California SB 253 & SB 261: Scope 1-3 Compliance Guide, Timelines, and Penalties for 2026

California SB 253 compliance is now a hard deadline: companies with more than $1 billion in revenue that do business in California must report Scope 1 and Scope 2 emissions to the California Air Resources Board (CARB) by 10 November 2026. CARB’s Initial Regulation was approved on 12 October 2026 and took effect the same day. Scope 3 follows in 2027. The companion law, SB 261, requires climate-related financial risk reports from companies above $500 million in revenue, but it is paused by a Ninth Circuit injunction.

This guide explains who is covered, the reporting timeline for each scope, the first-year relief CARB has written into the rule, penalties, and a practical checklist for multinationals. Prefer a quick overview? Flip through our 11-slide SB 253 web story.

• SB 253 and SB 261 in brief
• Who is covered
• SB 253: Scope 1, 2 and 3 timeline
• First-year relief for 2026
• SB 261: climate risk reports
• Penalties and fees
• Measuring Scope 1, 2 and 3 for California
• Compliance checklist for multinationals
• FAQs

SB 253 and SB 261 in brief

California passed both laws in 2023 and amended them in 2024. Together they create the most far-reaching corporate climate disclosure regime in the United States, and because they key off doing business in California rather than a stock listing, they reach private companies and foreign-owned US subsidiaries as well as listed groups.

• SB 253, the Climate Corporate Data Accountability Act (Health and Safety Code 38532), requires annual disclosure of greenhouse gas emissions across Scopes 1, 2 and 3.
• SB 261, the Climate-Related Financial Risk Act (Health and Safety Code 38533), requires a public report every two years on climate-related financial risks and how the company is managing them.

Who is covered by California’s climate disclosure laws?

Both laws apply to partnerships, corporations, LLCs and other business entities formed under US law that do business in California. The revenue tests differ: more than $1 billion in total annual revenue for SB 253, and more than $500 million for SB 261. Revenue is total revenue, not California revenue, so a company with a small California footprint can still be covered.

CARB’s final rule applies one common applicability framework to both laws. Each entity’s revenue is measured on its own, using the lesser of its two prior fiscal years, and intercompany transactions within the same combined reporting group are excluded. Insurers regulated by the California Department of Insurance, or in the insurance business elsewhere, are outside SB 261.

Because the test is applied entity by entity, a group should map every US legal entity, its revenue in each of the last two fiscal years, and whether it does business in California. Several subsidiaries in one group may each be covered.

SB 253: Scope 1, Scope 2 and Scope 3 reporting timeline

SB 253 phases in by scope and by assurance level. The statute sets the structure; CARB’s regulations set the dates (HSC 38532).

The 10 November 2026 date is three months later than the 10 August date CARB had previously adopted. The deadline moved when CARB withdrew an earlier version of the regulation in June 2026 and reissued it with modifications. CARB has said a separate rulemaking will cover 2027 and later years, including the Scope 3 reporting date.

First-year relief: what CARB accepts for 2026

CARB has codified relief for the first reporting cycle only (WilmerHale, 20 Oct 2026):

• Existing data is enough. Companies may report using emissions data they already had, or were collecting, on or before 5 December 2024.
• Flexible formats. An existing annual or sustainability report, a report prepared for another program or voluntary initiative, or CARB’s own template are all accepted.
• No data, no report — but a statement. A company that neither had nor was collecting Scope 1 or 2 data by 5 December 2024 may instead file a statement on company letterhead explaining why.
• Two ways to submit. CARB’s voluntary 2026 Report Intake Platform, or by email to the address in CARB’s guidance.
• No assurance needed in 2026. CARB will accept 2026 submissions whether or not they carry third-party assurance.

The relief is a one-year bridge. From 2027, filings must carry limited assurance over Scope 1 and 2, so the data systems and controls an auditor will test need to be in place during fiscal 2026.

SB 261: biennial climate-related financial risk reports

SB 261 requires covered entities to prepare a climate-related financial risk report every two years, disclosing their climate-related financial risk in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), or an equivalent framework such as the ISSB’s IFRS sustainability standards, together with the measures adopted to reduce and adapt to that risk. The report is published on the company’s own website (HSC 38533).

The statute set the first report for 1 January 2026. In November 2025, the Ninth Circuit granted an injunction against enforcement of SB 261 pending appeal in Chamber of Commerce v. Sanchez; the court declined to extend it to SB 253 (CARB SB 261 docket). CARB’s final rule sets no SB 261 deadline and the agency plans to provide an alternate date once the appeal is resolved (Thompson Hine, 14 Oct 2026).

Pausing enforcement does not change the work. A TCFD-aligned report needs governance, strategy, risk management and metrics, including scenario analysis. Companies already reporting under ISSB in other markets can largely reuse that work; our IFRS S2 implementation roadmap and scenario analysis guide cover the core elements.

Penalties and fees under SB 253 and SB 261

• SB 253: administrative penalties of up to $500,000 per reporting year. CARB must weigh past and present compliance and whether the company took good-faith steps to comply.
• Scope 3 safe harbor: no penalty for Scope 3 misstatements made with a reasonable basis and disclosed in good faith.
• Scope 3, 2027–2030: penalties apply only for failing to file.
• SB 261: administrative penalties of up to $50,000 per reporting year (currently unenforceable while the injunction stands).
• Annual fees: both programs now carry an annual CARB fee. Fee notices are expected from 10 December each year, with payment due within 60 calendar days.

The penalty ceiling is modest for a $1 billion company, but the larger exposure is reputational and contractual: SB 253 filings become public, and customers, lenders and investors will compare them with voluntary reports, CDP responses and other jurisdictions’ disclosures.

Measuring Scope 1, 2 and 3 emissions for California reporting

SB 253 requires emissions measured under the Greenhouse Gas Protocol. For most companies the practical sequence is:

1. Scope 1: direct emissions from owned or controlled sources such as boilers, furnaces, vehicles and refrigerant leaks.
2. Scope 2: purchased electricity, steam, heat and cooling. US reporters should use eGRID subregion factors for location-based figures; see our eGRID Scope 2 guide.
3. Scope 3: the 15 value-chain categories, usually led by purchased goods and services, use of sold products and transport. Start supplier data collection now; the 2027 report will need it. Our guide to cloud computing Scope 3 shows how category-level estimates are built.

Our free GHG Emissions Engine structures a Scope 1, 2 and 3 inventory under the GHG Protocol, so the same numbers can feed an SB 253 filing, a CDP response and an ISSB or CSRD report.

Compliance checklist for multinationals doing business in California

1. Map entities. List every US-organized entity, its revenue for the last two fiscal years, and its California activity. Flag each against the $500 million and $1 billion tests.
2. Confirm your 2026 route. Decide whether you will file an existing report, CARB’s template, or a letterhead statement, and who signs it off before 10 November 2026.
3. Budget for fees. Expect a CARB fee notice from 10 December 2026 and payment within 60 days.
4. Prepare for assurance. Select a provider and dry-run limited assurance over fiscal 2026 Scope 1 and 2 data, ready for the 2027 filing.
5. Start Scope 3 now. Prioritise the largest categories, engage key suppliers and document estimation methods to stay within the good-faith safe harbor.
6. Keep SB 261 work moving. Draft a TCFD- or ISSB-aligned risk report so you can publish quickly if the injunction lifts.
7. Align frameworks. If you also report under the EU’s CSRD or ISSB-based rules elsewhere, map overlapping data points once. Our CSRD Double Materiality Checker helps identify shared topics.
8. Assign ownership. Put a named executive and board committee in charge, and align emissions reporting with the financial close calendar.

Comparing jurisdictions? Singapore’s regime pairs a carbon tax with ISSB reporting; see our Singapore carbon tax and ISSB guide.

Frequently asked questions

When is the first California SB 253 report due?

Scope 1 and Scope 2 emissions for the prior fiscal year are due to CARB by 10 November 2026, under CARB’s Initial Regulation approved on 12 October 2026. Scope 3 is not required in 2026.

Who must comply with SB 253?

US-organized companies that do business in California and have total annual revenue above $1 billion, tested at the entity level using the lesser of the two prior fiscal years.

Is SB 261 in effect?

SB 261 is law but paused. The Ninth Circuit granted an injunction pending appeal in November 2025, and CARB will set a new reporting date once the appeal is resolved.

What are the penalties for non-compliance?

Up to $500,000 per reporting year under SB 253 and up to $50,000 per reporting year under SB 261. Scope 3 misstatements made with a reasonable basis and in good faith are protected, and from 2027 to 2030 Scope 3 penalties apply only for nonfiling.

Is third-party assurance required for the 2026 SB 253 report?

No. The statute calls for limited assurance from 2026, but CARB will accept 2026 submissions with or without it. Limited assurance applies from 2027 and reasonable assurance from 2030.

Sources

• California Health and Safety Code 38532 (SB 253, as amended by SB 219)
• California Health and Safety Code 38533 (SB 261, as amended by SB 219)
• CARB, Guidance for SB 253 2026 Reporting Submittals, September 2026
• CARB, Climate-Related Financial Risk Reports (SB 261) docket
• Thompson Hine, CARB’s Final Climate Disclosure Rule Sets SB 253 Deadline, Leaves SB 261 Paused, 14 October 2026
• WilmerHale, Climate Disclosure Update: CARB’s SB 253 Initial Regulation Takes Effect, 20 October 2026

This guide is for information only and is not legal advice. Rules and deadlines may change; confirm requirements with CARB and your advisers.