SUSTAINABILITY DESK

Week of Feb. 23: Climate regulations reshape the compliance landscape

From CARB’s final SB 253 rulemaking to the EU’s narrowed CSRD scope and the future of carbon accounting — here’s what sustainability and compliance teams need to know right now.

Table of Contents

California

CARB unanimously approved the implementing rule for SB 253 and SB 261

The California Air Resources Board (CARB) has approved the implementing regulation for SB 253 and SB 261 — locking in the practical framework that will govern how large companies operating in California disclose Scope 1 and 2 emissions and climate-related financial risk.

  • The regulation sets the fee structure, defines applicability and exemptions, and locks in Aug. 10, 2026 as the first-year reporting deadline for Scope 1 and 2 under SB 253.
  • Revenue threshold is tied to CA Franchise Tax Board gross receipts, not GAAP. Companies can report FY24 or FY25 data depending on fiscal year end.
  • “Best available data” is accepted for year one. CARB will use enforcement discretion for good-faith submissions.
  • Insurance companies were controversially exempted from SB 253 (they were only excluded from SB 261 in the original legislation). Senator Wiener and several other commenters criticized the exemption as inconsistent with the statute. The board ultimately approved the regulation but with a commitment to further evaluate the applicability of SB 253 to insurance companies, including whether existing disclosures to the California Department of Insurance already satisfy the requirements.
  • SB 261 (climate risk, greater than $500M revenue) remains under injunction and is not being enforced, but 120+ companies have voluntarily submitted reports.
  • Scope 3 and assurance requirements are coming in a separate 2027 rulemaking later this year.
State Legislation

New Jersey advances its own climate reporting bill

S-679, the NJ Climate Corporate Data Accountability Act, cleared the Senate Environment & Energy Committee and was referred to Senate Budget and Appropriations.

  • Mirrors California’s SB 253: applies to companies doing business in NJ with greater than $1B in revenue.
  • Scope 3 was removed during committee markup. Scope 1 and 2 reporting would begin three years after enactment (currently approximately 2029), with public disclosure and limited assurance at year four, and reasonable assurance at year eight.
  • Reports filed under California’s SB 253 would satisfy NJ requirements.
  • Still a long road to passage, but it adds to the growing state-level disclosure trend alongside New York and Illinois.
EU Regulation

EU’s Omnibus I is finalized: CSRD and CS3D scope dramatically narrowed

The European Council gave final approval on Feb. 24. The directive enters into force 20 days after publication in the Official Journal (expected approximately March 2026). Member states have 12 months to transpose.

  • CSRD now applies only to EU companies with greater than 1,000 employees and greater than €450M net turnover — an estimated 90% reduction in covered companies from the original scope.
  • For non-EU (U.S.) companies: CSRD applies if the parent has greater than €450M annual EU revenue and has an EU subsidiary or branch generating greater than €200M in EU revenue. First reporting would cover FY2028 data, due in 2029.
  • CS3D thresholds raised to greater than 5,000 employees and greater than €1.5B net turnover. For non-EU companies: greater than €1.5B in EU turnover. Compliance required by July 2029.
  • Mandatory climate transition plans removed. EU-wide civil liability regime deleted. Penalties capped at 3% of global revenue (down from 5%).
Even with the narrowed scope, CSRD reporting represents a significant undertaking. Companies approaching these thresholds should treat 2026 and 2027 as preparation years — building the data infrastructure now avoids costly scrambles later.
United Kingdom

UK publishes final Sustainability Reporting Standards

UK SRS S1 (general sustainability) and UK SRS S2 (climate) were published Feb. 25, closely aligned with ISSB’s IFRS S1 and S2.

  • Currently voluntary. The FCA is consulting (closes March 20) on making UK SRS S2 mandatory for listed companies starting Jan. 2027, with Scope 3 and non-climate sustainability on a “comply or explain” basis.
  • The government will consider mandatory requirements for large private companies later through its Modernizing Corporate Reporting program.
  • Expected to eventually replace the current SECR framework.
  • Scope 3 transitional relief timeline left open. Voluntary reporters can claim UK SRS compliance without Scope 3 indefinitely, as long as they disclose the relief.
Asset Management

Net Zero Asset Managers relaunches after one-year suspension

The Net Zero Asset Managers (NZAM) initiative has formally relaunched, though with a notably different composition and commitment structure than before.

  • 250+ signatories (down from 325 at peak). Notable U.S. absences: BlackRock, JPMorgan AM, Invesco, Franklin Templeton, and HSBC AM are all out.
  • Updated commitment drops the 2050 net zero target and shifts language to “well below 2°C,” with individual firms setting their own targets.
  • 50+ asset owners representing $3.7T backed the relaunch, calling on managers to participate.
  • Sierra Club called it “an important signal” but noted “membership is not the same as action.”
  • U.S. participation is significantly reduced due to ongoing antitrust scrutiny and political pressure.
Carbon Accounting

Carbon accounting is at a crossroads

This week at the Aspen Institute, key stakeholders gathered to discuss the future of corporate emissions measurement: whether the GHG Protocol’s Scope 1, 2, and 3 framework, the E-Ledger system championed by the new NGO Carbon Measures, or a hybrid approach should shape the next phase of reporting.

  • These aren’t competing systems so much as different tools. GHG Protocol takes the company as the unit of analysis (useful for investors and regulators). E-Ledgers take the product as the unit (useful for supply chain decarbonization and trade policy such as CBAM).
  • GHG Protocol is also mid-overhaul: the Land Sector and Removals Standard launched this month, Scope 2 guidance revisions are in second consultation, and Scope 3 updates are in process. Final guidance expected 2026–2027.

For companies building or refining their carbon accounting programs right now, the takeaway is practical: the GHG Protocol framework remains the regulatory and investor standard. The E-Ledger approach is worth monitoring for supply chain and trade-related applications, but it isn’t a replacement — it’s a complement.

Ready to streamline your emissions reporting and compliance readiness?

Frequently Asked Questions

What is the SB 253 reporting deadline and who does it apply to?

CARB has set Aug. 10, 2026 as the first-year reporting deadline for Scope 1 and 2 emissions under SB 253. The law applies to companies doing business in California with over $1B in gross annual revenue. Companies will report on prior-year data, allowing for flexibility depending on fiscal year ends. Learn more at our California Compliance Hub.

No. SB 261 (which requires climate-related financial risk disclosure for companies with greater than $500M in revenue) remains under a court injunction and is not currently being enforced. That said, more than 120 companies have voluntarily submitted reports. Companies above the threshold should use this period to build disclosure readiness.

The finalized Omnibus I significantly narrows CSRD scope. CSRD now applies only to U.S. companies IF the parent company has >€450M annual EU revenue AND has an EU subsidiary or branch generating >€200M in EU revenue. First reporting would cover FY2028 data, with disclosures due in 2029.

Yes, based on the current version of S-679 as it passed committee markup, reports filed under California’s SB 253 would satisfy NJ requirements. However, S-679 has not yet been signed into law and could change. Companies operating across both states should track its progress closely.

Currently, the GHG Protocol is still the most widely used international standard for measuring and managing greenhouse gas emissions. However, this week at the Aspen Institute, key stakeholders gathered to discuss the future of corporate emissions measurement, specifically whether the GHG Protocol’s Scope 1/2/3 framework, the E-Ledger system, or a hybrid approach should shape the next phase of reporting.

GHG Protocol is also currently undergoing updates, with final guidance on several standards expected between 2026 and 2027.

The UK published UK SRS S1 (general sustainability) and UK SRS S2 (climate) on Feb. 25, 2026, closely aligned with ISSB’s IFRS S1 and S2. They are currently voluntary. The FCA is consulting on making UK SRS S2 mandatory for listed companies starting Jan. 2027, with Scope 3 and non-climate sustainability on a “comply or explain” basis. vRequirements for large private companies are expected to follow through the Modernising Corporate Reporting programme. The standards are expected to eventually replace the current SECR framework.

Greenplaces is an all-in-one sustainability platform that helps businesses measure Scope 1, 2, and 3 emissions, navigate regulatory requirements like SB 253, CSRD reporting, and CDP reporting, and build the data infrastructure needed for assurance-ready disclosures. Visit greenplaces.com to learn more or request a demo.

Corinne Hanson headshot

Corinne Hanson is VP of ESG Strategy at Greenplaces, the all-in-one sustainability platform helping businesses turn climate goals into results. She brings over a decade of experience in corporate sustainability, including leadership roles at SH Hotels & Resorts, Global Footprint Network, and the NRDC. A George Washington University grad with degrees in International Relations and Philosophy, Corinne spends her time outside the office the same way she spends it inside: trying to keep the planet in good shape.

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