California is once again setting the tone for climate policy in the U.S. Its new law, the Climate Corporate Data Accountability Act (CCDAA), is raising the bar for corporate climate disclosure. If your company does business in California, this likely applies to you.

The legislation merges two bills—SB 253 and SB 261—into a comprehensive disclosure regime. Collectively, these laws are part of a growing global push to standardize climate transparency and align corporate practices with climate goals. Think of them as California’s version of Europe’s Corporate Sustainability Reporting Directive (CSRD).

What does the law require?

1. Emissions disclosures (SB 253):
Starting in 2026, companies with over $1 billion in annual revenue that operate in California must report their:

• Scope 1 emissions – Direct emissions from owned or controlled sources (e.g., facilities, vehicles).

• Scope 2 emissions – Indirect emissions from purchased electricity or energy.

• Scope 3 emissions – All other indirect emissions across the value chain (e.g., suppliers, product use), which must be reported starting in 2027.

Scope 1 and 2 disclosures must be independently verified, and Scope 3 may eventually require assurance—CARB (California Air Resources Board) will make that determination by 2027, with a possible enforcement start in 2030.

All disclosures will be submitted to CARB or a new digital platform, and they will be publicly accessible.

2. Climate risk reporting (SB 261):
Companies with over $500 million in annual revenue must also publish a climate-related financial risk report, aligned with the Task Force on Climate-related Financial Disclosures (TCFD). The first report is due by January 1, 2026, and must be updated every two years. These reports must be posted on the company’s website.

Who is affected?

If you're a public or private U.S. company doing business in California, and you meet the revenue thresholds, you’re in scope. Note: “doing business” is broadly defined and could capture more companies than expected.

What about enforcement?

CARB has the authority to impose civil penalties:

• Up to $500,000 for emissions disclosure violations

• Up to $50,000 for noncompliance with the climate risk reporting requirements

There is a safe harbor for Scope 3 disclosures—companies won’t be penalized for errors if they make a reasonable, good-faith effort. Additionally, CARB has signaled it won’t penalize companies for incomplete reports in the first year.

Bottom line:

California is not just following global climate disclosure trends—it’s helping lead them. For ESG leaders, this means aligning internal data systems, reporting processes, and risk frameworks now, before the first reporting deadlines hit. The law is designed to bring consistency, transparency, and comparability to the climate data investors and regulators are increasingly demanding.