California SB 253: Requirements, Deadlines, and Assurance

California SB 253, the Climate Corporate Data Accountability Act, requires any U.S.-formed business with more than $1 billion in annual revenue that does business in California to publicly report its greenhouse gas emissions each year to the California Air Resources Board. The first report, covering Scope 1 and Scope 2 emissions from the prior fiscal year, is due August 10, 2026. Scope 3 supply chain reporting begins in 2027. Reports must carry independent third-party assurance, and CARB can impose penalties of up to $500,000 per reporting year for noncompliance.¹ The law is codified at Health and Safety Code Section 38532.

Which Companies Have to Report

A reporting entity is any partnership, corporation, limited liability company, or other business entity formed under U.S. laws with total annual revenues over $1 billion that does business in California.² The threshold looks at the prior fiscal year. Headquarters location is irrelevant. A Texas or New York company is in scope if the revenue is there and the California footprint is there.

CARB’s adopted regulation ties the $1 billion figure to gross receipts as reported on the entity’s California corporate tax filings.¹

What “Doing Business in California” Means

Revenue and Taxation Code Section 23101 sets the test. A company is doing business in the state if any one of these dollar thresholds is met:

Sales into California above the lesser of $500,000 (adjusted annually) or 25 percent of total sales.
Real or tangible personal property in California above the lesser of $50,000 (adjusted annually) or 25 percent of total property.
Wages for California work above the lesser of $50,000 (adjusted annually) or 25 percent of total compensation.

The Franchise Tax Board updates these thresholds each year. For 2025, sales sit at $757,070 and property and compensation at $75,707 each.³

Corporate structure matters here. A parent may file one consolidated report covering its subsidiaries, but each subsidiary that independently meets the revenue and nexus tests still counts as a separate entity for applicability and fee purposes.

Who Is Exempt

Some companies clear the $1 billion line and still fall outside SB 253. CARB’s regulation excludes:

Non-profits and charities tax-exempt under the Internal Revenue Code.
Entities more than 50 percent owned by a federal, state, or local government body.
Insurance companies regulated by the California Department of Insurance or in the business of insurance in any other state.
Businesses whose only California presence is remote employees working from home.
Companies whose sole California activity is wholesale electricity transactions.
The University of California.

The insurance exemption originally applied only to the companion climate risk disclosure law, SB 261. CARB extended it to SB 253 in its February 2026 rulemaking.¹ Entities that do not report gross receipts on California tax filings, such as certain holding companies and mutual funds, may also fall outside scope.

What Has to Be Reported

The statute requires disclosure across three emission scopes, following the Greenhouse Gas Protocol.² All figures cover the reporting entity’s prior fiscal year.

Scope 1: Direct Emissions

Emissions from sources the company owns or directly controls. Fuel burned in company vehicles, manufacturing equipment, on-site industrial processes, and any other combustion or chemical process the company operates. If the smokestack or fleet is yours, the emissions are Scope 1.

Scope 2: Purchased Energy

Indirect emissions from electricity, steam, heating, or cooling the company purchases. The emissions physically occur at the utility, but the company’s consumption drives them. Accurate reporting requires data from energy providers.

Scope 3: Supply Chain

All other indirect emissions, upstream and downstream, that the company does not own or control. The statute specifically names purchased goods and services, business travel, employee commutes, and the processing and use of sold products, though the category runs broader.² For a manufacturer, that means tracing emissions from raw material suppliers through to customers using the finished product. Collecting the data requires coordination with vendors, distributors, and other third parties.

Reporting Deadlines

The first report is due August 10, 2026, and covers Scope 1 and Scope 2 emissions only.¹ Companies with fiscal years ending between February 2, 2026, and December 31, 2026, report data from the fiscal year ending in 2025.

Scope 3 reporting starts in 2027 on a schedule CARB will set through additional rulemaking.² After the first filings, all reports are due annually on a date CARB determines.

Third-Party Assurance

Every report must include an assurance engagement performed by an independent third-party provider. The scrutiny rises over time.

For Scope 1 and Scope 2, limited assurance applies starting in 2026. That involves moderate testing and a negatively phrased conclusion (nothing came to the provider’s attention suggesting material misstatement). In 2030 the standard rises to reasonable assurance, which requires extensive testing of internal controls and produces a positive opinion on accuracy.²

Scope 3 assurance is on a separate track. During 2026 CARB is reviewing assurance trends for supply chain emissions and may establish requirements by January 1, 2027. If required, Scope 3 assurance would begin at the limited level in 2030.

Providers must be independent from the reporting entity and named in the assurance report, which is submitted with the emissions disclosure. The statute does not lock in a single framework, but providers commonly work under ISO 14064-3 for greenhouse gas verification or ISAE 3000 for non-financial assurance engagements.

The Scope 3 Safe Harbor

Scope 3 data depends on vendors, customers, and logistics partners who may not track emissions closely. Two protections address that.

A reporting entity cannot be penalized for any Scope 3 misstatement made with a reasonable basis and disclosed in good faith. This protection is permanent.²

Between 2027 and 2030, Scope 3 penalties apply only to complete nonfiling. A company that submits a flawed or incomplete Scope 3 report in those years faces no enforcement action so long as it filed.⁴ That gives companies a multi-year runway to build supply chain data collection before accuracy-based penalties begin.

Penalties and Enforcement Posture

CARB administers the program and can impose administrative penalties for nonfiling, late filing, or other reporting failures. The cap is $500,000 per reporting entity per reporting year.²

Setting the amount, CARB must weigh the company’s past and present compliance record and any good-faith measures taken to comply, including the timing of those measures. For the first reporting year, CARB has said it will prioritize supporting compliance over punishing it and will use enforcement discretion for companies making a genuine effort to submit accurate data.¹

Discretion is not exemption. A company that ignores the deadline or makes no attempt to collect emissions data should not expect leniency, and the $500,000 cap applies per reporting year, so missed years compound.

Annual Compliance Fee

Reporting entities pay an annual fee to fund program administration. CARB has proposed a flat fee of $3,106 per entity subject to SB 253.⁵ Subsidiaries filing through a parent’s consolidated report still owe the fee individually. CARB has indicated the amount will adjust in future years for inflation and any program funding surplus or deficit.

How Reports Become Public

The statute requires that emissions data be publicly disclosed, either through a nonprofit emissions reporting organization contracted by CARB or directly to CARB.² SB 219 made the contracting arrangement optional, so CARB may administer the platform itself. The practical result is a standardized, comparable dataset that investors, journalists, and the public can use to evaluate the carbon footprints of large companies.

SB 253 Versus SB 261

SB 253 is the emissions reporting law. SB 261, codified at Health and Safety Code Section 38533, is a separate obligation aimed at a broader group. Any company doing business in California with total annual revenues over $500 million must publish a climate-related financial risk report on its own website, following the Task Force on Climate-related Financial Disclosures framework.⁶ SB 261 reports are biennial, and the first was originally due January 1, 2026. Pursuant to a court order, CARB is currently not enforcing SB 261, and reporting under that law is voluntary.¹ Companies caught by both should track SB 261’s legal status separately, as it may change.

1
California Air Resources Board. CARB Approves Climate Transparency Regulation for Entities Doing Business in California
2
California Legislative Information. California Code Health and Safety Code 38532 – Climate Corporate Data Accountability Act
3
California Franchise Tax Board. Doing Business in California
4
LegiScan. California SB219 – Enrolled
5
California Air Resources Board. SB 253/261/219 Public Workshop: Regulation Development and Additional Guidance
6
California Legislative Information. SB-261 Greenhouse Gases: Climate-Related Financial Risk