California’s New Climate Disclosure Rules & What They Mean for Your Business

California is continuing to push forward with the development of its climate disclosure laws. On October 10th, 2025, the California Air Resources Board (CARB) released its draft reporting template for Scope 1 and 2 greenhouse gas (GHG) emissions, marking a major step toward enforcing the landmark Climate Corporate Data Accountability Act (SB-253) and Climate-Related Financial Risk Act (SB-261).

Together, these two laws will make California one of the first jurisdictions in the world to require large companies to publicly report both their emissions and their climate-related financial risks.

If your organization operates, sells, or even supplies into California, this affects you.

What is SB-253

SB-253, also known as the Climate Corporate Data Accountability Act, is a California law passed in 2023 that requires large companies to publicly disclose their greenhouse gas (GHG) emissions every year.

It covers:

• Scope 1 emissions: Direct emissions from a company’s own operations (for example, fuel burned in company vehicles or facilities).

• Scope 2 emissions: Indirect emissions from purchased electricity, heating, or cooling.

• Scope 3 emissions: All other indirect emissions across the company’s value chain, from suppliers to product use.

The law directs the California Air Resources Board (CARB) to design and oversee this reporting program, including the newly released reporting template that standardizes how companies will submit their data.

Does SB-253 Apply To You

You might be surprised by how broad the law’s reach is.

SB-253 applies to any public or private company that:

• Does business in California, and

• Has total annual revenue exceeding $1 billion (USD)‍

That includes companies headquartered elsewhere but selling into California, owning or leasing property, or having employees, facilities, or major customers in the state. ‍

The exact definitions of these factors is still being finalized by CARB, but many businesses in California and around the world will be impacted.

A companion law, SB-261, applies to companies with over $500 million in revenue and requires disclosure of climate-related financial risks every two years, beginning in 2026.

If your organization meets those criteria, you’ll need to:

• Disclose Scope 1 and 2 emissions starting in 2026 (for 2025 data). CARB has indicated that third-party assurance will not be required for the first reporting year

• Disclose Scope 3 emissions starting in 2027 (for 2026 data), with assurance requirements expected in later years once the program is fully implemented

• Plan for third-party assurance in future reporting cycles, even though it is not required for 2026 submissions‍

Even if your company doesn’t cross the threshold, there’s a strong chance you’ll feel the effects through your customers, investors, or suppliers.

Large enterprises subject to SB-253 will need accurate Scope 3 data, which means they’ll start requesting emissions data from their suppliers and business partners. Many already are.

That means:

• Suppliers will need to calculate and share their emissions data to maintain preferred-vendor status

• Investors and financial institutions will expect consistent reporting across their portfolios

• Procurement and sustainability teams will need systems that can respond to these requests efficiently

In practice, SB-253 will ripple through entire value chains, not just the companies at the top.‍

What CARB’s New Template Includes

CARB’s reporting template standardizes how companies present their emissions data, though using the template is optional for 2026. Companies may submit existing reports if they already disclose Scope 1 and 2 emissions.

While details may evolve, the template includes:

• Organizational information

• Third-party verification details

• Inventory boundaries

• Fuel consumption and energy use by source

• GHG emissions for all activities across Scope 1 and 2 in CO2e as well as for each gas (CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, and NF₃)

• Emission factors and calculation methods used

• Optional assurance statement (CARB does not require third-party assurance for 2026 submissions)

The inclusion of GHG disaggregation (breaking out individual gases) aligns with global frameworks like the GHG Protocol, bringing California’s standards close to those used in the EU.

For companies, this means your data systems will need to capture both total emissions and granular component data.

How You Should Prepare

If you believe your organization may fall under SB-253 or SB-261, here are the steps you should take today to get prepared:

1. Understand your Exposure

• Review whether your organization, or any of your largest customers, meets the SB-253 or SB-261 thresholds. 

• Map where California touches your operations, sales, or supply chain.

2. Get your Data In Place

• Centralize energy, fuel, and refrigerant data for Scope 1 and 2.

• Ensure consistent measurement and documentation across regions and entities.

• Start engaging suppliers on Scope 3 readiness; their data will be critical later.

3. Align with Reporting Standards

• Cross-check your current reporting against CARB’s template and the GHG Protocol.

• If you already produce CDP, ISSB, or CSRD-aligned reports, you’re partway there, but CARB’s template may require new levels of detail.‍

4. Understand Future Assurance Requirements

• CARB has clarified that third-party assurance will not be required for the first year of SB-253 reporting in 2026.

• Assurance requirements are expected in later reporting cycles, so building audit-ready systems now will put you ahead when verification becomes mandatory.

5. Build Internal Awareness

• Procurement, sustainability, and finance teams will all be involved in disclosure readiness.

• Create a shared understanding of terms, timelines, and responsibilities before requests start coming in from customers or regulators.

If this feels overwhelming, you’re not alone. 

For most companies, preparing for SB-253 and SB-261 isn’t just about collecting data. Even with CARB’s flexible first-year approach, organizations still need reliable systems, clear processes, and a shared understanding of what regulators will expect as requirements tighten.

How Green Project Can Help

At Green Project, we see disclosure not just as a compliance exercise, but as a chance to build credibility and accelerate real decarbonization.

Our platform helps enterprises and suppliers prepare for regulations like SB 253 and SB 261 through:

• Audit-ready carbon accounting that tracks Scope 1, 2, and 3 emissions

• Template-aligned reporting

• Supplier enablement tools that allow vendors to calculate and report their own emissions, improving the accuracy of Scope 3 reporting

• Renewable energy procurement to help companies reduce their reported emissions

With CARB offering flexibility in the first reporting year, now is the ideal time to put strong systems in place. We help clients establish audit-ready carbon accounting before assurance requirements begin.

The Bigger Picture on Climate Regulations

California’s climate disclosure laws signal a broader transformation in how companies account for their impact. 

What began as voluntary ESG reporting is now evolving into a mandatory, regulated component of corporate accountability.

The companies that prepare early won’t just avoid potential fines or penalties, they’ll strengthen their investor confidence, resilience, and reputation.

Ready to see where you stand? Get in touch to learn how Green Project helps enterprises and their suppliers align with emerging disclosure requirements like California’s SB 253 and SB 261.