On September 24, the California Air Resources Board (CARB) published the list of entities it believes need to comply with California’s new climate disclosure laws, SB 253 and SB 261.
Check the list: Preliminary List of Reporting/Covered Entities
Compliance is based on two tests: whether that entity’s global revenue meets the statutory threshold (over $500m for SB 261; and over $1 billion for SB 253), and whether you are “doing business” in California.
CARB’s list is its initial estimate of which entities are in scope. But they have been explicit: companies are responsible for compliance even if not initially included on the list. And many companies which are captured are likely not included in this preliminary determination. If your company meets these criteria, it’s time to start assessing what you may need to do to meet the requirements.
What companies should do now
To prepare for compliance, companies should:
- Confirm your status. Review your corporate structure, revenue figures, and California footprint, then work with legal counsel to determine if you meet the thresholds—even if CARB hasn’t listed you yet.
- Mobilize your data owners. Kick off a coordinated data-gathering process across finance, ops, procurement, IT, and sustainability, assigning clear owners and deadlines for emissions and climate risk information.
- Plan for phased compliance. SB 261 requires biennial climate risk reports beginning January 1, 2026. SB 253 requires Scope 1–2 emissions reporting with limited assurance by June 30, 2026, with Scope 3 reporting to follow in 2027.
- Get audit-ready. Limited assurance begins with your first SB 253 filing. Early preparation reduces the risk of gaps, errors, and penalties. (Note: SB 261 reports do not require assurance.)
“California is asking companies to assess the impact of climate-related risks on their business. Luckily, there are great tools for quickly assessing how exposed your assets might be to the shocks and stresses that we are already experiencing, and how your business strategy may be impacted from shifts in energy sources and technological change. Assessing your risks and opportunities and measuring your emissions can happen in weeks, not months, with the right tools and expertise.”
Nate Kimball, Sustainability Advisor at Watershed
How Watershed helps
One of the first decisions companies face is whether to build reporting on a technology platform or to patch it together manually. Manual approaches can get you through year one, but they come with costs: higher risk of errors, longer reporting cycles, and little ability to reuse work as requirements expand.
Watershed offers the best of both worlds: enterprise-grade software and unmatched advisory expertise. With Watershed, you get:
- Guided California report builder aligned with SB 253 and SB 261 requirements
- AI-accelerated drafting to speed up report preparation, with transparent, explainable outputs
- Audit-ready measurement with 150+ built-in error checks and a 100% audit pass rate
- Policy and assurance expertise from the team most trusted by companies reporting to California today
- Future-proof infrastructure — a secure, SOC-2 compliant system of record that scales to Scope 3, SEC, and CSRD reporting
With Watershed, companies don’t have to choose between rigor and speed. You get both: automation and hands-on support to solve for compliance quickly, and confidence you’re reporting trustworthy disclosures that will stand up to regulatory scrutiny. That’s why more companies trust Watershed for California reporting than any other platform.
If you meet the thresholds—or appear on CARB’s list—now is the time to act.
Talk with our team to see how Watershed can help you move quickly, stay compliant, and turn disclosure into a driver of resilience and growth.
