CA Senate Bill 253: Reporting, Assurance, and Penalties

California Senate Bill 253, the Climate Corporate Data Accountability Act, requires any business entity with more than $1 billion in annual revenue that does business in California to publicly disclose its greenhouse gas emissions every year. The California SB 253 emissions reporting requirements cover all three emission scopes, apply to both public and private companies, and begin with the first filings in 2026. The California Air Resources Board (CARB) is finalizing the implementing regulations now.¹

Which Companies Have to File

Two conditions trigger the obligation. The entity must have total annual revenue above $1 billion in the prior fiscal year, and it must do business in California.² Partnerships, corporations, LLCs, and other business entities all qualify. The entity can be organized under the laws of any U.S. state, the District of Columbia, or an act of Congress. California headquarters and California incorporation are not required.

The $1 billion figure looks at total revenue, not California revenue. A parent that consolidates subsidiary revenue into its financial statements can cross the threshold through consolidation alone.

“Doing business in California” uses the same test the California Franchise Tax Board applies for tax purposes: engaging in any transaction for financial gain inside the state, being organized or commercially headquartered there, or exceeding annually adjusted thresholds for California sales, property, or payroll. Those dollar thresholds move each year, so check the Franchise Tax Board’s current figures when assessing exposure. A company headquartered in New York or Dallas can be pulled in through California sales or California-based employees alone.

What You Have to Report

Covered companies disclose emissions across three categories defined by the Greenhouse Gas Protocol, which the statute names as the required framework.²

Scope 1 covers direct emissions from sources the company owns or controls: fuel burned by a company fleet, on-site manufacturing, natural gas used to heat company facilities.
Scope 2 covers emissions from the electricity, steam, heating, and cooling the company purchases. The emissions physically happen at the power plant but are counted against the company consuming the energy.
Scope 3 covers everything else in the value chain, upstream and downstream: raw material extraction, employee commuting, business travel, transportation of goods, and the use and disposal of products the company sells. For most large companies, Scope 3 is the largest share of total emissions and the hardest to measure.

When Reports Are Due

The law phases in over several years. Each annual report covers the prior fiscal year’s emissions, so data gathered during 2025 feeds the first filing.

2026: first annual disclosure of Scope 1 and Scope 2 emissions, covering fiscal year 2025, with limited assurance from an independent third-party auditor.²
2027: Scope 3 reporting begins on a schedule CARB will set. No assurance engagement is required for Scope 3 at this stage.²
2030: assurance on Scope 1 and Scope 2 rises from limited to reasonable assurance, and Scope 3 begins requiring limited assurance.²

The specific filing date within each year will come from CARB’s implementing regulations. Reports go to CARB or to an emissions reporting organization CARB contracts with, and they become publicly available.

Third-Party Assurance

Every reporting entity must engage an independent third-party assurance provider to verify its disclosures.² The provider’s complete report, including the provider’s name, is submitted alongside the company’s disclosure.

The two assurance levels are not interchangeable. Limited assurance, required beginning in 2026 for Scope 1 and 2, resembles a financial review: the auditor checks for plausibility without deep testing. Reasonable assurance, required from 2030, is closer to a full financial audit, with extensive testing and verification of the underlying data. Internal tracking systems that can carry a limited assurance engagement will often need meaningful upgrades to survive a reasonable assurance review.

Scope 3 Safe Harbor

Two protections cushion Scope 3 reporting, which the statute treats as genuinely harder to get right than Scope 1 or 2.

A company cannot be penalized for misstatements in its Scope 3 disclosures as long as the figures were prepared with a reasonable basis and disclosed in good faith. This protection is ongoing, with no sunset. Separately, between 2027 and 2030, Scope 3 penalties can be imposed only for outright failure to file. During those early years, submitting a good-faith Scope 3 report with inaccurate estimates will not trigger fines, as long as the report was filed.²

That matters because Scope 3 data often relies on estimates, industry averages, and supplier-reported figures that are inherently imprecise.

Penalties

CARB can impose administrative penalties of up to $500,000 per reporting year for violations, which include failure to file, late filing, submitting inaccurate data, and failing to obtain the required third-party assurance.² Penalties are imposed through administrative hearings rather than through the courts, and CARB has discretion to set the amount within the cap. The disclosures themselves are public, so being flagged as non-compliant carries reputational exposure on top of the fine.

How This Differs From the SEC Climate Rule

SB 253 is a separate framework from the SEC’s climate disclosure rule, and complying with one does not satisfy the other. The SEC voted in March 2025 to stop defending its climate rule in court, effectively shelving it. California’s law is moving forward on schedule.

Three differences are worth knowing. The SEC rule applied only to publicly traded registrants; SB 253 applies to public and private entities alike that meet the revenue and doing-business tests.² The SEC’s final rule dropped Scope 3; SB 253 requires it starting in 2027. And there is no mechanism to substitute an SEC filing for a California filing, so a company subject to both frameworks would file under each independently if the federal rule ever revived.

Where CARB’s Rulemaking Stands

SB 219, the 2024 amendment to SB 253, pushed CARB’s deadline for proposed regulations from January 1, 2025, to July 1, 2025. CARB posted proposed regulation text and a staff report in December 2025, with a public hearing to follow.¹ Filing formats, treatment of affiliated entities, and the specific submission platform are still being finalized. With the first reports due in 2026, companies that wait for full clarity before starting data collection will be short on time.

1
California Air Resources Board. California Corporate Greenhouse Gas Reporting and Climate Related Financial Risk Disclosure Programs
2
California Legislative Information. California Code HSC 38532 – Climate Corporate Data Accountability Act