California SB 253 is stirring the pot for over 5,400 companies with revenues surpassing $1 billion, requiring them to disclose greenhouse gas emissions starting in 2026. Picture it as a corporate report card on climate impact! By 2026, firms must track and report their Scope 1 and 2 emissions, followed by Scope 3 the next year. This regulation is not just red tape; it paves the way for eco-friendly investments and could save companies money. Curious about how to comply?
Quick Overview
- California SB 253 targets over 5,400 U.S.-based companies with more than $1 billion in global annual revenue for climate disclosure requirements.
- Companies are required to report Scope 1 and Scope 2 emissions by August 10, 2026, with Scope 3 reporting due the following year.
- The California Air Resources Board (CARB) will oversee the compliance and reporting processes for affected organizations.
- Mandatory climate disclosures aim to enhance accountability and attract sustainability-focused investors, aligning with global net-zero commitments.
- Firms below $500 million in revenue are exempt from the 2026 reporting requirements under SB 253.
What You Need to Know About California SB 253
What exactly does California SB 253 mean for businesses operating in the Golden State?
This significant law targets U.S.-based organizations with over $1 billion in global annual revenue. Roughly 5,400 firms will need to step up their climate game. The California Air Resources Board (CARB) will administer the compliance requirements, which means businesses will need to stay informed about regulatory updates. Additionally, companies must prepare for annual filings starting in 2026, ensuring ongoing transparency in their emissions reporting.
If your business skims below the $500 million mark, consider yourself off the hook for 2026 reporting.
Companies must report their Scope 1 and Scope 2 emissions by August 10, 2026, and get ready for Scope 3 the following year. The law aligns with broader ESG frameworks that investors increasingly use to evaluate corporate sustainability performance.
Think of it as a climate report card—one that’s graded by both auditors and the environment!
How to Comply With California SB 253’s Reporting Requirements?
Steering through California SB 253‘s reporting requirements might feel like preparing for a high-stakes exam, but with the right strategy, businesses can ace it.
First, companies must collect data on fuel use and electricity, akin to gathering ingredients for a recipe. Next, they will calculate their Scope 1 and Scope 2 emissions using the GHG Protocol, that trusty cookbook of carbon accounting. Innovative organizations are implementing AI-powered tools to track sustainability metrics and reduce Scope 3 emissions across their supply chains. Additionally, companies should be aware that stakeholder engagement is a crucial part of the CARB rulemaking process, as it helps in refining the regulations and ensuring compliance. Notably, entities with over $1 billion in revenue will be required to report greenhouse gas emissions starting in 2026.
Companies must gather fuel and electricity data, then calculate Scope 1 and Scope 2 emissions using the GHG Protocol.
Submissions are due by August 10, 2026, through CARB’s public docket.
And remember, while limited assurance is required for the first year, don’t fret—this is just a small step towards a much greener future!
Why Climate Disclosure Matters for Your Business
How essential is climate disclosure for a business’s long-term success? It’s critical, akin to checking your car’s oil before a road trip.
By revealing greenhouse gas emissions, companies hold themselves accountable and attract investors who prioritize sustainability—over half of them view climate risk disclosure as fundamental as financial reports. Furthermore, the implementation of regulations like Brazilian companies disclosing emissions starting January 2026 underscores the growing importance of mandatory climate disclosures in corporate sustainability practices.
Plus, identifying emission hotspots can save money, making operations more efficient. Aligning disclosure practices with UN Sustainable Goals allows businesses to demonstrate measurable contributions to global sustainability targets. As consumers and regulators increasingly demand transparency, businesses that embrace climate disclosure not only boost their reputation but also future-proof themselves against risks.
In a world shifting toward net-zero, it’s smart business—like bringing an umbrella on a cloudy day.
