California continues to lead the way in corporate climate accountability across the United States with the previous passage of SB 253 and SB 261 (now Sections 38532 and 38533 of the Health and Safety Code). These regulations are set to reshape how large public and private companies report their GHG emissions and climate-related financial risks.  

SB 253 will impact approximately 5,300 companies and SB 261 will impact approximately 10,000 companies. However, these regulations will have cascading impacts on additional companies, including many middle market companies. 

On September 30, 2024, California announced that Governor Gavin Newsom signed SB 219, which amended portions of language included in SB 253 and 261.  

Full Scope Insights, a comprehensive ESG services provider, recognizes the significance of these laws and is prepared to assist companies in navigating the increasingly complex compliance landscape. We have provided an overview of key details as well as timing updates to California’s climate and GHG reporting laws below. You can review the full texts of SB 253 here and SB 261 here. 

Key Provisions of SB 253 

• SB 253 requires companies with annual revenue over $1 billion to publicly report on their emissions. In 2026, companies must begin submitting their annual emissions inventories. Companies will only be required to report their scope 1 and 2 emissions to the regulatory body initially, with scope 3 reporting beginning in 2027.  

• SB 253 includes phased-in third party assurance requirements which escalate over time. This verification process ensures that the reported data is accurate and meets the standards set by the regulatory body, The California Air Resources Board (CARB). Initially, only scope 1 and 2 emissions reporting will be subject to third party assurance at the limited assurance level. In 2030, the assurance level will be heightened to the reasonable assurance level for scope 1 and 2 emissions reporting. 

• In 2030, scope 3 emissions reporting will be subject to third party assurance at the limited assurance level. This will ensure that the scope 3 reporting is credible and backed by data while allowing companies time to make initial best efforts and fine tune their calculation methodology without any initial third-party audit requirements.  

• SB 253 allows for consolidated reporting at the parent company level, which reduces the reporting burden for companies with multiple subsidiaries.  

Key Provisions of SB 261 

• SB 261 complements SB 253 by focusing on the financial risks companies face due to climate change. 

• SB 261 requires companies with annual revenue over $500 million to prepare climate-related financial risk reports which outline the risks posed by climate change, along with measures they have implemented to mitigate those risks. Companies must post these public reports to their individual websites by January 1, 2026. 

• The first climate-related financial risk reports are due by January 1, 2026. After the initial submission, corporations must continue providing updated reports every two years. 

• SB 261 allows for consolidated reporting at the parent company level. Additionally, companies will make their climate-related financial risk report available to the public via their website rather than submitting it directly to CARB.  

Summary of SB 219 Amendments to SB 253 and SB 261  

SB 219:  

• Provides CARB an additional six months to complete the rulemaking process (from January 1, 2025, to July 1, 2025). 

• Amends the SB 253 provision, which required reporting entities make their annual emissions disclosures of scope 3 emissions six months after reporting scope 1 & 2 emissions and instead allows CARB to schedule those submissions how it sees fit. 

• Confirms that climate reporting may be consolidated at the parent company level to simplify compliance. 

• No longer requires companies to pay fees upon filing their disclosures but retains the annual fee payment requirement.  

Next Steps for In-Scope Companies: 

1. Establish an Emissions Reporting System: Companies must prepare to track, quantify, and report their emissions across all three scopes. 

2. Engage a Third-Party Assurer: Early engagement with assurance providers can streamline the verification process and ensure accurate emissions disclosures. 

3. Prepare for Climate Risk Reporting: Begin assessing financial risks related to climate change and develop strategies to mitigate these risks by conducting a climate scenario analysis. 

How Full Scope Insights Can Help: 

With SB 253 and SB 261 on the horizon, companies should act now to ensure compliance with these rigorous reporting and assurance requirements. Full Scope Insights offers expert guidance on: 

• GHG emissions accounting (scope 1, 2, and 3) 

• Climate risk assessments and financial risk reporting 

• Third-party assurance support for emissions verification 

Our team of specialists is ready to assist companies in building robust reporting frameworks that meet the new regulatory standards, ensuring compliance and fostering corporate transparency. 

About Full Scope Insights  

Full Scope Insights provides fit-for-purpose fractional CSO and Sustainability Program Management services. We specialize in developing and executing value-add sustainability strategies for public and private organizations in a cost-efficient manner, including scope 1, scope 2, and scope 3 GHG emissions accounting, fractional sustainability program management, and ESG data and reporting. Our fractional resources provide our clients with flexibility in the way they structure their human capital needs and ESG program sensibly.  

For more information on how Full Scope Insights can help your company meet the requirements of SB 253 and SB 261, contact us today.