November 19, 2025 UPDATE
- Injunction granted: On November 18, 2025, the United States Court of Appeals for the Ninth Circuit granted in part (SB 261) and denied in part (SB 253) an injunction which was brought by the U.S. Chamber of Commerce. Oral argument is currently scheduled for January 9, 2026, after the January 1, 2026 statutory deadline for SB 261 compliance. If the injunction is lifted, SB 261 (and SB 253) activity will resume rapidly.
- Our take: Many organizations have made significant progress with their SB 261 preparations — drafted TCFD-aligned climate risk reports or completed climate risk assessments and scenario analyses. If compliance efforts are still underway or incomplete, companies should consider finishing and adequately documenting this work to ensure their efforts can easily resume in the coming weeks or months.
- Stay informed: Expect additional updates and rulemaking on future compliance with SB 253 and SB 261 from CARB over the coming months. We will monitor developments closely and provide updates as needed. You can also monitor for updates by visiting the CARB website and the State Legislator Bill Text pages for SB 261 and SB 253.
A brief background
Back in 2023, Governor Newsom of California signed into law two state senate bills, SB 253 and SB 261, requiring companies that do business in California to disclose their greenhouse gas (GHG) emissions and climate-related financial risks. It was a different political climate in the U.S. at the time, and California’s newly minted laws were on track to join federal legislation mandating climate risk reporting for public companies. We reported on this development in this blog post.
Much has changed since 2023 with a new administration in Washington, D.C. taking federal climate reporting for public companies off the table. But California has forged ahead with its climate-related requirements, clearing legal hurdles, setting up reporting infrastructure at the state level and clarifying definitions in the two bills, with deadlines for compliance unchanged since they were first announced.
Legal hurdles cleared
The two bills were legally challenged by the California Chamber of Commerce and industry groups shortly after they were adopted, and by Exxon Mobil most recently, but the California Supreme Court has dismissed most claims and denied injunction requests. This means that the regulations are moving forward and the first compliance date is January 1, 2026.
Who’s affected by which law?
The California Air Resources Board (CARB), the entity tasked with implementing and enforcing the laws, has identified 4,160 companies subject to SB 261 (climate risk reporting) and 2,596 companies (~62% of the total) subject to both SB 261 and SB 253 (emissions) reporting.
- Companies subject to SB 253 are entities with more than $1 billion in annual global revenues.
- Companies subject to SB 261 are entities with more than $500 million in annual revenues.
The list of these companies can be found on CARB’s website. CARB has emphasized that the list is not legally determinative — companies must independently assess whether they meet the thresholds for reporting, regardless of inclusion or exclusion from the list.
Definition of “doing business”
CARB says its definition of what it means to be “doing business” in California is based on the California Franchise Tax Board’s definition but that this definition may evolve. In broad terms, the entity is doing business in the state if it is organized or commercially domiciled in the state and is engaging in transactions for the purpose of financial gain. More details can be found in CARB’s list of frequently asked questions.
Deadlines
The very first climate risk reports by all identified entities under SB 261 are due on January 1, 2026, just 6 weeks away, and then bi-annually.
The SB 253 deadlines are a bit more staggered:
- Reporting of Scope 1 and Scope 2 emissions are due by June 30, 2026
- Reporting of Scope 3 emissions will start in 2027, with the exact date still to be determined
The reporting of emissions is subject to assurance requirements as follows:
- 2026: Limited assurance for Scope 1 and 2 emissions
- 2030: Reasonable assurance for Scope 1 and 2 and limited assurance for Scope 3 emissions
Actions to take now
- Review the California legislation and CARB guidance on the CARB website, including the two public workshops (with another being held on November 18, 2025), then contact your in-house or external legal counsel to determine if your company meets the thresholds for compliance.
- Review the Greenhouse Gas (GHG) Protocol and IFRS S2 (sustainability reporting) guidelines to become familiar with calculating emissions and assessing climate-related risk.
- Determine your baseline year, time period (aligned with company’s fiscal year), and operational boundary.
Before January 1, 2026 (SB 261):
- Conduct a climate risk assessment structured around the four pillars of governance, strategy, risk management and metrics & targets.
- Prepare supporting documentation, including the methodology used to assess climate risk.
- Create a public-facing climate risk report reviewed by your legal team before disclosing.
- Be ready to submit the URL to CARB’s public docket by January 1, 2026.
- If you are including emissions data, your report must undergo third-party assurance.
Before June 30, 2026 (SB 253):
- Develop a GHG Inventory Management Plan.
- Calculate emissions, documenting the approach and methodology used.
- Complete the template provided by CARB and confirm it is consistent with data being used in your Annual Sustainability Report or other voluntary or mandatory disclosures that include emissions data.
- Engage a third party for assurance no less than 3 months prior to the submission deadline.
- Be ready to submit documentation to CARB’s digital platform by June 30, 2026.
Document good faith effort
CARB has indicated that it may apply enforcement discretion if companies demonstrate good-faith compliance efforts during the first cycle. To demonstrate good faith, keep records of internal reviews, stakeholder engagement, and preparatory steps for complying with the two measures.
How Protiviti can help
Protiviti helps companies conduct climate risk assessments in accordance with recognized frameworks, develop GHG emissions inventory management plans, set up systems for data collection and integration, conduct benchmarking, assist with science-based target setting, develop emissions reduction plans and report data to regulators and other stakeholders. We can also facilitate training and capacity building for sustainable management of reporting requirements over the long term. See an example of our work here.
To learn more about our full range of sustainability services, visit our website or contact the authors.
