New climate laws, new requirements
California’s disclosure laws—SB 261 and SB 253—are now moving from legislation to implementation. Companies are preparing their first reports and building the processes to support them. With first SB 253 disclosures due in 2026, many companies are building emissions measurement and assurance processes now.
These laws go further than sustainability reporting. SB 261 requires a comprehensive climate risk assessment aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework (though enforcement is currently paused pending a decision from the Ninth Circuit Court of Appeals). SB 253 calls for audit-ready emissions disclosures and limited assurance from the first year.
It’s a big shift, but it doesn’t have to be a scramble. Preparing climate disclosures under California’s SB 253 and SB 261 means building new processes for emissions measurement, climate risk assessment, and assurance. For many companies, the challenge isn’t just reporting, it’s translating climate data, internal risk assessments, and supplier information into disclosures that meet regulatory expectations.
Watershed is purpose-built for this moment: audit-ready from the start, aligned with California’s standards, and backed by experts who’ve helped hundreds of companies navigate new regulations. As teams face evolving CARB guidance, compressed timelines, and steep penalties—up to $500,000 under SB 253—Watershed is how companies get it right the first time.
“It was definitely daunting.”
That’s how Heather Jin, Global Head of Social Impact and Sustainability at customer and employee experience software provider Medallia, described her first reaction to California’s new requirements. “I was unsure of what TCFD really meant, and we’d never been through a Greenhouse Gas (GHG) footprint audit process before.”
Now in its third year of sustainability reporting with Watershed, Medallia had already achieved internal approval for its science-based targets, assessed climate risks, and begun supplier engagement. So when the California bills came into focus, the team had a head start: solid data, clear processes, and a partner ready to help them translate all of that progress into compliant disclosures.
With Watershed’s California Compliance Solution, reporting becomes doable—in just weeks
Even with a strong foundation, Medallia’s first climate risk report still felt intimidating. However, by partnering closely with Watershed’s advisors and utilizing purpose-built tools specifically designed to meet state requirements, Jin found the process far more manageable than expected.
“Looking back, it was a lot faster than I thought it was going to be,” she said. “Watershed helped us find ways to make it much more low-lift.”
Using Watershed, Medallia ultimately built its first SB 261–aligned report through a clear, qualitative approach supported by data, benchmarks, and expert guidance.
How Watershed helps teams get compliant—quickly and confidently
Watershed’s California Compliance Solution brings together the tools companies need to meet SB 253 and SB 261 with confidence: audit-ready data, guided report builders, AI-assisted drafting, expert advisory, and guaranteed assurance. It is specifically designed to support both companies with limited ESG capacity and climate-advanced teams sharpening mature programs.
Here’s how the product helps organizations move quickly and file with confidence:
AI-accelerated climate-risk reporting (SB 261)
Watershed’s AI tools help companies get from a blank page to a structured draft in hours instead of weeks. AI drafting automatically transforms existing disclosures—such as CDP responses—into SB 261–aligned language. AI suggestions then identify gaps relative to CARB’s evolving expectations, drawing on more than 10,000 peer benchmarks to show what strong, compliant reporting looks like.
“Our AI is designed to really speed up your drafting process,” explains Anna Debenham, product lead for Watershed Reporting. “We’re already seeing it save customers days to weeks of work.”
For Medallia, early drafting began with qualitative inputs, then they grouped facilities by region, checked public datasets like GRI Aqueduct, and validated assumptions with business continuity and legal teams.
“It was reassuring to know you can group things at a high level,” says Jin. “We did it all pretty quickly and qualitatively, and then worked with Watershed’s advisors to sense-check our assumptions.”
Audit-ready emissions measurement (SB 253)
SB 253 requires limited assurance on scopes 1 and 2 starting in 2027, and Watershed’s measurement platform is engineered for this level of scrutiny. Every emissions number includes full data lineage and drill-down detail. QA tools surface anomalies and missing data automatically, and change logs maintain transparent tracking of both AI- and human-generated edits—making collaboration across finance, operations, and sustainability smoother and more defensible.
“Verification delays usually come from people, not data,” says Jackson Stiles from Watershed’s strategic sustainability data advisory. “Watershed helps companies prep those teams and document everything in advance to streamline verification and ease cross-functional collaboration.”
The Medallia team has already begun preparing for SB253 as well. “We got our scope 1 and 2 emissions audited this year so we could understand the process—who’s needed, how long it takes, and what data cleanup is required,” Jin says.
Support through assurance
Watershed helps companies prepare for third-party assurance with audit-ready data, detailed documentation, and expert advisory support.
“If a customer doesn’t pass assurance, we’ll waive up to $250,000 in fees for the following year,” explains Stiles. “It’s how we stand behind the integrity of our systems and support companies through the assurance process.”
This guarantee helps companies mitigate compliance risk, avoid costly rework, and move quickly with confidence.
Lessons from Medallia: How to move fast with confidence
The work Medallia has done offers a clear blueprint for organizations getting started on California reporting. Jin advises teams to begin by reviewing how similar companies have approached climate risk disclosure, as benchmarking can help clarify what “good” looks like. She also encourages companies not to wait for perfect data—qualitative assessments are often a suitable place to start, and assumptions can be refined over time.
Engaging stakeholders early—especially legal, risk, and business continuity teams—helps validate risks and ease the drafting process. Framing the effort around compliance can also galvanize internal support, since regulatory fines and verification failures carry real consequences. And finally, even companies not yet in scope can benefit from early preparation, since initial audits and data cleanup significantly reduce future workloads.
The time to act is now
Medallia’s experience shows what’s possible: with the right partner, companies can meet California’s new disclosure requirements quickly, accurately, and with confidence.
As companies prepare their first California disclosures, the organizations that start early—building emissions measurement, climate risk assessments, and assurance processes now—will be best positioned to report with confidence. Watershed helps teams move from first draft to audit-ready disclosures faster.
For companies beginning their compliance journey today, there is still ample time to prepare—provided they act quickly and choose tools designed for assurance from day one.
Learn more about Watershed for California climate disclosures here.
