California’s Climate Disclosure Rules: Takeaways from the California Air Resource Board’s first public workshop

California flag waves

On May 29th, the California Air Resources Board (CARB) held their first public workshop on the upcoming climate disclosure rules. Reflecting the scale of the work, over 3000 people signed up, with more than an hour of Q&A, and opening remarks from Senators Wiener and Stern (two authors of the bills).

The takehome message was clear: deadlines are being held firm, with both CARB and Senator Wiener explicitly stating that first disclosures are due in 2026. While some of the key definitions are still to be ironed out, we broadly know which companies are likely to have to report, and that disclosures will likely align with the GHG Protocol and TCFD/ISSB frameworks. As expected, CARB won’t have resolved the full details by the July 1 deadline set in statute, but they have laid out initial proposals and are now actively inviting public engagement with an aim of finalizing these towards the back end of the year.

The background

As a reminder, in late 2023 California passed bills SB 253 and SB 261, requiring certain companies to disclose climate-related metrics (with both bills being updated in SB 219 in late 2024).

SB 253 requires businesses which do business in California, and with revenues above $1 billion, to disclose their scope 1 and 2 greenhouse gas emissions in 2026, adding scope 3 emissions from 2027. SB 261 requires businesses which do business in California, with revenues of more than $500 million, to disclose climate-related financial risks by January 1, 2026.

CARB is responsible for developing implementation regulations for SB 253, which were initially due on January 1, 2025 though the deadline was later moved back to July 1, 2025 (as part of SB 219). For SB 261, CARB aren’t explicitly required to adopt regulations, and are considering whether to publish either regulation or guidance. The public workshop on Thursday (May 29, 2025) was held after a public consultation period, and aimed to share initial proposals on key definitions, as well as to invite public engagement.


The workshop

During the workshop, CARB presented its initial proposals for the implementing regulations, as well as providing a series of guided questions to shape feedback. Their presentation slides can be found here.

There were also presentations from Montrose Environmental, who were commissioned by CARB to summarise other GHG reporting programs (here), and the UCLA Center for Impact, who gave an overview of their State of Corporate Sustainability Disclosure report (slides and the full report here).

Key takeaways:

Timelines are being held firm. First disclosures are due in 2026, though detailed rules are only expected later this year.

CARB confirmed what had already been expected – that the specific regulations for SB 253 will not be ready by the July 1 deadline – but stated their revised goal of providing regulations by the end of year. Notwithstanding this delay, both Senator Wiener and CARB reiterated that first disclosures under 253 will still be due in 2026:

Scope 1 & 2 disclosures will be required in 2026, and scope 3 in 2027. Those timeframes are holding firm.

Senator Scott Wiener

Similarly, representatives from CARB said, "We want to be clear, Scopes 1 & 2 with limited assurance in 2026 is a statutory requirement."

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In line with last December’s Enforcement Notice on SB 253, CARB acknowledged that companies need some time between issuance of CARB’s rules and the first report filing, and confirmed that no penalties will be issued in the first year, so long as companies can show a good faith effort to report emissions. CARB’s adoption of this approach allows people to start with what they have and build capabilities to prepare for full compliance down the road.

For SB 261, while CARB isn’t explicitly required to develop regulations, they asked whether the bill should be implemented via guidance or regulation. They are currently looking at how other regulators have approached climate risk rules and seeking input as to what would be most feasible.

More detail is needed – and expected – on who is captured by the regulations.

Many of the comments in the public consultation focused on this, with questions primarily falling into three buckets: how the regulations will define “revenue,” “doing business in California” and parent-sub relationships. CARB’s approach was to present “initial staff concepts” for each definition, with public opinion invited for feedback::

Revenue: the CARB proposal is to define this as gross receipts as per the California Revenue and Taxation Code (Section 25120(f)(2)).

Doing business in California: responses in the public consultation were split as to whether the definition used in the Californian Revenue and Tax Code was appropriate, or too broad. CARB favors the former, and has proposed that the Code definition (Section 23101) is workable, with some minor modifications.

This would set a relatively low threshold for what doing business in California means, essentially being any entity which is actively engaged in in any transaction for the purpose of financial or pecuniary gain or profit and meets any of the following conditions:

  • The entity is organized or commercially domiciled in California.
  • Sales in the state exceed $735,019 (for 2024).
  • The value of real property and tangible personal property of the entity in California exceed $73,502 or 25% of the entity's real property and tangible personal property.
  • The amount paid in California for compensation exceeds $73,502 or 25% of the total compensation paid by the entity.

Parent-sub relations: CARB intends to leverage the California cap-and-trade approach for defining corporate relations. Under that program, one entity with ownership or control of 50% or more over another entity is considered to have a corporate association.

CARB is still ironing out the nuanced details on what will be specifically required of companies.

The good news is CARB repeatedly expressed a desire to minimize the burden on companies and, where possible, align with existing frameworks and guidelines. There seems to be strong appetite from both CARB and respondents for conformity with GHGP and other geographies’ requirements.

That said, CARB highlighted the challenge of taking voluntary frameworks and turning this into the level of specificity required for a regulation (e.g. noting the areas where GHGP says entities “should” rather than “shall”).

On 253, CARB spoke for the first time about the issue of materiality – not mentioned in the legislation – acknowledging that they’d heard repeatedly that materiality thresholds for Scope 3 were critical. That said, there was opposition from other quarters and it’s unclear where this will land.

On 261, questions were asked about which sections of TCFD would be required (noting that TCFD also includes emissions for instance); and on how people should think about ISSB versus TCFD. CARB has simply stated that entities should provide disclosures to the best of their ability, but has provided no further details on formats or enforcement.

What’s next?

CARB is now seeking feedback from the public, and we should expect a series of workshops throughout the year.

Summary FAQs

Are the compliance dates for SB 253 and SB 261 still 2026?

Yes. SB 253 will be required in 2026, though the exact date hasn’t yet been given. For SB 261, CARB confirmed that reports are due by January 1, 2026. While CARB has promised to continue sharing more information on both throughout the year, SB 261 differs in not explicitly requiring implementing regulations from them.

When will more guidance be issued?

CARB continues to seek public engagement and aims to issue detailed guidance by the end of the year. As had been widely expected, they will not meet the July 1 deadline for implementing regulations, but continue to seek stakeholder engagement and will provide updates over the coming months.

Who will be captured by the regulations?

Not fully resolved. CARB has laid out initial proposals on the key definitions to align with the Californian Revenue and Tax Code, but are actively seeking public comments on their proposals. It remains unclear for instance whether revenue would be specific to the Californian business or the business as a whole.

Will this be enforced?

Yes. Both bills have been passed into law. CARB has discretion on how to enforce them both and has stated that there will be no penalties for SB 253 reports in the first year, so long as entities can show a good faith effort to comply.

Will there be materiality thresholds for certain scope categories?

Not currently, but unclear. CARB highlighted that many public responses called for materiality thresholds for scope 3 emissions. They also stated that they want to avoid overburdening companies – though noted that they have to balance this with the need for accuracy and specificity.

Will companies need to provide a full TCFD or ISSB report for SB 261 reporting?

CARB reiterated that it wants to use existing report structures, specifically TCFD and/or ISSB. However, both of these are voluntary frameworks and CARB is required to use certain language when writing regulations to provide the right level of clarity. It therefore acknowledged that it is considering options and will provide more updates shortly, but didn’t provide any update on the suggested format or scope.

Did the meeting address the current legal challenges to both laws?

No. That said, part of the lawsuit against the bills has already been dismissed, while the timeline for the remainder of the lawsuit looks likely to continue past the first compliance dates.

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