California’s Climate Accountability Package introduces two landmark laws requiring companies doing business in the state to disclose greenhouse gas (GHG) emissions and climate-related financial risks. Both laws apply regardless of whether a company is headquartered in California—the trigger is “doing business in California,” which includes conducting transactions for financial gain, being organized/domiciled in the state, or meeting certain tax thresholds.
The California Air Resources Board (CARB) missed its July 2025 deadline to finalize implementing regulations but has confirmed that statutory reporting deadlines remain firm. Companies should prepare now, even as some implementation details remain uncertain.
What the Laws Require
SB 253 – Climate Corporate Data Accountability Act
1. Annual GHG Disclosure:
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- Applies to U.S. business entities with annual revenue >$1 billion doing business in California.
- Scope 1 & 2 emissions must be disclosed starting in 2026 (for 2025 data).
- Scope 3 (supply chain) emissions reporting begins in 2027.
- Emissions must be measured using the Greenhouse Gas Protocol and disclosed through a CARB-designated reporting platform.
2. Third-Party Assurance:
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- Scope 1 & 2: Limited assurance required in 2026, transitioning to reasonable assurance by 2030.
- Scope 3: Potential assurance requirements starting in 2030.
3. Fees & Penalties:
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- Companies must pay an annual fee to fund CARB oversight.
- Penalties up to $500,000/year for non-compliance, though good-faith Scope 3 misstatements are exempt.
SB 261 – Climate-Related Financial Risk Act
1. Biennial Risk Reporting:
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- Applies to business entities with revenue >$500 million doing business in California.
- First report due January 1, 2026, then every two years.
- Must describe climate-related financial risks and mitigation strategies.
2. Disclosure Framework:
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- Reports must align with TCFD (Task Force on Climate-related Financial Disclosures) or equivalent (e.g., IFRS S2).
- Companies with existing TCFD-aligned reports may repurpose them.
3. Publication & Penalties:
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- Reports must be publicly posted on the company’s website.
- Fines up to $50,000/year for non-compliance.
Key Compliance Considerations
Who Is Covered?
1. SB 253: Entities with >$1B revenue.
2. SB 261: Entities with >$500M revenue.
3. “Doing business in California” includes:
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- Generating >$735,019 in CA sales OR
- Holding >$73,502 in CA property/payroll (per CARB’s proposed thresholds).
Reporting Deadlines
| Law | First Report Due | Data Covered | Frequency |
| SB 253 (Scope 1 & 2) | 2026 (exact date TBD) | 2025 emissions | Annual |
| SB 253 (Scope 3) | 2027 (≤180 days after Scope 1 & 2) | 2026 emissions | Annual |
| SB 261 | Jan 1, 2026 | FY 2023/24 or 2024/25 | Biennial |
Assurance & Enforcement
1. SB 253:
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- Limited assurance (2026) → Reasonable assurance (2030).
- No penalties in 2026 for good-faith efforts (per CARB’s Dec 2024 notice).
2. SB 261: No mandatory assurance, but gaps must be disclosed.
Leveraging Existing Frameworks
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- SB 253: GHG Protocol (including Scope 3 guidance).
- SB 261: TCFD or IFRS S2.
- Parent-level reporting is permitted for consolidated entities.
How IsoMetrix Can Help
IsoMetrix’s Sustainability & Carbon Management Platform simplifies compliance with SB 253 & SB 261:
✔ Automated Emissions Tracking – Scope 1, 2 & 3 calculations aligned with the GHG Protocol Corporate Accounting and Reporting Standard with audit-ready data.
✔ Real-Time Dashboards – Customizable visualizations for carbon footprint monitoring.
✔ Compliance-Ready Reporting – Built-in guidance from TCFD, GRI, SASB & IFRS S2 ensures reporting alignment
✔ Global Scalability – Supports multi-site, supply chain, and third-party data collection.
✔ End-to-End ESG Management – Integrates climate risk, safety, and sustainability in one platform.
✔ Advisory Support – Partner network assists with strategy and disclosure alignment.
Conclusion
California’s SB 253 and SB 261 mark a shift from voluntary to mandatory climate disclosure, with strict penalties for non-compliance. Despite regulatory delays, reporting deadlines are fixed, leaving little time for preparation.
Next Steps for Companies:
1. Determine applicability (revenue + CA business presence).
2. Start GHG inventories & climate risk assessments.
3. Align with GHG Protocol & TCFD/IFRS S2.
4. Implement scalable data systems (e.g., IsoMetrix) to ensure audit-ready reporting.
IsoMetrix provides the tools, expertise, and automation needed to meet these requirements efficiently—reducing manual effort while ensuring compliance.