California, August 26, 2025
News Summary
California is poised to introduce significant climate disclosure regulations through the California Air Resources Board’s proposed rulemaking. Following Governor Newsom’s signing of SB 253 and SB 261, the new laws mandate substantial emissions reporting from large companies. SB 253 requires firms with over $1 billion in revenues to disclose both direct and indirect emissions, while SB 261 mandates biennial climate risk reports from companies earning at least $500 million. This substantial policy effort aims to enhance corporate accountability amid growing climate concerns.
California is set to introduce significant climate disclosure regulations as the California Air Resources Board (CARB) will issue a notice of proposed rulemaking on October 14, 2023. This development follows the signing of two landmark bills by Governor Gavin Newsom in 2023: SB 253, which is aimed at ensuring climate corporate data accountability, and SB 261, focused on climate-related financial risk reporting.
The context for these regulations began when Governor Newsom signed additional legislation in 2024 that upheld the reporting deadlines for 2026 while granting CARB more flexibility in implementation. SB 253 requires companies with revenues exceeding $1 billion to disclose their Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy) emissions. Looking forward, future requirements will also include Scope 3 disclosures, which pertain to the value chain emissions.
On the other hand, SB 261 mandates that firms with at least $500 million in revenues produce biennial reports on their climate-related risks. CARB anticipates that these regulatory measures will impact about 4,160 companies for climate-related risk reporting under SB 261, while 2,596 firms will be subject to the emissions reporting requirements outlined in SB 253.
Initially, CARB had planned to finalize regulations by July 1, 2023, but now expects these considerations to be reviewed by the board on December 11-12, 2023, following a 45-day comment period from the public. This delay indicates a thorough engagement and examination process surrounding these reporting requirements.
Implementing these laws is anticipated to incur a one-time cost of approximately $20.7 million, financed temporarily by the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. Ongoing implementation costs are projected to be around $13.9 million annually. Under the proposed regulations, annual fees will be structured at $3,106 for companies reporting under SB 253 and $1,403 for those subjected to SB 261. Notably, companies with revenues exceeding $1 billion will face both fee categories.
Exemptions apply to non-profits, government entities, teleworking-only companies, and certain wholesale electricity businesses. An important note regarding enforcement: CARB has indicated that there will be no penalties in the first year for companies failing to meet data requirements, assuming they make a good faith effort to collect the relevant emissions data.
The journey to these regulations has not been without challenges; federal courts have recently rejected various legal attempts to halt their implementation, with a judge declining to issue a preliminary injunction against the rules. CARB is actively gathering feedback from public workshops until September 11, 2023, and has made available a FAQ document outlining compliance expectations and processes.
Financial outlooks suggest that anticipated changes in political leadership could impact the strategies surrounding ESG investments, potentially leading to a more adversarial approach to these issues by 2025.
Key Features of the Climate Disclosure Regulations
| Feature | Details |
|---|---|
| Regulatory Body | California Air Resources Board (CARB) |
| Legislation Date | October 14, 2023 – Proposed Rulemaking |
| Main Bills | SB 253, SB 261 |
| Total Companies Affected | Approx. 4,160 (SB 261) & 2,596 (SB 253) |
| Reporting Requirement Deadline | December 11-12, 2023 |
| Estimated One-Time Cost | $20.7 million |
| Annual Cost | $13.9 million |
| Annual Fees | $3,106 (SB 253), $1,403 (SB 261) |
| First Year Penalty | No penalties for incomplete data with good faith effort |
Frequently Asked Questions (FAQ)
What are the main objectives of the new climate disclosure regulations?
The new regulations aim to enhance corporate accountability by mandating firms to disclose their greenhouse gas emissions and assess climate-related financial risks.
Which companies will be most affected by these regulations?
Companies with revenues over $1 billion will need to report Scope 1 and Scope 2 emissions, while those with revenues of at least $500 million will prepare biennial climate-related risk reports.
Are there exemptions to the regulations?
Yes, non-profits, teleworking-only companies, government entities, and certain wholesale electricity businesses are exempt from these regulations.
What happens in the first year if companies do not meet reporting requirements?
CARB will not impose penalties in the first year as long as companies demonstrate a good faith effort to collect the necessary emissions data.
Deeper Dive: News & Info About This Topic
- ESG Dive: CARB to Propose California Climate Risk Disclosure Rules
- Wolters Kluwer: California Climate Disclosure Laws
- ESG Today: California Releases FAQ for Climate Reporting
- Mayer Brown: California’s Climate Disclosure Laws Updates
- Google Search: California Climate Disclosure Regulations
Author: STAFF HERE BEVERLY HILLS WRITER
The Beverly Hills Staff Writer represents the experienced team at HEREBeverlyHills.com, your go-to source for actionable local news and information in Beverly Hills, Los Angeles County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Rodeo Drive Concours d'Elegance, the Beverly Hills artSHOW, Concerts on Canon, and holiday celebrations throughout the city. Our coverage extends to key organizations like the Beverly Hills Chamber of Commerce and Visit Beverly Hills, plus leading businesses in luxury fashion, hospitality, and entertainment that drive the local economy. As part of the broader HERE network, including HERELosAngeles.com, HERESantaAna.com, HEREHuntingtonBeach.com, and HERECostaMesa.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
