California, August 26, 2025
News Summary
California is moving forward with significant corporate climate disclosure regulations as the California Air Resources Board (CARB) prepares for proposed rulemaking. Set for October 14, 2023, these regulations follow the enactment of stringent laws requiring large companies to disclose greenhouse gas emissions and climate risks. With an expected impact on over 6,000 firms, CARB anticipates a one-time implementation cost of $20.7 million. These initiatives reflect California’s commitment to climate action and corporate transparency, with discussions continuing on the proposed regulations until December 2023.
California is set to take significant strides in regulating corporate climate disclosure as the California Air Resources Board (CARB) prepares to issue a notice of proposed rulemaking on October 14, 2023. This development follows the recent enactment of two pivotal laws aimed at enhancing climate accountability among large companies, which were signed by Governor Gavin Newsom in 2023.
The two laws, SB 253 and SB 261, establish a framework for reporting greenhouse gas emissions and assessing climate-related financial risks. SB 253 requires firms with annual revenues exceeding $1 billion to disclose their Scope 1 and Scope 2 emissions, and will eventually expand to include Scope 3 disclosures. Meanwhile, SB 261 mandates that companies with revenues of at least $500 million produce biennial reports on climate-related risks.
Initially anticipated for completion by July 1, CARB has now scheduled its board consideration of the regulations for December 11-12, 2023, following a 45-day public comment period. This change reflects a broader effort by CARB to gather stakeholder input and refine regulations.
Impact on Businesses
CARB estimates that approximately 4,160 firms will be affected by SB 261, while around 2,596 companies will need to comply with the emission reporting requirements laid out in SB 253. The agency plans to validate the list of companies covered by these laws to ensure accurate compliance.
Implementing these regulations is projected to incur a one-time cost of $20.7 million, which will be temporarily financed through the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. In addition, there will be ongoing costs estimated at $13.9 million per year. Companies under SB 253 will face annual fees of $3,106, while those under SB 261 will pay $1,403 annually. Corporations exceeding $1 billion in revenue will be liable for both fee structures.
Some entities, including non-profits, businesses exclusively using telework, government entities, and certain wholesale electricity companies, will be exempt from these laws.
Compliance and Enforcement
To ease the transition into compliance, CARB has indicated that it will not impose penalties for incomplete data during the first year, provided that companies demonstrate a good faith effort to collect relevant emissions data. This approach reflects CARB’s commitment to supporting companies while ensuring accurate reporting in the long run.
The laws have faced legal challenges, but a recent ruling from a federal judge upheld their validity, allowing CARB to proceed. Following CARB’s first public workshop in May, discussions indicated that the original reporting deadlines would remain unaffected.
Future Considerations
Feedback is currently being collected through public workshops, which will continue until September 11, 2023. Additionally, CARB has released a FAQ document to assist companies in understanding compliance obligations. As political landscapes evolve, particularly with anticipated leadership shifts in 2025, there are concerns about how climate-focused investment, particularly Environmental, Social, and Governance (ESG) considerations, could be impacted.
Key Takeaways
| Law | Requirements | Companies Affected | Cost Estimates |
|---|---|---|---|
| SB 253 | Report Scope 1 and Scope 2 emissions | 2,596 firms | $3,106 annual fee |
| SB 261 | Biennial climate-related risk reports | 4,160 firms | $1,403 annual fee |
Conclusion
These regulations demonstrate California’s commitment to climate action and corporate accountability, a trend that could lead the way for other states seeking to implement similar measures.
FAQ
What are the key regulations set to be proposed by CARB?
The California Air Resources Board will propose climate disclosure regulations requiring large companies to report emissions and climate-related risks under SB 253 and SB 261.
Who will be affected by these regulations?
Approximately 4,160 firms will need to prepare climate-related risk reports under SB 261, while about 2,596 firms will be required to report emissions under SB 253.
What are the reporting deadlines for these laws?
The proposed reporting deadlines are intended to remain in place, with consideration occurring on December 11-12, 2023, and implementation expected around 2026.
Will there be penalties for non-compliance in the first year?
CARB will not impose penalties for incomplete data during the first year as long as companies show a good faith effort to collect the required emissions data.
Deeper Dive: News & Info About This Topic
- ESG Dive: CARB to propose California climate risk disclosure rules
- Wolters Kluwer: California Climate Disclosure Laws
- ESG Today: California releases FAQ on climate reporting
- Mayer Brown: California’s Climate Disclosure Laws Updates
- Google Search: Climate Change Disclosure Laws
- Wikipedia: Environmental, Social and Governance (ESG)
Author: STAFF HERE MISSION VIEJO WRITER
MISSION VIEJO STAFF WRITER The MISSION VIEJO STAFF WRITER represents the experienced team at HEREMissionViejo.com, your go-to source for actionable local news and information in Mission Viejo, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Oso Fit 5K Fun Run and Community Health Fair, Walk Against Drugs & Community Fair, and National Night Out. Our coverage extends to key organizations like the Mission Viejo Chamber of Commerce and Providence Mission Hospital Mission Viejo, plus leading businesses in retail and education that power the local economy such as The Shops at Mission Viejo, Capistrano Unified School District, and Amazon Delivery Station. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
