SB 253 at a glance
SB 253 creates a mandatory annual greenhouse gas disclosure requirement for large companies doing business in California. Unlike voluntary sustainability initiatives, SB 253 introduces a regulated obligation to measure and report emissions across the full value chain using established methodologies.
California has also enacted a climate risk disclosure law, Senate Bill 261 (“SB 261”), but SB 253 is driving near-term activity because it establishes a defined compliance deadline and enforceable reporting expectations for 2026.
Which companies are covered?
SB 253 applies to public and private companies worldwide that:
- do business in California; and
- have more than $1bn in annual global revenue.
A company does not need to be headquartered or incorporated in California to fall in scope. Alignment with California tax concepts means a company may qualify through sales, property, or payroll activity even if its core operations are elsewhere.
What SB 253 requires companies to disclose
Companies must measure and disclose greenhouse gas emissions across all three scopes in accordance with the Greenhouse Gas Protocol:
- Scope 1: direct emissions from owned or controlled sources
- Scope 2: indirect emissions from purchased electricity, steam, heating, or cooling
- Scope 3: all other indirect emissions across the value chain, including purchased goods, transportation, business travel, and downstream activities
Because Scope 3 data is complex and often dependent on suppliers, SB 253 includes a phased timeline and a good faith safe harbour for early reporting.
Timing and reporting mechanics
In February 2026, the California Air Resources Board confirmed:
- Scope 1 and Scope 2 disclosures are due August 10, 2026, covering the prior fiscal year
- Scope 3 disclosures are required in later reporting cycles
- Assurance requirements begin in 2027 for Scopes 1 and 2, and in 2030 for Scope 3
Penalties and enforcement
SB 253 establishes administrative penalties of up to $500,000 per reporting year for noncompliance. While regulators anticipate reasonable flexibility during early implementation, companies will still need clear methodologies, transparent assumptions, and reliable governance frameworks.
How SB 253 fits with SB 261
California’s SB 261 requires biennial climate risk reports aligned to the Task Force on Climate-related Financial Disclosures. Enforcement is currently paused due to litigation, but SB 253 remains fully in effect. As a result, many companies are focusing on emissions measurement, carbon data readiness, and the groundwork required for future climate reporting standards.
What companies should be doing now
With the first deadline approaching, companies should begin preparing by:
- confirming whether they meet SB 253 applicability thresholds
- establishing a robust approach for Scope 1 and Scope 2 inventories
- identifying material Scope 3 categories and realistic data sources
- developing standard calculation methodologies and defensible assumptions
- creating documentation suitable for internal review and external assurance
Looking ahead
SB 253 represents a significant shift in how emissions data is treated, moving California-related carbon reporting from a voluntary exercise to a regulated requirement. Given California’s market influence, the impact will extend to companies both within and beyond the state.
Businesses that invest early in high-quality emissions data will be better positioned for compliance, investor expectations, and future global sustainability regulations.
Speak to our experts to understand how we support SB 253 carbon footprinting with advisory-led methodologies and transparent, defensible emissions disclosure.
