California, August 26, 2025
News Summary
California is poised to introduce new climate disclosure regulations via the California Air Resources Board (CARB) on October 14, 2023. Following the enactment of SB 253 and SB 261 earlier this year, these regulations require significant corporations to report emissions data and climate-related risks. CARB, which adjusts its timeline for regulations, anticipates affecting over 4,000 firms while also providing a grace period for compliance. The regulatory landscape will be further shaped by upcoming political changes in 2025, impacting ESG investments.
California is set to establish new climate disclosure regulations when the California Air Resources Board (CARB) issues a notice of proposed rulemaking on October 14, 2023. This regulation follows the enactment of two critical laws earlier this year: SB 253, also known as the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act, both signed by Governor Gavin Newsom. The implementation of these laws aims to enhance corporate transparency around environmental impacts and climate-related financial risks.
The laws target substantial companies, mandating that those with over $1 billion in revenue report their Scope 1 and Scope 2 emissions, with future requirements for Scope 3 disclosures to follow. Similarly, firms with at least $500 million in revenue will be required to prepare biennial climate-related risk reports. CARB estimates that approximately 4,160 firms will need to comply with SB 261, while around 2,596 firms will fall under the emissions reporting requirements of SB 253.
CARB initially planned to present final regulations by July 1, but the timeline has adjusted, with board consideration now scheduled for December 11-12, 2023. A 45-day public comment period will precede this meeting, which will help refine the final regulations. The agency’s efforts also include validating the list of companies required to adhere to the new legislation.
Implementing these laws is expected to incur a one-time financial cost of $20.7 million, funded temporarily by the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. Continuing costs are projected to be about $13.9 million annually. Companies falling under SB 253 will pay an average annual fee of $3,106, while those under SB 261 will incur fees around $1,403. Notably, entities with revenues exceeding $1 billion will be subject to both fees.
Importantly, the new regulations contain provisions for enforcement. CARB has indicated that it will not impose sanctions for incomplete data during the first year, provided companies make a genuine effort to collect relevant emissions data. This approach aims to facilitate a smoother transition for businesses adapting to the new requirements.
Following a public workshop conducted by CARB in May, sustainability leaders from KPMG clarified that the 2026 reporting timelines will remain intact, despite some concerns about potential delays. Moreover, while there have been legal challenges to these new laws, a recent ruling from a federal judge denied the request for a preliminary injunction against the regulations, allowing CARB to move forward with its plans.
The public can offer feedback through workshops until September 11, 2023. In addition, CARB has released a FAQ document to help businesses understand their compliance obligations under these new regulations.
Looking ahead, political dynamics may influence the future landscape for ESG investments in California. With upcoming leadership changes expected to adopt a more adversarial stance towards environmental and social governance (ESG) issues in 2025, companies must brace themselves for evolving regulatory and investment climates.
FAQ
What are the main requirements of SB 253 and SB 261?
SB 253 requires companies with over $1 billion in revenue to report Scope 1 and Scope 2 emissions, while SB 261 mandates companies with at least $500 million in revenue to produce biennial climate-related risk reports.
When are the regulations expected to be finalized?
CARB plans to present the final regulations for board consideration on December 11-12, 2023, after a 45-day public comment period.
Who will be exempt from these laws?
Exemptions include non-profits, teleworking-only companies, government entities, and certain wholesale electricity businesses.
Key Features Summary
| Aspect | SB 253 | SB 261 |
|---|---|---|
| Revenue Threshold | Over $1 billion | At least $500 million |
| Reporting Requirement | Scope 1 and Scope 2 emissions | Biennial climate-related risk reports |
| Estimated Affected Companies | 2,596 firms | 4,160 firms |
| Annual Fees | $3,106 | $1,403 |
| Initial Implementation Cost | $20.7 million | $20.7 million (shared) |
| Ongoing Annual Cost | $13.9 million | $13.9 million (shared) |
| Grace Period for Sanctions | No sanctions for incomplete data in the first year | No sanctions for incomplete data in the first year |
Deeper Dive: News & Info About This Topic
- ESG Dive: California Climate Risk Disclosure Rules
- Wikipedia: Climate Change
- Wolters Kluwer: California Climate Disclosure Laws
- Google Search: California climate disclosure
- ESG Today: California Mandatory Climate Reporting FAQ
- Encyclopedia Britannica: Climate
- Ropes & Gray: California’s New Climate Disclosure Laws
Author: STAFF HERE COSTA MESA WRITER
COSTA MESA STAFF WRITER The COSTA MESA STAFF WRITER represents the experienced team at HERECostaMesa.com, your go-to source for actionable local news and information in Costa Mesa, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the OC Fair, Concerts in the Park, and Fish Fry. Our coverage extends to key organizations like the Costa Mesa Chamber of Commerce and Boys & Girls Clubs of Central Orange Coast, plus leading businesses in retail, fashion, and technology that power the local economy such as Vans, Experian, and South Coast Plaza. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
