California’s climate-transparency regime has now moved from legislative ambition to operational reality. On February 26, 2026, the California Air Resources Board approved an initial regulation to implement SB 253 and SB 261, setting fees, clarifying key definitions, and fixing August 10, 2026 as the first-year reporting deadline for SB 253. The rules target large companies “doing business in California”: generally, firms with more than $1 billion in annual revenue for emissions reporting under SB 253, and more than $500 million for climate-related financial-risk reporting under SB 261. CARB has also said the revenue threshold will be tied to gross receipts reported to the California Franchise Tax Board. (ww2.arb.ca.gov)
The most consequential question is not whether companies must disclose emissions, but how far disclosure should extend beyond their own facilities. California’s answer is expansive, though deliberately staged. For the first reporting year under SB 253, companies must disclose only Scope 1 and Scope 2 emissions: direct emissions from sources they own or control, and indirect emissions from purchased electricity, steam, heat, or cooling. Beginning in 2027, however, the law reaches Scope 3 emissions as well. Those are the notoriously difficult emissions embedded across the value chain, and the GHG Protocol describes Scope 3 accounting as a way for companies to assess emissions throughout that chain—often where the largest share of their footprint lies. (ww2.arb.ca.gov)
That expansion is more than technical. It reflects a deeper legal and moral premise: climate impact does not stop at the factory gate. A company may decarbonize its offices while still relying on carbon-intensive suppliers, logistics networks, or customers. California’s framework therefore couples emissions disclosure with financial-risk disclosure. Under SB 261, covered entities must report climate-related financial risks and the measures they have adopted to reduce or adapt to them, using the TCFD framework or an equivalent standard. Yet that part of the system remains in legal limbo. After a Ninth Circuit order, CARB said it would not enforce SB 261’s January 1, 2026 deadline; for now, reporting is voluntary, although CARB says more than 120 such reports have already been submitted publicly. (leginfo.legislature.ca.gov)
In effect, California is insisting that corporate credibility now requires radical legibility: not slogans, but boundaries; not vague ambition, but auditable evidence; not merely what a company emits directly, but what its entire business model makes possible. (ww2.arb.ca.gov)
