While federal climate disclosure regulations have stalled amid legal battles, California’s new climate reporting laws are moving forward with firm deadlines. Two major pieces of legislation Senate Bill 261 and Senate Bill 253 are set to take effect soon, bringing sweeping climate-related disclosure requirements for companies doing business in the state.

Who Is Affected and When?

Starting January 1, 2026, companies with over $500 million in annual revenue that operate in California will need to submit detailed climate-related financial risk reports. These reports must outline how climate change could impact their business strategy, operations, and financial performance.

Shortly after, larger companies with revenues above $1 billion will also be required to publicly report their greenhouse gas emissions. This includes Scope 1 emissions from direct operations, Scope 2 emissions from purchased electricity, and eventually, Scope 3 emissions that come from the broader value chain. Importantly, these laws apply to both public and private companies.

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Frameworks That Shape Reporting

California’s climate reporting structure is heavily influenced by globally recognized frameworks. The Greenhouse Gas Protocol and the Task Force on Climate-related Financial Disclosures (TCFD) provide the foundational guidance. Companies will need to address how climate risks are governed, managed, and disclosed, along with metrics that reflect emissions performance and reduction efforts.

The California Air Resources Board (CARB), the agency responsible for overseeing implementation, has confirmed that the 2026 deadline for climate risk disclosures will remain in place. Even though the final regulations are still being finalized, CARB is urging companies to begin preparation now.

Recent Legislative Adjustments via SB 219

In September 2024, California passed SB 219 to introduce key updates that modify the original climate laws. One change gives CARB until July 2025 to issue final greenhouse gas disclosure rules. While this timeline pushes regulatory clarity closer to the deadline, it does not alter the obligation to report.

The bill also gives companies more flexibility with Scope 3 emissions, allowing them to potentially begin reporting these data points in 2027. Additionally, companies with multiple subsidiaries may be able to consolidate their reporting if the parent entity is already in compliance. The time frame for publishing emissions reports has also been extended from 30 to 90 days.

Legal Challenges Create Uncertainty, But Not Delay

Although legal pushback has emerged from the U.S. Chamber of Commerce and others, including constitutional arguments, California has not paused its climate disclosure plans. Several legal claims have been dismissed, but litigation is ongoing.

Companies that assume the rules will be overturned may find themselves unprepared. As it stands, the state is holding firm on its implementation timelines.

Action Steps for Businesses Now

For companies that fall within the revenue thresholds and have operations in California, now is the time to act. Start by assessing whether your business qualifies as “doing business” under state criteria. From there, begin collecting emissions data from 2025 operations, especially Scope 1 and Scope 2 figures.

It is also critical to review your company’s governance and risk management practices to ensure alignment with TCFD standards. These frameworks are more than just checkboxes; they reflect how seriously your business is integrating climate into its strategic thinking.

CARB has scheduled a workshop for August 21, 2025, which may offer further guidance on how to comply. Monitoring these updates will be essential for staying on track.

A State-Level Ripple Effect Across the U.S.

California is not alone in moving forward with climate-related financial disclosures. States like New York, New Jersey, and Illinois have proposed similar legislation, each drawing from the same international standards. If these state bills pass, businesses could face a fragmented but widespread network of climate laws across the country.

For multistate businesses, this trend points to a future where ESG reporting will be a routine requirement, not a specialized initiative.

Explore OneStop ESG Marketplace: GHG Accounting

Start Preparing Before It’s Too Late

With less than 18 months before the first major deadline, businesses should not let the federal uncertainty lull them into a wait-and-see mindset. California’s rules will demand significant resources, including cross-departmental coordination, detailed data collection, and potentially third-party audits.

Companies that act early will not only be in a better position to comply, but they may also gain competitive advantages through improved transparency, investor confidence, and stakeholder trust.

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