The California Air Resources Board has formally adopted the California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation, establishing August 10, 2026 as the first disclosure deadline for corporate greenhouse gas emissions under the state’s landmark climate reporting laws.

The move operationalizes two major statutes, SB 253 and SB 261, positioning California as a global leader in mandatory corporate climate transparency.

Scope And Coverage Of The New Rules

SB 253 applies to companies with more than $1 billion in annual revenue that conduct business in California. These companies will be required to report annually on Scope 1 and Scope 2 emissions, as well as Scope 3 value chain emissions, which include supply chain activities, procurement, waste, employee commuting, business travel, and water usage.

In the first year of implementation, however, companies will only be required to report Scope 1 and Scope 2 emissions. Mandatory Scope 3 reporting begins in 2027.

SB 261 covers U.S. companies with more than $500 million in annual revenue that do business in California. These firms must disclose climate-related financial risks and outline measures to mitigate and adapt to those risks.

Together, the laws will introduce climate disclosure obligations for most large companies operating in the United States. CARB has issued a preliminary list identifying more than 4,000 companies likely to fall within the scope of the regulations.

Read more: Norway’s $2.2 Trillion Wealth Fund Deploys AI to Detect ESG Risks in Real Time

Legal Challenges And Interim Voluntary Reporting

Implementation of SB 261 remains subject to legal proceedings. The U.S. Ninth Circuit Court of Appeals issued an injunction late last year pausing enforcement of the climate financial risk disclosure requirement pending appeal. Initial SB 261 reports had originally been scheduled for publication by January 1, 2026.

As a result, CARB confirmed that reporting under SB 261 is currently voluntary. According to the regulator, approximately 120 climate-related financial risk reports have already been submitted and made publicly available on a voluntary basis.

Explore OneStop ESG Marketplace: Regulation and Compliance

Aligning With Global Climate Disclosure Trends

CARB Chair Lauren Sanchez stated that the regulation establishes clear and consistent disclosure requirements, ensuring investors and consumers have access to reliable climate data. She emphasized that many companies are engaging early, reflecting recognition of the growing importance of climate risk transparency in capital markets.

California’s framework places it alongside jurisdictions such as the European Union and the United Kingdom that have implemented mandatory climate disclosure regimes. For U.S.-based multinationals, compliance will likely require alignment of reporting systems across jurisdictions.

With the August 2026 deadline approaching, companies in scope will need to accelerate emissions data collection, verification systems, and governance processes to ensure readiness for public disclosure.

Subscribe to our newsletter for more insights, case studies, and ESG intelligence.

Explore ESG Solutions on our marketplace - OneStop ESG Marketplace.

Keep abreast of the top ESG Events on OneStop ESG Events.

OneStop ESG Educate: Your go-to source for top ESG courses and training programs tailored to your needs.

Stay informed with the latest insights on OneStop ESG News.

Discover meaningful career opportunities on OneStop ESG Jobs.