California Climate Corporate Data Accountability Act Update

Legislation Overview

California’s three climate disclosure laws aim to improve transparency in corporate environmental impacts:

• SB 253 (Climate Corporate Data Accountability Act):

  • Requires businesses doing business in California with $1 billion+ in global revenue to disclose Scope 1, 2, and 3 GHG emissions annually.

  • First reporting due in 2026 (Scope 1 & 2) and 2027 (Scope 3)

• SB 261 (Climate-Related Financial Risk Act):

  • Requires businesses with $500 million+ in revenue to disclose climate-related financial risks every two years.

  • Businesses must also disclose the measures they have taken to mitigate risks.

• AB 1305 (Voluntary Carbon Market Disclosures Act):

  • Targets companies making net zero, carbon neutrality, or emissions reduction claims.

  • Requires businesses to provide public disclosures about their use of voluntary carbon offsets

Regulatory Update - California Air Resources Board (CARB)

During the May 29 workshop, the CARB announced a regulatory update on timing when regulations will be issued:

• SB 253 Final Regulations Coming by End of 2025:

• No Delays in Reporting: Businesses must still report emissions starting in 2026 (Scope 1 & 2) and 2027 (Scope 3).

• Early Enforcement Leniency: CARB will allow businesses to report based on existing data during the first 2026 cycle to ease compliance.

• "Doing business in California": Likely to follow California Revenue and Tax Code Section 23101, and cover businesses with sales, property, or payroll exceeding specified thresholds.

• Revenue definition: Will be based on gross receipts under California tax law.

• Parent/Subsidiary Reporting: CARB may use the cap-and-trade program’s model, treating entities with 50%+ ownership or control as a single entity.

Conclusion

Although California’s climate disclosure regulations won’t be finalized until 2026, companies that expect to be subject to the rules should begin preparing now to calculate their 2025 emissions. A wait-and-see approach could leave you struggling to comply. Contact Joe Holman at joe.holman@esgadmin.com to learn how ESGA can help you get ahead.