California Climate Disclosure Laws Update: What CARB’s FAQ Means for SB 253 and SB 261 Compliance

Updated: October 17, 2025

The California Air Resources Board (CARB) continues to issue updated guidance for companies preparing to comply with the state’s climate disclosure laws under SB 253 and SB 261. This page will continue to be updated with information from the most recent FAQ documents.

In recent months, CARB has released two important new resources: a draft Climate-Related Financial Risk Report Checklist to guide companies’ first SB 261 filings due January 1, 2026, and a draft Scope 1 and 2 GHG Reporting Template to support early reporting under SB 253. Together, these documents mark a significant step toward operationalizing California’s corporate climate reporting framework and offer much-needed clarity for covered entities preparing for compliance in 2026.

The deadlines remain unchanged, and companies should use this guidance to finalize their compliance strategy well before January 1, 2026. 

A Brief History: Where Are We in California Climate Law Rulemaking?

The California Legislature passed SB 253 and SB 261 in 2023, creating the most expansive climate disclosure laws in the country. SB 219, passed in August 2024, aligned the two laws and gave CARB extra time to complete formal rulemaking. 

Need a refresher on SB 219? Check out our complete guide here ➔ 

Nearly a year after that, on May 29, 2025, CARB held its (long awaited) first public workshop, drawing over 3,000 participants. Senators Wiener and Stern opened the session by reaffirming that deadlines remain solid. CARB shared initial proposals and confirmed that disclosures will align with GHG Protocol, TCFD or ISSB frameworks. The full video is over 3 hours long and includes additional presentations with a comparative analysis of greenhouse gas accounting and reporting mechanisms.  

Additional interim FAQ documents released since then:

• July 9, 2025 – PDF link.
• August 21, 2025 – PDF link. Another 3-hour virtual workshop accompanied this release.
• September 2, 2025 – PDF link. Specific Climate Risk Reporting Checklist for SB 261.
• October 10, 2025 – PDF link. Specific Scope 1 and Scope 2 Emissions Draft Reporting Template for SB 253.

This guidance helps to clarify what companies need to do now to prepare for 2026 compliance.

Below, we outline the most important takeaways from the latest documents. 

What Does CARB’s Latest Draft Checklist Clarify About California’s SB 261?

Reporting Deadline and Process
Covered companies must prepare and publicly post their Climate-Related Financial Risk Report by January 1, 2026. CARB will open a public docket on December 1, 2025, where companies will post the link to their report. The docket will remain open through July 1, 2026, providing a centralized directory of all submitted reports.

Data Year Flexibility
CARB’s checklist confirms that companies may use the most recent or best-available data, whether on a calendar-year or fiscal-year basis. For many, this will mean using FY 2024 data (and in some cases, FY 2023).

Applicable Frameworks
Reports may follow any of the frameworks specified in statute:

• The Task Force on Climate-related Financial Disclosures (TCFD) recommendations (June 2017),
• The IFRS S2 Climate-Related Disclosures issued by the International Sustainability Standards Board, or
• A recognized framework issued by a regulated exchange or government entity.

Each company must include a comply-or-explain statement, identifying which framework was used, which recommendations were included or omitted, and why—plus any plans to expand disclosures in the future.

Minimum Disclosure Areas
The checklist outlines five core sections that every report must address:

1. Reporting Framework – Statement of the framework used and rationale.
2. Governance – Description of oversight structures for identifying and managing climate-related financial risks, including any board-level involvement.
3. Strategy – Discussion of climate-related risks and opportunities over the short, medium, and long term, their impacts on operations and financial planning, and the resilience of company strategy under future climate scenarios.
4. Risk Management – How the company identifies, assesses, and manages climate-related risks, and integrates them into overall risk processes.
5. Metrics and Targets – Disclosure of metrics and targets used to assess and manage material climate-related risks and opportunities.

Scenario Analysis
Quantitative scenario modeling is not required in the first reporting cycle. CARB accepts qualitative scenario-based assessments to describe how resilient a company’s strategy is to future climate impacts, with encouragement to expand this analysis over time.

GHG Emissions Data
While some frameworks reference Scope 1–3 emissions, CARB notes that emissions data are not required in the initial SB 261 report to avoid duplication with SB 253.

Exemptions
Businesses regulated by the California Department of Insurance or engaged primarily in the business of insurance in any state are excluded from SB 261 reporting requirements.

What exactly is “TCFD”? And what does it have to do with SB261? ➔ 

What Does CARB’s Latest Guidance Clarify About California’s SB 253?

Scope 1 and 2 Emissions Reporting
Under SB 253 (Climate Corporate Data Accountability Act), covered entities must disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions for the first time by June 30, 2026, using FY 2025 data. CARB has released a draft reporting template to streamline these disclosures, especially for companies reporting for the first time. Use of the template is voluntary for the 2026 cycle, but it provides the clearest view yet of how CARB expects emissions data to be organized and submitted.

Template Structure
The draft reporting template includes sections for:

• Organization Information
• Third-Party Verification
• Inventory Boundary
• Scope 1 and Scope 2 Disclosure
• Methodology
• De Minimis / Minor Sources
• California MRR Fields (if applicable)
• Emission Reductions (if applicable)

CARB notes that additional optional fields—such as base year emissions—are included to support comparability and transparency for future reporting years.

Organizational Boundary
The template allows companies to apply any of the GHG Protocol’s three boundary approaches – equity share, operational control, or financial control – provided that the method chosen is clearly disclosed and applied consistently. CARB is also seeking input on whether one boundary method should eventually be standardized for comparability.

Key New Template Features

• Intensity Metrics: Optional fields allow reporting of emissions intensity (e.g., per $ million revenue) to enable comparisons across industries.
• Industry Classification: Entities can classify emissions using NAICS 2-digit sector codes.
• Transparency in Methods: Companies must disclose the source and year of emission factors and global warming potential (GWP) values, and specify their calculation approach.
• Alignment with MRR: The template links to California’s Mandatory Reporting Regulation (MRR) facility IDs for data consistency.
• Emission Reduction Initiatives: Optional reporting fields capture renewable energy purchases, renewable gas contracts, or other verified emissions reduction activities.

Public Comment Period
CARB is accepting written feedback on the draft Scope 1 & 2 template and memo through October 27, 2025, via climatedisclosure@arb.ca.gov. Stakeholders are encouraged to review the structure and suggest refinements before final guidance is issued.

Any Other Key Clarifications About California’s SB 219?

• A “good-faith effort” = evidence that your company is:
  ✔ Following recognized methodologies (GHG Protocol, TCFD/ISSB).
  ✔ Obtaining third-party verification or assurance where required.
  ✔ Paying program fees and submitting by deadlines.
  ✔ Correcting data promptly if inaccuracies are discovered.

• Consolidated Reporting for Subsidiaries 
  CARB confirms that a parent company may submit one consolidated report that covers all of its subsidiaries. Covered subsidiaries do not need to file separately if they are fully included in the parent’s disclosure, though each entity must still pay its separate fee liability.

• Use of Existing TCFD or ISSB Reports 
  If a company already produces a TCFD- or ISSB-aligned report, that report may be used to satisfy SB 261. It must be publicly posted and linked in the CARB docket to qualify. 

• No Delay Due to Litigation
  Although a preliminary injunction hearing was held in May 2025, the lawsuit from the U.S. Chamber of Commerce has not delayed implementation. CARB is continuing with its compliance timeline, and the California Legislature has rejected any delay proposals. 

What Should Companies Do Next for California Compliance?

The latest FAQ provides a clear framework for how to prepare. Companies should: 

1. Confirm eligibility under SB 253 (over $1 billion in annual revenue) and SB 261 (over $500 million in annual revenue).
2. Compile most recently available data (FY 2024 or 2023) for climate-risk reporting for SB 261 (due Jan. 1, 2026).
3. Conduct a qualitative climate-risk assessment following TCFD or ISSB.
4. Plan for disclosure governance, including internal review and executive oversight.
5. Prepare to submit reports via the CARB public docket starting December 1, 2025.
6. Complete a GHG inventory using GHG Protocol for FY 2025 on Scope 1 and 2 emissions (due June 30, 2025).
7. Engage a verifier for limited assurance on Scope 1 and 2 emissions.

Final Thoughts on Meeting California Climate Disclosure Requirements in 2026

CARB’s latest releases, the Climate-Related Financial Risk Report Checklist for SB 261 and the Draft Scope 1 and 2 GHG Reporting Template for SB 253, confirm that California’s climate disclosure timeline is moving forward as planned. The deadlines remain firm, and the frameworks are clearly defined. These documents provide practical blueprints for compliance that clarifies what to disclose, how to structure reports, and which frameworks to use.

Companies that begin preparing now can develop credible, transparent reports that align with investor expectations and meet assurance requirements with confidence. Those that postpone action risk facing significant challenges as verification and data quality standards tighten.

At Good.Lab, we help companies benchmark readiness, align reporting with TCFD / ISSB frameworks, and ensure accurate GHG measurement and reporting to meet the requirements of SB 253 and SB 261. Now is the time to act, before 2026 approaches.

Let’s build a disclosure strategy that works. ➔