CA SB 253: Reporting Requirements, Assurance, and Penalties

California SB 253, the Climate Corporate Data Accountability Act, requires business entities with more than $1 billion in annual revenue that do business in California to publicly disclose their greenhouse gas emissions each year. The California Air Resources Board (CARB) runs the program. The first reports, covering Scope 1 and Scope 2 emissions, are due by August 10, 2026, with Scope 3 reporting phasing in during 2027.¹ SB 219, signed in 2024, amended several parts of the original law, including a safe harbor for Scope 3 disclosures and permission for parent companies to file consolidated reports.

Which Companies Have To File

Two conditions must both be true. The entity’s total annual revenue exceeds $1 billion, measured globally rather than just in California, based on the prior fiscal year. And the entity does business in California.² The law covers partnerships, corporations, LLCs, and other business entities formed under the laws of California, any other U.S. state, D.C., or an act of Congress.

“Doing business in California” borrows from the state’s tax framework under Revenue and Taxation Code Section 23101. A company qualifies if it is organized or commercially domiciled in California, or if its California sales, property, or payroll exceed set thresholds.³ For 2025, the sales threshold was roughly $757,000. CARB’s implementing regulation narrows the test somewhat, focusing on whether an entity is organized or commercially domiciled in California, or exceeds the California sales threshold, rather than applying all of the property and payroll tests from the tax code.

Who Is Exempt

Even where the revenue and nexus tests are met, several categories are carved out:

Nonprofits and charities that are tax-exempt under the Internal Revenue Code.
Insurance companies regulated by the California Department of Insurance or in the business of insurance in another state.
Federal, state, and local government bodies, and companies that are more than 50 percent government-owned.
Entities whose only California activity is wholesale electricity transactions.
Entities whose only California business activity consists of employee compensation or payroll expenses, including teleworking employees.

That last exemption matters for out-of-state companies whose only California footprint is a handful of remote workers.

What You Have To Report

Emissions are broken into three scopes tracking how directly the company causes them.

Scope 1 covers direct emissions from sources the company owns or controls, wherever located. Factory equipment, delivery fleets, and building furnaces all count.²

Scope 2 covers indirect emissions from purchased electricity, steam, heating, or cooling. The emissions physically come from the utility’s power plant, but the buyer reports them.

Scope 3 covers all other indirect emissions across a company’s value chain, both upstream and downstream: purchased goods and services, business travel, employee commutes, and product use and disposal by customers. Companies must report all material Scope 3 categories as defined by the Greenhouse Gas Protocol. For most large companies, Scope 3 dwarfs Scope 1 and Scope 2 combined.

All measurements must conform to the Greenhouse Gas Protocol standards, including the Corporate Accounting and Reporting Standard and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The statute makes those frameworks mandatory rather than a matter of company choice.

Reports are publicly disclosed through an emissions reporting organization contracted by CARB. If CARB does not contract with one, reports go directly to the board.

Reporting Deadlines

The rollout is staggered:

August 10, 2026: First Scope 1 and Scope 2 reports covering the prior fiscal year.¹
2027: Scope 3 reporting begins. Under the statute, a company’s Scope 3 disclosure is due no later than 180 days after its Scope 1 and Scope 2 data is publicly disclosed.²

CARB must review the Scope 3 deadlines by 2029 and update them by January 1, 2030, to consider whether the 180-day gap can be shortened.⁴

Third-Party Assurance

The law does not let companies self-certify their numbers. Independent verification is required, and the standard tightens over time:

2026 through 2029: Scope 1 and Scope 2 require limited assurance, closer to a financial review than a full audit.
2030 onward: Scope 1 and Scope 2 move to reasonable assurance, a stricter standard analogous to a financial statement audit.

Scope 3 follows a different path. CARB must review third-party assurance trends during 2026 and may set an assurance requirement by January 1, 2027. If it does, limited assurance for Scope 3 begins no earlier than 2030. Companies will therefore file several years of Scope 3 data before independent verification is required, which is part of why the Scope 3 safe harbor matters.

Parent Company Consolidated Reporting

SB 219 allows filings to be consolidated at the parent level. A subsidiary that independently meets the $1 billion revenue threshold and does business in California does not need to file separately, as long as its parent’s consolidated report covers it.⁴ Disclosures must also account for acquisitions, divestitures, mergers, and other structural changes affecting emissions totals.

Annual Fee

Reporting entities pay an annual fee to CARB. The statute does not fix a dollar amount; CARB sets the fee at a level sufficient to cover the program’s actual and reasonable costs, adjusted annually based on changes in the California Consumer Price Index. Fees are deposited into the Climate Accountability and Emissions Disclosure Fund.

Penalties for Late or Missing Reports

CARB can impose administrative penalties of up to $500,000 per reporting year for nonfiling, late filing, or other failures to meet the law’s requirements.² In setting the fine, CARB looks at the company’s compliance history and whether it took good-faith steps to comply, and when.

Scope 3 gets more lenient treatment. A company cannot be fined for misstatements in Scope 3 disclosures made with a reasonable basis and in good faith. That’s the SB 219 safe harbor. And from 2027 through 2030, the only Scope 3 violation that can trigger a penalty is outright nonfiling; incomplete or inaccurate Scope 3 data will not result in fines during that window.⁴

CARB has also issued an enforcement notice stating that it will not penalize companies for incomplete compliance during the first year of reporting in 2026. That eases the transition, but it does not waive the obligation to file.

Litigation and the Status of SB 253

Business groups have challenged SB 253 in federal court, arguing that mandatory emissions disclosures amount to compelled speech under the First Amendment. The suit originally raised Supremacy Clause and dormant Commerce Clause claims as well, but a federal court dismissed both without prejudice, leaving only the First Amendment claim active. The dismissed claims could be reasserted after CARB finishes implementing its regulations.

The Ninth Circuit has issued an injunction against the companion climate-risk law, SB 261, but that injunction does not reach SB 253. SB 253’s reporting requirements remain fully in effect on their original timeline.¹

How SB 253 Differs From SB 261

SB 253 is often mentioned in the same breath as SB 261, but they are separate obligations. SB 261 requires companies with more than $500 million in annual revenue to publish biennial reports on their climate-related financial risks and how they are managing them. Its revenue threshold is lower, and its focus is forward-looking risk rather than backward-looking emissions. SB 261’s enforcement timeline is currently uncertain because of the Ninth Circuit injunction; CARB has said it will set a new reporting date once the appeal is resolved.⁵ Meeting SB 253’s emissions reporting requirements does not satisfy SB 261, and vice versa.

1
California Air Resources Board. CARB Approves Climate Transparency Regulation for Entities Doing Business in California
2
California Legislative Information. California Health and Safety Code 38532 – Climate Corporate Data Accountability Act
3
California Legislative Information. California Revenue and Taxation Code 23101 – Doing Business
4
LegiScan. Bill Text CA SB219 – 2023-2024 Regular Session – Enrolled
5
California Air Resources Board. California Corporate Greenhouse Gas Reporting and Climate Related Financial Risk Disclosure Programs