California’s SB 253 & 261
What California’s Climate Laws Mean for Business
Introduction
California has passed two landmark climate disclosure laws: SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act). Together, they create the most ambitious state-level reporting requirements in the U.S.
If your company does business in California and meets the revenue thresholds, these laws will directly affect your reporting obligations.
SB 253: Climate Corporate Data Accountability Act
Who it affects:
U.S. companies doing business in California with over $1B in annual revenue
What it requires:
Annual disclosure of greenhouse gas (GHG) emissions, verified by a third party
Covers Scope 1, Scope 2, and Scope 3 emissions (direct, indirect from energy, and full value chain)
Reports will be made public through a digital platform managed by the California Air Resources Board (CARB)
Why it matters:
Scope 3 reporting is complex and requires coordination with suppliers, vendors, and customers
Data must be accurate, consistent, and auditable—late or poor-quality disclosure risks reputational and regulatory consequences
SB 261: Climate-Related Financial Risk Act
Who it affects:
U.S. companies doing business in California with over $500M in annual revenue
What it requires:
Biennial disclosure of climate-related financial risks and strategies to address them
Must follow the TCFD (Task Force on Climate-related Financial Disclosures) or IFRS S2 framework
Reports must cover governance, strategy, risk management, and metrics/targets
Why it matters:
Goes beyond emissions to focus on financial risk and resilience
Requires scenario analysis, board-level governance, and cross-functional coordination
Weak or rushed disclosures may undermine investor confidence and invite regulatory attention
Real-World Impact
For affected companies, these laws mean:
New compliance costs: From emissions accounting to scenario analysis and assurance
Cross-functional involvement: Finance, sustainability, legal, operations, and supply chain all play a role
Investor and customer expectations: California is setting a precedent likely to influence other states and markets
What Companies Should Do Now
Assess applicability: Confirm whether your revenue and California business activities trigger these laws
Map requirements: Emissions reporting (SB 253) and financial risk reporting (SB 261) have different—but overlapping—data needs
Engage leadership: These disclosures require board and C-suite involvement
Start early: Especially for Scope 3 emissions and scenario planning, which take time to execute well
Actionable Summary
SB 253 = Annual emissions reporting (Scopes 1, 2, 3) for companies >$1B revenue
SB 261 = Biennial climate financial risk reporting for companies >$500M revenue
Both = High visibility, significant effort, and need for credible, cross-functional reporting
The takeaway: Companies that start now can turn compliance into a chance to strengthen governance, build investor confidence, and demonstrate leadership on climate.
