On May 29, 2025, the California Air Resources Board (CARB) held its first public workshop to kick off rulemaking for the state’s landmark climate disclosure laws: SB 253 (Climate Corporate Data Accountability Act), SB 261 (Climate-Related Financial Risk Act), and the implementation update under SB 219.

Here’s a concise overview of what your ESG team needs to know — and how you can prepare now to stay ahead.

Why the Workshop Mattered

CARB’s session marked the official start of its regulatory development process. It clarified legal obligations, previewed timelines, and addressed major implementation questions raised by stakeholders. The session also served as a temperature check — gathering early reactions and concerns from companies across the state and beyond.

A Quick Refresher on SB 253 & SB 261

• SB 253 applies to U.S. companies with over $1 billion in annual revenue that do business in California. These firms must begin publicly disclosing Scope 1 and 2 GHG emissions in 2026. Scope 3 emissions reporting follows in 2027, using 2026 data.

• SB 261 affects companies with over $500 million in annual revenue doing business in California. It requires a biennial climate-related financial risk report, aligned with the TCFD framework, with the first report due by January 1, 2026.

• SB 219 did not change these reporting deadlines but revised CARB’s internal rulemaking schedule.

Key Takeaways from the Rulemaking Timeline

• Deadlines haven’t moved. The statutory reporting dates for SB 253 and SB 261 are still in effect.

• Draft rules for SB 253 are expected by late 2025, with final regulations adopted in 2026.

• For SB 261, CARB may issue guidance instead of full regulations, depending on stakeholder input.

Enforcement Will Prioritize "Good Faith"

CARB has indicated it will not penalize companies for noncompliance in the first year of SB 253 reporting as long as they show a good faith effort. This approach encourages companies to begin the process early, even if all systems and data aren’t perfect yet.

Implementation Questions Still in Play

Several areas remain under discussion, including:

• Who qualifies as "doing business" in California? CARB is leaning on California Tax Code Section 23101, but nuances are still being debated.

• Revenue thresholds and subsidiaries: CARB suggests using “gross receipts” as defined in Section 25120(f)(2), but questions remain about revenue attribution across corporate structures.

• Corporate control and ownership: A 50% ownership threshold is being considered (mirroring California’s cap-and-trade model) to determine which entities need to report.

• Scope 3 challenges: CARB acknowledged the complexity of Scope 3 disclosures and may issue future guidance to help companies prioritize material categories and manage data uncertainty.

Public Engagement Will Continue

The workshop drew over 3,000 participants — a strong sign that companies are eager to understand their responsibilities. More engagement sessions are on the way, and companies are encouraged to provide feedback and stay tuned via CARB’s SB 253 & SB 261 implementation hub.

What ESG Teams Should Do Now

If your organization falls under SB 253 or SB 261, it’s time to lay the groundwork. Here’s how:

• Centralize your emissions data and begin mapping Scope 1, 2, and 3 categories.

• Use ESG reporting software, like LoneReport, to organize disclosures aligned with TCFD and GHG Protocol. This ensures traceability, flexibility, and audit-readiness across frameworks.

• Start stakeholder conversations (finance, legal, procurement, operations) to assign roles, gather input, and identify data owners.

• Engage in CARB’s process to help shape regulations and stay ahead of changes.

California’s SB 253 and SB 261 are moving forward — and companies have a real opportunity to lead with credible, transparent climate data. Preparing early with structured systems and stakeholder alignment will help your team stay compliant, reduce risk, and position your organization for long-term sustainability success.