Large companies doing business in California continue to face a moving target in complying with California’s new climate-disclosure laws—Senate Bills 253 (the Climate Corporate Data Accountability Act) and 261 (the Climate-Related Financial Risk Act). This week, the Ninth Circuit temporarily blocked the California Air Resources Board (CARB) from enforcing SB 261 pending further judicial review. Meanwhile, as compliance deadlines approach, CARB has not issued implementing regulations but continues to release and revise preliminary guidance on reporting requirements.
SB 261
SB 261 requires companies that do business in California and have more than $500 million in annual revenue to report climate-related financial risks. In its most recent guidance, CARB proposes a definition of “revenue” that tracks California Revenue and Taxation Code § 25120(f)(2) and focuses on a company’s gross receipts.[1] Per that guidance, a company is “doing business in California” if it engages in any for-profit transaction in California and is either organized in the state or has California sales exceeding $735,019 (inflation-adjusted for 2024) or 25 percent of the company’s total sales.
While the first reporting deadline for SB 261 is January 1, 2026, the Ninth Circuit recently temporarily enjoined CARB from taking any action to enforce SB 261 pending further litigation in an ongoing legal challenge to the law.
If SB 261’s reporting requirements take effect, any company subject to the law must submit a biennial report disclosing, among other information, the financial risks it faces due to climate change and any measures it has taken to mitigate or adapt to such risks. The statute provides some flexibility in choosing how to structure the report, but CARB has released guidance regarding minimum requirements. For example, in November 2025, CARB released an updated reporting checklist identifying information companies should disclose, including governance structures, risk management processes, and the metrics and targets used to assess and manage relevant climate-related risks.
SB 253 Emission Reports
SB 253 requires companies that do business in California and have more than $1 billion in total annual revenue to annually disclose their greenhouse gas (GHG) emissions. The disclosures must include three types of GHG emissions: “Scope 1” emissions released directly from sources the company owns or controls; “Scope 2” emissions from consumed energy acquired by the company; and “Scope 3” emissions, which include indirect emissions occurring upstream and downstream of the company’s operations (such as emissions related to the use of its products). Companies must report Scope 1 and 2 emissions by a date in 2026 (still to be determined by CARB), and Scope 3 emissions starting in 2027. CARB recently announced that it will propose an initial reporting deadline of August 10, 2026 for Scope 1 and 2 emissions.
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Large companies that do business in California will need to monitor reporting requirements under SB 251 and SB 261 as legal challenges to the two laws continue to unfold and regulatory requirements continue to evolve. Venable will continue to track developments and assist with ensuring compliance with both laws.
[1] CARB’s working definition for “revenue” is “The gross amounts realized (the sum of money and the fair market value of other property or services received) on the sale or exchange of property, the performance of services, or the use of property or capital (including rents, royalties, interest, and dividends) in a transaction that produces business income, in which the income, gain, or loss is recognized (or would be recognized if the transaction were in the United States) under the Internal Revenue Code, as applicable for purposes of this part. Amounts realized on the sale or exchange of property shall not be reduced by the cost of goods sold or the basis of property sold.”