INSIGHT

California’s SB 253 & SB 261: How to Prepare for Climate Disclosure Deadlines 

Raffaella Pate-Forti, Su Rim • November 13, 2025

Services: Environmental, Social & Governance (ESG)

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California is raising the bar on climate accountability. Two landmark laws—SB 253 and SB 261—are reshaping how companies report on greenhouse gas emissions and climate-related financial risks. If your company does business in California and meets certain revenue thresholds, these requirements apply to you. 

While the California Air Resources Board (CARB) continues working on final implementation rules, the statutory deadlines haven’t changed. That makes now the right time to prepare. This isn’t just about checking a compliance box. It’s about building transparency, demonstrating resilience, and strengthening trust with stakeholders who increasingly expect companies to take climate action seriously. 

What You Need to Know About SB 253 and SB 261 

SB 253 – Climate Corporate Data Accountability Act 

This law applies to companies with annual global revenues exceeding $1 billion that do business in California. Here’s what it requires: 

• Disclosure of Scope 1 and Scope 2 emissions by June 30, 2026 
• Scope 3 emissions reporting starting in 2027 
• Independent third-party assurance of all disclosures 

SB 261 – Climate-Related Financial Risk Act 

This law casts a wider net, applying to companies with annual global revenues of $500 million or more that do business in California. It requires: 

• Biennial public reports on climate-related financial risks starting January 1, 2026 
• Clear strategies for mitigating those risks 

For complete legislative details, visit SB 253 and SB 261. 

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Does This Apply to Your Company? 

You don’t need to be headquartered in California to fall under these requirements. Any organization “doing business” in the state that meets the revenue thresholds is in scope. 

CARB has published a preliminary list of companies they believe are covered under these laws. You can review it here (September 2025). 

Why Early Preparation Matters 

It’s tempting to wait for CARB to finalize all the implementation details. But here’s the reality: the statutory deadlines aren’t moving, and these reporting requirements are complex. Companies that start preparing now will be positioned for success. 

Here’s what early action gets you: 

Getting your data systems and processes ready takes time, especially for Scope 3 emissions that reach across your entire value chain. Starting now gives you the runway you need. 

Companies that demonstrate proactive compliance and sustainability leadership stand out. Early preparation shows stakeholders you’re serious about climate accountability. 

CARB’s initial enforcement will likely focus on good-faith efforts. Being prepared protects you from penalties and positions you as a responsible corporate citizen. 

Understanding the Stakes 

Non-compliance carries real consequences. SB 253 authorizes penalties of up to $500,000 per year for failure to report emissions. SB 261 imposes fines for missing climate risk disclosures. CARB will oversee enforcement, with an initial emphasis on transparency and good-faith efforts before escalating penalties. 

Meeting Assurance Requirements 

Independent verification isn’t optional; it’s required. Your disclosures must meet recognized assurance standards such as ISO 14064 or AICPA attestation frameworks. 

We recommend engaging with assurance providers early in the process. They can help validate your methodologies, strengthen your internal controls, and ensure your reporting systems are audit-ready from the start. 

What Makes This Challenging 

Let’s be honest about the hurdles ahead. Preparing for these disclosures isn’t quick or simple. 

• Scope 3 is complex. You’ll need to map emissions across your entire value chain and potentially work closely with suppliers who may not have this data readily available. 
• Climate risk connects to everything. Your climate disclosures need to align with enterprise risk management and governance structures across your organization. 
• Many companies lack the right systems. ESG data management often requires new technology and processes to produce reports that meet assurance standards. 

These challenges are real, but they’re not insurmountable. Companies that start now will have time to address them methodically. 

How to Get Started Today 

Here’s what we recommend to position your organization for success: 

• Conduct a comprehensive emissions inventory. This includes all Scope 3 categories. Understanding your current baseline is the essential first step. 
• Align with recognized frameworks. Global standards like the Task Force on Climate-related Financial Disclosures (TCFD) and the IFRS Sustainability Disclosure Standards (IFRS S2) provide proven approaches that will serve you beyond California’s requirements. 
• Engage assurance providers now. Early involvement helps validate your approach and identify gaps before you’re up against tight deadlines. 
• Build the right governance structures. Climate risk oversight needs clear ownership and integration into your enterprise risk management processes. 
• Invest in technology. ESG data management and reporting automation will be critical for producing accurate, timely disclosures that meet assurance standards. 
• Leverage CARB’s draft resources. CARB has published a Scope 1 and Scope 2 GHG reporting template and a Climate-Related Financial Risk Report Checklist. These tools provide clarity on expected disclosures. You can review it here (October 2025). 

Moving forward with confidence 

SB 253 and SB 261 represent a significant shift in corporate climate accountability. But they also create an opportunity. Organizations that embrace these will strengthen stakeholder trust, improve operational resilience, and position themselves as sustainability leaders. 

At BPM, we understand that navigating these new requirements can feel overwhelming. That’s why we’re here. Our team brings deep expertise in assurance, ESG strategy, and sustainability reporting. We’ve helped organizations like yours build robust climate disclosure programs that meet regulatory requirements while creating real business value. 

Looking for a team who understands where you’re headed and how to help you get there? Let’s talk about preparing your organization for California’s climate disclosure requirements.