Focus on 2026 reporting for California climate laws
Hot Topic | January 2025
CARB announces enforcement relief and public consultation as implementation nears for California climate disclosures.
In October 2023, the California Governor signed three climate disclosure laws that shape climate disclosure practices beyond the state’s borders.
SB-253 (GHG emissions) and SB-261 (climate risks) – both amended by SB-219 – apply to US businesses that meet specified revenue thresholds and do business in California.
AB-1305 (carbon offsets) applies to US and international companies that undertake specified activities in California or make certain claims.
Latest developments
In December 2024, the California Air Resources Board (CARB) announced leniency for good faith efforts in the initial period of GHG emissions reporting and launched a public consultation for stakeholder feedback related to implementation of the laws.
Penalties for non-compliance
Recognizing that companies may need time to implement new data collection processes for reporting GHG emissions, CARB has indicated that for the first SB-253 reporting cycle (i.e. 2026), it will not take enforcement action for incomplete reporting, as long as companies demonstrate good faith efforts. Senators Wiener and Stern have formally expressed disapproval for the notice, indicating that further discussions may be forthcoming.
Public consultation
CARB is seeking stakeholder feedback to guide California climate law implementation. The public consultation aims to clarify definitions, identify reporting entities and establish data standards within a 60-day feedback period ending February 14, 2025.
CARB is interested in challenges and opportunities related to the new reporting requirements, feasibility of different methodologies and streamlining the process. This feedback will shape future regulatory frameworks and compliance for businesses in California. CARB stated that additional comments on SB-253 and SB-261 implementation are also welcome.
Applicability
- The Climate Corporate Data Accountability Act (SB-253, as amended by SB-219) and CARB enforcement notice
- Climate-Related Financial Risk Act (SB-261, as amended by SB-219)
- Public consultation, Public Comments to California Climate-Disclosure Information Solicitation
- Voluntary Carbon Market Disclosures Act (AB-1305) and proposed amendments (AB-2331)
Relevant dates
- SB-253 and SB-261 (as amended by SB-219) are effective for reporting in 2026
- Public consultation on SB-253 and SB-261 is open until Feb 14, 2025
- AB-1305 was effective Jan 1, 2024; a proposed amendment would change that date to July 1, 2025
Key impacts
In the movement to improve transparency and standardize climate-related disclosures, California passed the following laws, signed by the Governor in October 2023.
SB-253, Climate Corporate Data Accountability Act, mandates the disclosure of GHG emissions.
SB-261, Greenhouse gases: climate-related financial risk Act, mandates the disclosure of climate-related financial risks and measures adopted to reduce and adapt to such risks.
The above laws were amended by SB-219, which was signed into law by the Governor in late September 2024. Contrary to earlier proposals, these amendments do not delay the reporting effective dates for SB-253 and SB-261, but they do defer by six months (to July 1, 2025) the date for CARB to develop and adopt regulations that implement SB-253.
AB-1305, Voluntary carbon market disclosures Act, mandates disclosures about voluntary carbon offsets and emissions reduction claims. Proposed AB-2331 would delay the effective date for reporting to July 1, 2025 but failed to pass before the end of California’s 2024 legislative session.
Report contents
- Fast facts, impacts, actions
- Background
- A broad scope
- Targeted disclosures
- Effective dates are coming soon
- Assurance required from the outset
- Future developments: CARB consultation
- Other US states progressing similar laws
- It’s all about the value chain
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