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Last month the California Air Resources Board (CARB) approved the adoption of its initial climate disclosure regulations. The board voted to adopt the California Greenhouse Gas Reporting and the Climate Financial Risk Disclosure Initial Regulation, establishing the compliance framework required under SB 253 and SB 261.
Both bills were signed into law by Governor Newsom (D) in 2023, however, ongoing legal battles over these regulations have created some uncertainty for California businesses on when and what emissions they will need to report.
SB 253 requires companies with over $1 billion in annual revenue that operate in California to report their greenhouse gas emissions, specifically Scope 1 and 2, by August 10, 2026. Scope 3 value chain emissions (which cover supply chains, business travel, employee commuting, procurement, waste and water usage) will be required to be reported in 2027.
SB 261 applies to companies with over $500 million and requires them to disclose climate-related financial risk reports every two years. Currently, compliance is voluntary as the U.S. Court of Appeals for the Ninth Circuit paused enforcement on November 18, 2025, to consider legal challenges.
The U.S. Chamber of Commerce and other business groups filed litigation challenging the enforcement of both laws; however, the court only granted an injunction on the enforcement of SB 261, likely due to its earlier reporting deadline of January 1, 2026. CARB has since opened a public docket for companies that want to voluntarily submit these reports. On January 9, the Ninth Circuit heard oral arguments on the constitutionality of both laws, focusing on whether the state can require companies to disclose climate-related emissions and risk data. Opponents argued that requiring companies to publish this information violates First Amendment rights against compelled commercial speech. The injunction for SB 261 will remain in effect until the court issues its ruling.
While California is the first state to implement this type of comprehensive emission reporting, Vermont and New York passed climate superfund laws in 2024 focused on placing financial responsibility on fossil fuel companies in the state. These state-level actions come as the EPA recently rescinded findings that greenhouse gas emissions are a threat to public health. The repealing of the legal basis for federal emissions regulations is likely to spur legal action on climate policy, and many states will watch for the outcome of these legal battles in California.
In New York, lawmakers currently have a bill moving through the Senate with language very similar to California’s disclosure requirements for Scope 1, 2, and 3 emissions (S 9072). The bill was passed to the Assembly in February, but no further action has been taken since. The New York legislature is expected to adjourn on June 4.