California’s Climate Disclosure Laws: Deadlines, Requirements, and Compliance Guidance
California’s latest climate disclosure laws are reshaping corporate reporting, requiring businesses to prepare for greenhouse gas emissions reporting, climate-related financial risk disclosures, and carbon offset transparency as deadlines approach.
This Week's Contributor
Corporate and institutional players in the US are facing an unprecedented period of change, characterized by a rapidly evolving landscape of sustainability and climate-related risks. This transformation is being driven by regulatory uncertainty as well as rising consumer and stakeholder expectations.
California’s Rapidly Evolving Climate Disclosure and Regulatory Landscape
Although federal action on climate disclosure remains stalled, California continues to lead with aggressive climate legislation (SB 253, SB 261, and AB 1305) that has significant implications for businesses operating in California. These measures have survived initial court challenges, and the California Air Resources Board (CARB) recently released guidance for mandatory disclosures required under SB 261, confirming that January 1, 2026, remains the deadline for initial reporting.
Overview of California Climate Disclosure Bills (SB 253, SB 261, AB 1305)
In October 2023, California Governor Gavin Newsom signed into law three critical climate-related bills:
- CA SB 253: Climate Corporate Data Accountability and Emissions Disclosure Act
- CA SB 261: Climate-Related Financial Risk Disclosure Act
- CA AB 1305: Voluntary Carbon Markets and Carbon Offset Disclosure Act
These bills establish mandatory climate reporting requirements for both public and private companies, and they require entities that market, sell, or purchase voluntary carbon offsets (VCOs) to provide transparent, verifiable reporting.
| Regulation | Impacted Parties | Disclosure Requirements | Assurance | Consequences for Non-Compliance |
|---|---|---|---|---|
| CA SB 253: Climate Corporate Data Accountability Act | “Reporting Entities,” defined as: any “partnership, corporation, LLC, or any other business entity” formed under CA state law, the laws of any other US state including DC, or an act of congress that is doing business in CA with total annual revenues >$1B* | Annual disclosure of Scope 1, 2, and 3 GHG emissions, based on the GHG Protocol’s standards, with reporting to commence for Scope 1 and 2 emissions starting FY25 and for Scope 3 emissions starting FY26, with a currently proposed deadline for initial reporting of June 30, 2026 | Scope 1 and 2: Limited assurance starting 2026 with reasonable assurance starting 2030
Scope 3: Limited assurance starting 2030 but may start as soon as 2027 |
Fine of up to $500K in a given reporting year |
| CA SB 261: Climate-Related Financial Risks Act | “Covered entities,” defined as: any “partnership, corporation, LLC, or any other business entity” formed under CA state law, the laws of any other US state including DC, or an act of congress that is doing business in CA with total annual revenues >$500M, excluding those in the insurance industry* | Biennial disclosure of climate-related financial risks, based on TCFD, IFRS S2, or equivalent standard (e.g., frameworks developed by a regulated exchange, national government, or governmental entity) and measures to mitigate such, with initial reporting due on January 1, 2026 | None | Fine of up to $50K in a given reporting year |
| CA AB 1305: Voluntary Carbon Markets Disclosures Act | Public and private businesses that a.) sell and market VCOs in CA; b.) purchase or use VCOs sold in CA, make climate-related emissions claims, and operate in CA; or c.) make climate-related emissions claims in CA and operate in CA | Annual disclosure, starting January 1, 2025, of information regarding a.) VCOs projects including emissions reductions; b.) the business entity selling VCOs, including associated project type; and c.) how the accuracy of any relevant emissions-related claims was determined by the disclosing business entity | Disclosure is required indicating whether there is independent third-party verification of a.) the project attributes of relevant VCOs or b.) the climate-related emissions data or claims made by the disclosing business entity | Fine of $2.5K/day up to $500K per violation |
| *While neither SB 253 nor 261 specifically include non-US business entities in their respective definitions of those covered by the legislation, it is expected that they may still apply to those foreign business entities that otherwise meet the respective criteria. | ||||
Clarifying SB 219 Updates
While SB 253 and SB 261 initially left questions unanswered regarding applicability and reporting, SB 219: Climate Corporate Accountability and Climate-Related Financial Risk, signed in September 2024, clarified key issues:
- The fee previously required to CARB for filing GHG emissions or financial risk reporting was eliminated.
- Parent companies may report on behalf of subsidiaries meeting revenue thresholds.
- CARB was given until July 1, 2025, to finalize and implement legislated GHG reporting requirements.
- CARB may determine the schedule for Scope 3 emissions disclosure, replacing the original 180-day schedule following Scope 1 and 2 emissions reporting.
CARB Guidance for SB 261 Reporting
On September 2, 2025, CARB issued guidance for initial climate-related financial risk reports under SB 261:
- January 1, 2026, remains the deadline for initial reporting.
- Subsidiaries are not required to report separately if a parent company submits a report on their behalf.
- Reporting can comply with frameworks such as the 2017 Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD); The International Financial Reporting Standards Sustainability Disclosure Standards (IFRS S2); or a report developed in accordance with any regulated exchange, national government, or governmental entity.
- Insurance companies are exempt as “covered entities” and are not subject to SB 261.
- Scope 1, 2, and 3 GHG emissions reporting is not required for initial reporting.
- Scenario analysis may be qualitative to reduce duplication and reporting burden.
- Disclosures must include governance, strategy, risk management, and metrics.
Implications for Climate Disclosure and Corporate Compliance
The reporting period for AB 1305 carbon offsets and climate-related claims is already underway, and companies only have three months until initial SB 261 reporting is due. SB 253 initial reporting is scheduled for June 30, 2026, meaning impacted business entities must act swiftly to ensure regulatory compliance.
Even companies below the revenue threshold, or those planning to enter the California market, can benefit from using this period to better understand their greenhouse gas emissions, climate-related financial risks, and use of carbon offsets. Despite federal regulatory retrenchment, other states, including Illinois, New York, and Washington, are developing similar climate disclosure requirements. Companies that proactively assess their exposure and reporting obligations can position themselves for compliance while leveraging opportunities to enhance sustainability and climate-related performance across multiple jurisdictions.
Steps for Achieving Compliance, Climate Risk Disclosure, and Preparedness
- Assess climate-related risks and exposure to state-level regulation.
- Identify, validate, and pre-assure relevant data, ensuring methodology accuracy.
- Evaluate internal processes to identify gaps in regulatory preparedness and reporting capability.
- Develop a practical compliance plan that aligns with broader sustainability and climate-related goals.
- Implement asset and portfolio improvements, including energy optimization, renewable energy adoption, and fleet management strategies.
- Conduct comprehensive risk and opportunity assessments including scenario analysis for climate-related financial risks.
Partnering with APTIM for Sustainability Reporting and Climate Disclosure Compliance
Whether your objective is to achieve regulatory compliance or strengthen climate risk management, APTIM’s sustainability experts can guide organizations through every step. To learn more, contact us at Sustainability@APTIM.com or Alex Miller-Brown at Alex.Miller-Brown@APTIM.com for personalized guidance.
Published October 2025
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