SB 253 & SB 261 Compliance
California enacted two corporate climate disclosure laws taking effect in 2026 that require organizations to track and report their GHG emissions and report their financial risks. These new laws represent the most stringent climate disclosure requirements in the United States. ​​
Understanding New California Climate Legislation (California Corporate Climate Disclosure Requirements)
In 2023, the State of California passed two major bills designed to promote corporate transparency on greenhouse gas (GHG) and climate-related financial risk. Together, they represent the strictest climate disclosure requirements in the U.S. and align closely with global sustainable reporting frameworks (e.g., TCFD and ISSB).
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Because California is the world’s fifth-largest economy, its climate policies often set a precedent for national and international regulation. These new laws are already influencing policy discussions in other states and at the federal level.
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Organizations that fall under their requirements must start reporting in 2026.
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In addition, State senate bill SB 219 amended portions of Sections 38532 and 38533 of the California Health and Safety Code that were established upon passage of California state senate bills SB 253 and SB 261.
SB 253 Compliance — Climate Corporate Data Accountability Act
SB 253 Compliance (Climate Corporate Data Accountability Act) focuses on measuring and reporting GHG emissions to meet this California climate disclosure law.
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Applicability
Applies to reporting entities with total global annual revenues greater than one billion dollars ($1B USD) who are doing business in California.
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“Reporting entity” means a partnership, corporation, limited liability company, or other business entity with total global annual revenues in excess of one billion dollars who are doing business in California.
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Applicability is determined based on the reporting entity’s revenue for the prior fiscal year.
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Requirements
Requires annual GHG disclosures across Scopes 1, 2, and 3. Scope 1 & 2 reporting begins in 2026 (covering FY 2025), Scope 3 begins in 2027. (H4)
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Scope 1 emissions come from emissions sources that a company directly owns, lease, or controls, such as emissions from gas furnaces in buildings and company vehicles.
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Scope 2 emissions cover indirect emissions from purchased electricity, heating, or cooling for the buildings the company owns, leases or controls.
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Scope 3 emissions include all other indirect emissions across a company’s value chain, such as those from business travel, commuting, suppliers, transportation, and product use.
GHG disclosure reports must follow the Greenhouse Gas Protocol (GHGP).
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Limited assurance for Scope 1 & 2 begins in 2026, with reasonable assurance required by 2030. Scope 3 limited assurance begins in 2030, though it may start as early as 2027 depending on market conditions. Limited assurance must follow a globally recognized standard (such as ISSA 5000 (IAASB), AA1000, ISO 14060 family, or AICPA).
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The assurance process includes:
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Sampling plans
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Reviews of data management systems
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Limited data checks
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Limited conformance checks
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Process documentation
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Log of any found and corrected errors by the reporting company
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Report and statement at the conclusion
By January 1, 2025, CARB must develop and implement a system for businesses to publicly disclose their emissions data to meet the California climate disclosure law and ensure SB 254 compliance.
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Penalties
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Administrative penalties up to $500,000 per reporting year; enforcement discretion by CARB.
SB 261 Compliance — Climate-Related Financial Risk
SB 261 Compliance (Climate-Related Financial Risk Act) focuses on reporting climate risks to meet California’s corporate climate disclosure requirements
Applicability
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Applies to covered entities with total global annual revenues greater than five hundred million dollars ($500M USD) who are doing business in California (insurers exempt under NAIC framework).
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“Covered entity” means a corporation, partnership, limited liability company, or other business entity with total global annual revenues in excess of five hundred million United States dollars ($500,000,000) who are doing business in California.
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Applicability shall be determined based on the business entity’s revenue for the prior fiscal year. “Covered entity” does not include a business entity that is subject to regulation by the Department of Insurance in this state, or that is in the business of insurance in any other state.
Requirements
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Requires biennial climate risk reports, aligned with TCFD or ISSB frameworks.
First report is due January 1, 2026, after the first report, reports must then be submitted biennially to CARB and must be published on the company’s website to meet the California corporate climate disclosure law and ensure SB 261 compliance.
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Disclosure reports must cover material climate-related financial risks and mitigation measures. These include the actual and potential impacts of climate-related risks and opportunities on the company’s operations, strategy, and financial planning. Reports must describe climate-related risks and opportunities over the short, medium, and long term, assess their impacts on operations and financial planning, and evaluate the resilience of the organization’s strategy under different climate scenarios.
They must also outline governance structures for identifying, assessing, and managing climate-related financial risks (including how the board oversees those risks), describe the metrics and targets used to evaluate climate-related risks, and explain the company’s risk assessment and financial planning measures to mitigate exposure.
The disclosure report should address:
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Climate-related risks (e.g., physical risks such as extreme weather events, droughts, and wildfires; and transition risks such as changing regulations) and opportunities the organization has identified over the short, medium, and long term
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Impacts of climate-related risks and opportunities on the organization’s operations, strategy, and financial planning
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Resilience of the organization’s strategy, considering the future impacts of climate change under various climate scenarios
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The process the reporting entity uses for identifying, managing, and assessing climate-related risks, and how those considerations are integrated into the organization’s overall risk management
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Penalties
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Penalties up to $50,000 per reporting year failure to report; good-faith efforts considered.
Shift Advantage’s SB 253 & SB 261 Compliance Services
Shift Advantage provides complete solutions to meet SB 253 (California’s Climate Corporate Data Accountability Act) Services & SB 261 (California’s Climate Related Financial Risk Act)
Shift Advantage’s experts will ensure your company meets SB 253 by providing submission-ready deliverables tailored to California’s CARB expectations:
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Robust Emissions Measurement: Build Scope 1, 2, and 3 Greenhouse Gas (GHG) inventories aligned with the GHG Protocol.
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Disclosure-Ready Reporting: Structure data and outputs to meet California’s annual public disclosure requirements with accuracy and auditability.
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Risk & Readiness Assessment: Identify compliance gaps, mitigate disclosure risks, and strengthen governance frameworks.
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Assurance Verification (3rd-Party Audits): Independent third-party assurance verification for companies that have completed their GHG inventories.
Our experts at Shift Advantage will ensure your company meets SB 261. We provide the following services and submission-ready deliverables tailored to California’s CARB expectations:
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Scenario Analysis: Evaluate climate-related financial risks (physical & transitional) and opportunities.
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Governance & Strategy Alignment: Integrate oversight and climate risk into enterprise decision-making.
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Disclosure Reporting: Prepare structured reporting in line with TCFD and SB 261 requirements.
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Scenario & Transition Planning: Physical/transition risk quantification and mitigation strategies.
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Risk Mitigation Roadmap: Support senior leaders with actionable strategies to address disclosure outcomes.
Why Choose Shift Advantage to meet SB 253 & SB 261 Compliance
1. Proven Compliance Expertise
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Deep knowledge of SB 261 & SB 253 compliance requirements, timelines, and CARB expectations.
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Decades of experience supporting global businesses across multiple sectors.
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A team that combines technical rigor with real-world business insight from both consulting and in-house leadership roles.
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2. Submission Ready Deliverables
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Submission-ready deliverables tailored to California’s CARB expectations.
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Alignment with global frameworks (GHG Protocol, TCFD, ISSB, CDP) to streamline disclosures and avoid duplication.
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Leverage compliance requirements into strategic business opportunities.
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3. Independent Verification & Credibility
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Third-party assurance services to meet SB 253 phased requirements and investor expectations.
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Audit-ready reporting that builds confidence with regulators, boards, and customers.
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Submission-ready deliverables that are practical, audit-ready, and regulator-aligned
Contact us to learn how Shift Advantage’s experts can provides the services you need to meet California’s requirements
Shift Advantage’s experts provide complete solutions to ensure your organization meets SB 253 and SB 261 by providing submission-ready deliverables tailored to California’s CARB expectations. Contact us to learn how we can ensure you meet California’s new requirements.​