SB 261 & SB 253: California law and what you need to know

California’s climate accountability laws, SB 261 and SB 253, set new expectations for how companies doing business in the state disclose climate risk and greenhouse gas emissions. SB 261 requires biennial climate-related financial risk reporting, while SB 253 requires annual disclosure of scopes 1, 2, and 3 emissions.

If you operate in California and meet the set revenue thresholds, these laws are likely to apply to you, making data readiness and governance a near-term priority. Read our complete guide to learn what these regulations mean for your business, when and how to submit your GHG reports, and the best ways to collect the data.

Key Takeaways

• SB 261: Companies doing business in CA with more than $500 million in annual revenue must publish a biennial climate-related financial risk report that is publicly available
• SB 253: Companies doing business in CA with more than $1 billion in annual revenue must annually disclose their Scope 1 and 2 greenhouse gas emissions to a CARB-designated reporting system beginning in 2026, with Scope 3 following in 2027

What SB 261 & SB 253 mean for your business

Together, SB 261 and SB 253 create two obligations for large companies that do business in California: publish a climate-risk report every two years (SB 261) and disclose annual greenhouse gas emissions across scopes 1, 2, and 3 (SB 253).

If your annual revenue exceeds $500 million (SB 261) or $1 billion (SB 253), these laws are likely to apply, even if your headquarters are outside the state of California. Building supplier engagement, normalizing utility data, and establishing audit trails will shorten your close and reduce verification friction later.

A practical path is to centralize utility bills and emissions factors in a single system of record, such as EnergyCAP Utility Management with Carbon Hub, to streamline data collection, conversions to scopes 1–3, and evidence for assurance. Support your process with a modern sustainability reporting platform.

CARB’s rulemaking signals ongoing administrative fees and program infrastructure, so budgeting for data collection, assurance, and internal review will be part of annual compliance. Assign clear ownership across finance, sustainability, procurement, and IT to keep filings accurate, consistent, and on time.

Pro Tip: Want deeper context on timing, scope, and assurance? Watch our webinar on decoding California’s climate disclosure laws.

California SB 261

Who it applies to: U.S. companies that do business in California with more than $500 million in annual revenue (prior fiscal year)

Passed on: Oct. 7, 2023

SB 261 requires a biennial climate-related financial risk report aligned with TCFD (or an equivalent framework). The report must disclose material climate-related financial risks and the measures your company is taking to reduce and adapt to those risks, and you must publicly post it on your website. Parent-level consolidation is allowed.

CARB will assess an annual program fee and may seek administrative penalties for non-filing or inadequate reports, capped at $50,000 per reporting year. For current implementation materials, see CARB’s SB 261 checklist.

California SB 253

Who it applies to: Public or private U.S. business entities that do business in California with more than $1 billion in annual revenue (prior fiscal year)

Passed on: Oct. 7, 2023

SB 253, California’s Climate Corporate Data Accountability Act, requires annual disclosure of Scope 1 and Scope 2 emissions starting in 2026 (for the prior fiscal year) and Scope 3 beginning in 2027.

Disclosures must follow the Greenhouse Gas Protocol and be submitted to a CARB-designated emissions reporting organization, which will host a public digital platform.

Third-party assurance ratchets from limited assurance on scopes 1–2 beginning in 2026 to reasonable assurance in 2030; CARB may require limited assurance for scope 3 beginning in 2030.

The program includes annual administrative fees and allows penalties up to $500,000 per reporting year for non-filing or other violations. For scope and eligibility details, see CARB’s Greenhouse Gas Reporting programs page.

How California SB 261 & SB 253 came to be

California’s climate disclosure push built on earlier legislative attempts, including SB 260 (2021–2022), which set the stage for economy-wide corporate transparency but did not pass. Lawmakers reintroduced the concept in 2023 as SB 253 (Sen. Scott Wiener) and paired it with SB 261 (Sen. Henry Stern) to address both emissions disclosure and climate-related financial risk.

Governor Gavin Newsom signed both bills on Oct. 7, 2023, directing the California Air Resources Board (CARB) to write implementing regulations and indicating that follow-up “cleanup” legislation would be pursued to fine-tune timing and program mechanics. CARB established a program page covering both laws and began rulemaking and stakeholder outreach soon after.

In 2024, the Legislature enacted SB 219 to amend elements of SB 253 and SB 261, most notably extending CARB’s deadline to adopt emissions reporting regulations from Jan. 1, 2025, to July 1, 2025, clarifying parent-level consolidation, and refining administrative mechanics. These updates are now part of California’s Climate Accountability package and inform current compliance planning.

When you need to submit your GHG reports

California set near-term timelines for both laws. Most organizations should work backward from their fiscal year-end to align data gathering, internal review, and assurance.

• SB 261 (climate-risk report): Voluntary first report due Jan. 1, 2026, then biennially and publicly posted on your website. In accordance with appellate court decisions, CARB will announce the finalized official due date for first reports in early 2026. As of December 2025, the January 1, 2026, due date was made voluntary.
• SB 253 (GHG emissions): Scope 1–2 disclosure starts in 2026 for the prior fiscal year; Scope 3 begins in 2027. CARB will finalize the submission mechanics and use a designated reporting organization that hosts a public digital platform for SB 253 filings, so monitor rulemaking updates and build your timeline accordingly.

For a forward look at budgets, staffing, and tech choices tied to these timelines, explore our 2026 energy management outlook.

7 tips to prepare for California’s new regulations

California’s climate laws are data-heavy and deadline-driven, but preparation does not have to be complicated.

Decide whether to report at the parent level, then create a single source of truth for bills, meters, and fuel so you can calculate scopes 1–3, maintain audit trails, and move smoothly into third-party assurance.

From there, lock in an annual calendar that lines up with your fiscal year, clarify who owns what, and practice your process before the first filing.

Our steps below keep it practical for your team:

1. Confirm scope and structure: Verify whether you must submit reporting, decide on parent-level consolidation, and name an executive sponsor with a cross-functional team across finance, sustainability, procurement, and IT.
2. Centralize your utility and fuel data: Pull bills, meter reads, and fuel records into one system of record. EnergyCAP Utility Management standardizes bill, meter, and commodity data, while Bill CAPture automates invoice ingestion to cut manual entry and eliminate errors. If renewable procurement is part of your mix, explore renewable energy management software to track production, certificates, and contract performance.
3. Convert activity data to Scopes 1, 2, and 3 with audit trails: Use Carbon Hub to quickly turn consumption and activities into GHG Protocol-aligned emissions, complete CARB’s reporting documentation, and view emissions data alongside cost for complete analysis and maximum savings; all features to expect from a robust sustainability management software stack.
4. Build for third-party assurance: Define data owners, collection standards, and engage third parties; ensure auditors have customized access with clear data trails and clean records.
5. Set the annual reporting calendar: For SB 253, plan close → calculate → internal QA → assurance → submission; for SB 261, align to TCFD or an equivalent framework, confirm governance and risk processes, and plan the public posting.
6. Engage suppliers early: Identify high-emissions categories, share simple request templates, clarify quality expectations, and note where estimates will be used to improve coverage each cycle.
7. Run a dry run before it counts: Produce a test inventory and a mock climate-risk report using last year’s data; use Smart Analytics and Powerviews to spot anomalies, compare periods, and log fixes ahead of assurance.

Centralize your GHG data with EnergyCAP

SB 261 and SB 253 raise the bar on climate-risk reporting and GHG disclosure. If you centralize utility data, standardize calculations, and build audit-ready workflows now, you’ll be ready for third-party assurance and smoother submissions.

EnergyCAP Utility Management, Bill CAPture, Carbon Hub, and Smart Analytics work together to pull bills into a single system, convert activities into Scope 1, 2, and3 emissions, maintain evidence, and surface issues before filing.

Request an EnergyCAP demo to get a walkthrough, timelines aligned to your fiscal year, and a clear plan to prepare your next reporting cycle.