What to know about California’s looming new disclosure deadlines

A little more than three months remain before thousands of companies will need to submit their first disclosure report under two new California laws. Though some questions remain about the process, others were addressed in an update released by the state last week. Here’s what you need to know.

Remind me — what’s in these acts?

In short: Multiple disclosure requirements that — in the U.S. at least — are unprecedented.

Starting next year, U.S. companies that do business in California and have $1 billion or more in annual revenue will have to report Scope 1 and 2 greenhouse gas emissions. Scope 3 will need to be added in 2027. That’s according to the Climate Corporate Data Accountability Act, or SB 253.

A separate bill — Climate-Related Financial Risk Act, SB 261 — mandates disclosure of climate-related financial risks and the steps being taking to mitigate them. The first reporting, based on 2025 data, is due January 1, 2026, with updates required bi-annually. In other words: Your company has around 16 weeks to finalize it’s SB 261 filing. 

SB 261 applies to companies with over $500 million in annual revenue, but even at that level the act is expected to apply to more than 5,000 companies. 

Wait, weren’t these bills supposed to be delayed?

Yes, but no.

A court challenge to the laws was filed by the U.S. Chamber of Commerce, an organization that seems to like nothing more than shooting down climate legislation. The chamber argued that by mandating speech, the acts violate the First Amendment. Not so, said a district court last month: The acts concern commercial speech that of interest to consumers and others.

There was also talk that the state might delay implementation to give companies more time to prepare. But in an update on SB 261 issued last week, the California Air Resources Board (CARB), showing bureaucratic disregard for holiday festivities, reiterated that risk disclosures are due on New Year’s Day, 2026. Emissions reports under SB 253 will follow later in the year, at a date not yet specified.

That said, theere’s still a chance that the deadlines could shift: The Chamber of Commerce has appealed the district court’s decision; a hearing is set for next week.

What else did the board say in its update?

With the deadline looming, the board is filling in practical details for companies that are required to file. On December 1, 2025, the board will make available a public docket where companies can begin to post links to their risk reports. Per the update:

• Reports can be based on several frameworks, including the widely used IFRS S2 from the International Sustainability Standards Board.
• Reports can be consolidated at the level of parent companies; subsidiaries need not file as long as their parent company does.
• Insurance companies are exempt.

Details of what constitutes minimum disclosure requirements for information on governance, strategy, risk management and risks and targets were also included. 

Carbon accounting is one area where that clarity will be welcomed, said Barnaby Lynch, a climate strategist at the sustainability platform Watershed. Until the update, it was unclear whether companies would have to include detailed emissions metrics in their SB 261 report, potentially duplicating the effort of complying with SB 253. Instead, noted Lynch, the board said: “We would like to understand your approach. It can be qualitative. You do not need to include quantitative emissions, at least in the initial reporting period.”

What happens next?

Well, you probably want to get to work. The good news is that carbon accounting providers, including Watershed and Persefoni, are ready to help customers prepare filings. Though many of them target larger companies, plenty of others work with small and medium-sized businesses. Searching for “SB 261” or “SB 253” on LinkedIn will surface pitches from providers looking for your business.