CA Senate Bill 253: Scopes, Timeline, and Penalties

California Senate Bill 253, the Climate Corporate Data Accountability Act, sets out emissions reporting requirements for any business with more than $1 billion in annual revenue that does business in California. Covered companies must publicly disclose greenhouse gas emissions across all three scopes, with the first Scope 1 and Scope 2 reports due in 2026 and Scope 3 reports beginning in 2027. The law is codified at Health and Safety Code Section 38532, and the California Air Resources Board (CARB) is finalizing the implementing regulations.¹

Which Companies Have to Report

SB 253 reaches any partnership, corporation, limited liability company, or other business entity that meets two conditions: total annual revenues above $1 billion, and doing business in California.² The entity can be organized under the laws of any U.S. state, the District of Columbia, or an act of Congress. Headquarters and state of incorporation don’t matter.

The revenue figure is total revenue for the prior fiscal year, not California revenue. A parent that consolidates subsidiary revenues into its financial statements can cross the threshold through consolidation alone, even when the parent’s standalone revenue is lower.

“Doing business in California” tracks the California Franchise Tax Board’s tax standard. A company qualifies if it engages in any transaction for financial gain in the state, is organized or commercially headquartered there, or exceeds annually adjusted thresholds for California sales, property, or payroll. Those dollar thresholds change each year, so check the Franchise Tax Board’s current figures. A company based in New York or Dallas can be pulled in through California sales or California-based employees alone.

What You Have to Report: The Three Scopes

Covered entities must report greenhouse gas emissions in three categories defined by the Greenhouse Gas Protocol, which the statute names as the reporting framework.²

Scope 1 covers direct emissions from sources the company owns or controls: fuel burned in a company-owned fleet, on-site manufacturing, natural gas heating at company facilities.

Scope 2 covers emissions from purchased energy. The emissions physically occur at the power plant, but they’re counted against the company that consumes the electricity, steam, heating, or cooling.

Scope 3 covers everything else in the value chain, upstream and downstream: raw material extraction, employee commuting, business travel, transportation of goods, and the use and disposal of products the company sells. For most large companies, Scope 3 is the largest share of total emissions and the hardest to measure.

Reporting Timeline

The rollout is phased, and each year’s report covers the prior fiscal year’s emissions. Data collected during 2025 forms the basis of the first filing.

2026: First disclosure of Scope 1 and Scope 2 emissions (fiscal year 2025 data). Limited assurance from an independent third-party auditor is required.²
2027: Scope 3 reporting begins on a schedule CARB will specify. No assurance engagement is required for Scope 3 at this stage.²
2030: Scope 1 and Scope 2 assurance rises from limited to reasonable assurance. Scope 3 begins requiring limited assurance.²

CARB’s implementing regulations will set the exact filing date within each year. Reports go to CARB or to an emissions reporting organization CARB contracts with, and they become publicly available.

Third-Party Assurance

Every reporting entity must retain an independent third-party assurance provider to verify its disclosures.² The provider’s complete report, naming the provider, is submitted with the company’s disclosure.

The two assurance levels are different in kind. Limited assurance, required in 2026 for Scope 1 and 2, resembles a financial review: the auditor checks for plausibility without deep testing. Reasonable assurance, required from 2030 for Scope 1 and 2, is closer to a full financial audit, with more extensive verification of underlying data. Moving from limited to reasonable assurance will push companies to strengthen their internal tracking systems well before 2030.

Safe Harbor for Scope 3 Reporting

The statute builds in two protections for Scope 3, reflecting how difficult value-chain measurement actually is.

A company cannot be penalized for Scope 3 misstatements as long as the figures were prepared with a reasonable basis and disclosed in good faith. This safe harbor is ongoing, not time-limited. Separately, between 2027 and 2030, Scope 3 penalties can only be imposed for outright failure to file. During those years, a good-faith filing with imprecise estimates will not draw a fine.²

Scope 3 data often depends on estimates, industry averages, and supplier-reported figures. The safe harbor takes penalty risk off the table while companies build better collection systems.

Penalties for Non-Compliance

CARB can impose administrative penalties of up to $500,000 per reporting year for failure to file, late filing, inaccurate data, or failing to obtain the required third-party assurance.² Penalties are set through administrative hearings, not litigation.

CARB has discretion within the $500,000 cap when setting a specific fine. A company that tried to comply and missed a deadline is likely to face a different outcome than one that ignored the law. For a business with more than $1 billion in revenue, the reputational exposure of a public non-compliance finding may weigh more than the dollar penalty.

Consolidated Reporting for Parents and Subsidiaries

SB 219, a 2024 amendment to SB 253, added a parent-level consolidation option. A subsidiary that would otherwise file separately can satisfy its obligation if its emissions are included in a consolidated report filed by its parent.³ CARB has been taking input on how companies will identify parent-subsidiary relationships for this purpose.

Consolidation streamlines filing but doesn’t eliminate the underlying obligation. Each subsidiary included in a parent report still counts as a separate reporting entity for fee purposes. Companies with complicated corporate structures should map which entities cross the $1 billion threshold through consolidation before deciding how to file.

Where CARB’s Rulemaking Stands

SB 219 extended CARB’s deadline for proposed regulations from January 1, 2025, to July 1, 2025. CARB posted proposed regulation text and a staff report in December 2025, with a public hearing to follow.¹ Still being finalized: exact filing formats, treatment of affiliated entities, and the platform companies will use to submit disclosures. Companies waiting for total clarity before starting data collection are running short on time.

How This Differs From the SEC Climate Rule

SB 253 is not a substitute for or a duplicate of the SEC’s climate disclosure rule. The SEC voted in March 2025 to stop defending its rule in court, and it’s shelved for now. Even if it returns, the SEC rule applied only to publicly traded SEC registrants and dropped Scope 3 from its final version. SB 253 applies to any qualifying business entity, public or private,² and requires Scope 3. There is no mechanism to satisfy the California filing with an SEC filing; the two frameworks would run in parallel if the federal rule is ever revived.

1
California Air Resources Board. California Corporate Greenhouse Gas Reporting and Climate Related Financial Risk Disclosure Programs
2
California Legislative Information. California Code HSC 38532 – Climate Corporate Data Accountability Act
3
California Air Resources Board. SB 253/261/219 Public Workshop – Regulation Development and Additional Guidance