In 2023, California passed two landmark climate laws: Senate Bill 253 (The Climate Corporate Data Accountability Act) and Senate Bill 261 (The Climate-Related Financial Risk Act). Together, these bills place California at the forefront of climate disclosure requirements in the United States, and their reach extends far beyond the state itself. Thousands of companies across the country will soon be required to measure, manage, and publicly disclose their climate impacts and climate-related financial risks.
Reporting requirements start in 2026 for both bills, so there’s no time to waste. This article will help tease out what is required by each of these bills and make it easy for you to establish compliance processes within your organization.
By acting now, your business can leverage these bills as a strategic opportunity, not just a regulatory requirement.
The California Air Resources Board (CARB) is required to monitor and enforce compliance with the bills. See the CARB’s most recent information (from August 21, 2025) on developing requirements for SB 253 and SB 261 here.
Begin understanding your climate risks and build your business for the long term.
Reporting requirements are right around the corner: SB 261 disclosures are required in January 2026. To set your business up for success, now is the best time to start understanding your climate-related risks and preparing your disclosures. CARB outlines a few frameworks that can be used as a starting point, including TCFD from the Task Force on Climate-related Financial Disclosures and IFRS S2 from the International Sustainability Standards Board. Regardless of which framework you choose, your risk disclosure report must address:
Importantly, your report must assess both physical risks (e.g., flooding, drought, extreme weather) and transition risks (e.g., market or regulatory changes). Businesses are required to include mitigation strategies and scenario analyses and to make reports publicly available on their websites.
Getting your verified Scope 1 and 2 GHG inventory in place ahead of the June 30, 2026 deadline is essential for SB 253 compliance. If you already track emissions, you will simply need to update your inventory with 2025 data. If you don’t, now is the time to start understanding your Scope 1 and 2 boundaries and to work with an independent third party to quantify your GHG emissions.
Requirements for reporting Scope 3 GHG information starts in 2027. For those new to understanding Scope 3, most of this information is obtained by working with your suppliers for purchased goods. This effort requires understanding who your suppliers are, developing internal systems to request and manage data, and building relationships with your suppliers to ensure success moving forward. It is essential to begin this process in 2026 so you can properly report information by the deadline in 2027.
SB 253 and SB 261 include significant non-compliance penalties. For SB 253, annual penalties for non-compliance are $500,000, and for SB 261, penalties for non-compliance are $50,000 per reporting year. Aside from the cost of penalties, non-compliance could also lead to reputational risks and loss of investor confidence. However, companies that take a proactive approach can avoid penalties and unlock value through:
Meeting the reporting requirements for SB 253 and SB 261 will be new for many businesses, but it also presents the opportunity to build long-term operational resilience. By understanding your emissions profile and climate risks, your business can:
California’s legislation is part of a larger trend toward climate-related disclosures that, increasingly, companies will report to in the future. California’s rules are already aligned with international compliance frameworks such as the European Union’s Corporate Sustainability Reporting Directive (CSRD). Additionally, if your business is in the value chain of an affected organization, you will likely be asked to comply by your customer. If your organization meets the revenue thresholds and does business in California, it’s no longer a question of if you’ll need to comply, it’s how soon.
We understand that most companies may need help navigating this process. Fresh Coast Climate Solutions is an experienced partner in helping businesses navigate the complexities of climate and sustainability regulations. With expertise in GHG accounting, sustainability planning, and disclosure frameworks, we act as a partner from setting strategy through reporting.
Here’s how we support clients facing SB 253 and SB 261 requirements:
Although enforcement timelines are phased in, companies should begin preparing now. Collecting accurate emissions data and developing risk assessments can take months, or sometimes years, especially for large organizations with complex supply chains. Early movers will not only avoid the scramble to comply but will also demonstrate leadership in sustainability and transparency.
Fresh Coast Climate Solutions joined Cascade in 2025 as wholly owned subsidiaries of United Cascade Enterprises, Inc., a 100% employee-owned company. Fresh Coast provides expert guidance on greenhouse gas inventories, climate action and decarbonization plans, climate impact modeling, product carbon footprints, water stewardship, nature-based solutions, and corporate sustainability.
Together, we are able to offer comprehensive energy and sustainability solutions, driving lasting, measurable change for your business and community.
