and implementation work. Given the advancing timeline to the first reporting deadline in August, companies should assess whether they are in scope and if so, have an initial reporting plan in place. Now is also a time to consider early engagement if there are aspects of CARB’s forward-looking rulemaking that are of particular concern for reporting companies (for example, deadlines and assurance standards).

As additional mandatory sustainability reporting regimes come into effect this year around the globe, the mix of regulatory convergence and divergence in the reporting space makes global forward planning an increasingly prudent approach to compliance. For businesses navigating ISSB-aligned frameworks, the EU's Corporate Sustainability Reporting Directive or other reporting regimes, CARB's emerging requirements add an additional layer of complexity that demands attention. At the same time, they present an opportunity for companies and relevant stakeholders to engage with and shape the rules before they are finalized.