Overview
Introduced: January 2023
Effective from: October 7, 2023
Last modified: June 2024
Region(s): California, United States
See the latest updates to California’s climate laws in our blog.
About
The California Climate Accountability Package includes two critical pieces of legislation—SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act). These laws impose significant reporting requirements on large public and private companies operating in California. SB 253 mandates the disclosure of comprehensive greenhouse gas (GHG) emissions data across Scopes 1, 2, and 3. Meanwhile, SB 261 requires companies to disclose climate-related financial risks and the strategies they have adopted to mitigate these risks. Collectively, these laws aim to enhance corporate transparency, ensure alignment with California’s ambitious climate goals, and provide investors and the public with reliable information on climate impacts and risks.
Criteria for compliance
Entities covered
U.S.-based partnerships, corporations, limited liability companies, and other business entities with total annual revenues exceeding $1 billion that operate within California.
Emissions reporting
- Starting in 2026: Scope 1 and Scope 2 emissions.
- Starting in 2027: Scope 3 emissions.
Verification
Emissions data must be verified by an independent third-party assurance provider.
Compliance timelines
- FYB 2025: Companies must report Scope 1 and Scope 2 emissions by 2026.
- FYB 2026: Companies must report Scope 3 emissions by 2027.
- Review by 2029: CARB will assess and potentially update the reporting timelines.
Disclosure requirements
GHG emissions reporting
- Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity, steam, heating, or cooling).
- Scope 3 (other indirect emissions) across the value chain, including purchased goods and services, business travel, employee commutes, and use of sold products.
Assurance requirements
- Third-party assurance for Scope 1 and Scope 2 emissions is required starting in 2026, with reasonable assurance required by 2030.
- CARB may introduce assurance requirements for Scope 3 emissions by 2027.
Third-party auditing
Independent third-party auditors must verify GHG emissions reports. Assurance for Scope 1 and Scope 2 emissions begins at a limited assurance level in 2026, progressing to reasonable assurance by 2030.
Penalties for non-compliance
The California Air Resources Board (CARB) may impose penalties of up to $500,000 per reporting year for noncompliance, including late filing, nonfiling, or inadequate reporting. Specific penalties for Scope 3 emissions reporting between 2027 and 2030 will focus on nonfiling.
