The California Air Resources Board (CARB) has voted to approve the draft implementing regulations for SB 253 and SB 261, marking a significant step forward in California’s mandatory corporate climate disclosure framework. While the action does not yet constitute final adoption, the regulatory architecture is now largely settled — and companies should assume the core compliance structure is effectively in place.

By way of background, SB 253 establishes a mandatory greenhouse gas (GHG) emissions reporting regime for large companies “doing business in California.” It requires public disclosure of Scope 1 emissions (direct emissions from owned or controlled operations) and Scope 2 emissions (indirect emissions from purchased electricity, steam, heating, or cooling), with Scope 3 emissions (value chain emissions) to follow. SB 261, by contrast, requires covered companies to publish disclosures describing their climate-related financial risks and the measures they are taking to manage those risks.

The regulation approved this week largely mirrors the version released in December. For companies that have been tracking CARB’s November 2025 workshop and subsequent proposal, there were no major structural surprises. The rule formalizes key definitions — including “doing business in California,” “revenue,” “parent,” and “subsidiary.” These definitions are critical for multinational or multi-entity organizations because they determine both applicability and whether reporting must occur at the consolidated group level.

One of the most important confirmations is timing. CARB has set August 10, 2026 as the deadline for the first SB 253 disclosures covering Scope 1 and Scope 2 emissions. The agency considered and rejected a rolling deadline, opting instead for a fixed reporting date. For ESG and finance leaders, this removes ambiguity: data systems, internal controls, and governance processes must be operational in advance of that deadline. CARB also confirmed that further rulemaking later this year will address Scope 3 reporting, assurance requirements, and reporting timelines for 2027 and beyond — signaling that the regulatory burden will expand.

The regulation narrows the immediate scope of coverage in certain respects. Insurance companies, nonprofit organizations, government entities, and companies whose only California activity consists of payroll or employee compensation are carved out under the current draft. However, the exclusion of insurance companies prompted significant debate at the hearing. SB 253 does not explicitly exempt insurers in the statutory text, and the bill’s sponsor publicly questioned whether CARB’s proposed exclusion aligns with legislative intent. The Board ultimately directed staff to coordinate with the California Department of Insurance (CDI) to assess whether CDI reporting requirements are equivalent. If not, CARB may revisit the issue through additional rulemaking. As a result, insurers should treat the exemption as provisional rather than permanent.

The regulation also establishes a fee structure, with CARB estimating annual fees between approximately $2,000 and $7,000 per in-scope entity, depending on the reporting program. While modest compared to the broader costs of emissions inventory development and assurance, the fees reinforce that this is an ongoing compliance regime rather than a one-time disclosure exercise.

Importantly, CARB’s action does not alter the legal status of SB 261. Enforcement of the climate-related financial risk disclosure mandate remains enjoined by the Ninth Circuit Court of Appeals. That injunction does not apply to SB 253, meaning greenhouse gas emissions reporting remains fully on track. CARB noted that more than 120 climate-related financial risk reports have been voluntarily submitted to its public SB 261 docket, though participation overall remains limited.

Although the Board vote represents a major milestone, final procedural steps remain. If CARB determines that conforming modifications are necessary, revised language will be released for additional public comment. If no further changes are deemed necessary, staff may proceed to finalize the regulation substantially as released in December. In parallel, CARB reiterated that its enforcement guidance for the first reporting year remains in effect and that the agency intends to prioritize stakeholder engagement and good-faith compliance support.

From an executive perspective, the message is clear. California’s corporate climate disclosure regime has moved decisively into implementation mode. Companies subject to SB 253 should now treat the August 2026 reporting deadline as firm and begin aligning emissions accounting methodologies, internal controls, audit readiness, and board oversight accordingly. Even with SB 261 temporarily paused, climate risk governance frameworks remain strategically relevant given litigation uncertainty and the broader global convergence around climate-related financial disclosure standards.

California continues to set the pace for U.S. climate-related corporate regulation. For companies with California nexus, preparation should now shift from interpretation to execution.