California Advances Climate Disclosure: What Companies Need to Know About SB 253 and SB 261

On February 26, 2026, the California Air Resources Board (CARB) formally approved initial regulations implementing SB 253 and SB 261, as amended by SB 219. These regulations largely codify provisions that CARB previewed during stakeholder meetings throughout 2025 and provide greater clarity for companies preparing to comply. 

Below are several key takeaways for organizations doing business in California. 

Clarified Definitions and Scope 

The regulations confirm how CARB will interpret several foundational concepts: 

• “Doing business in California” aligns with Sections 23101(b)(1) and 23101(b)(2) of the California Revenue and Taxation Code. 
• “Revenue” is defined consistently with “gross receipts” under Section 25120(f)(2) of the same code. 
• Parent–subsidiary relationships follow the definition set forth in Section 95833 of Title 17 of the California Code of Regulations. 

The regulations specify excluded entities, including: 

• Nonprofits and charities 
• Insurance companies 
• Government or majority government owned entities 
• Wholesale electricity brokers 
• Businesses whose only California activities are limited to functions such as payroll or employee compensation 

Program Fees 

CARB has established an annual flat rate fee structure for each reporting program. Based on current estimates, covered entities can expect annual fees ranging from approximately $2,000 to $7,000 per program, depending on applicability. 

Reporting Deadline for SB 253 

The regulations formally establish August 10, 2026 as the reporting deadline for first year emissions disclosures under SB 253. 

CARB clarified how companies should determine the preceding fiscal year for reporting purposes: 

• Companies with fiscal years ending February 2 through December 31 will report emissions for the fiscal year ending in the previous calendar year. 

• Companies with fiscal years ending January 1 through February 1 will report emissions for the fiscal year ending in the current calendar year. 

What’s Next in the Rulemaking Process 

Following this Board approval, CARB will prepare a final staff report, including responses to public comments, and submit the regulation to the Office of Administrative Law (OAL) for final adoption, assuming no further modifications. 

It’s important to note that SB 261 remains unenforceable at this time due to an injunction issued by the Ninth Circuit. While regulatory development continues, any reporting under SB 261 is currently voluntary. Notably, more than 100 companies have already chosen to submit voluntary climate risk reports. 

Looking ahead, CARB has indicated that additional SB 253 rulemaking is forthcoming, including requirements for reporting years 2027 and beyond, as well as data assurance requirements. 

Are You Preparing to Comply with SB 253? 

If your organization is subject to SB 253, now is the time to act. Building a compliant greenhouse gas inventory, particularly one that stands up to future assurance requirements, takes time, coordination, and experience. 

Sodali experts have over a decade of expertise preparing GHG inventories as part of our climate advisory work, supporting companies across sectors with Scope 1, 2, and 3 emissions leveraging industry best practices. Whether you are starting from scratch or refining existing processes, we help organizations translate complex regulatory requirements and standards into clear and defensible reporting. 

If you’d like to discuss what these regulations mean for your organization, or how to prepare for upcoming SB 253 obligations, we’d be glad to connect.