What's Happening?
The California Air Resources Board (CARB) has released proposed regulatory text for the state's climate disclosure laws, Senate Bills 253 and 261. These laws require companies with significant revenue to report their emissions and climate-related financial
risks. SB 253 mandates emissions reporting from companies generating over $1 billion in revenue, with a deadline set for August 10, 2026. Meanwhile, SB 261 requires entities with over $500 million in revenue to disclose climate-related financial risks. However, enforcement of SB 261 has been temporarily halted by the U.S. Ninth Circuit Court of Appeals following legal challenges. CARB has announced it will not enforce the law against entities failing to report by the January 1, 2026 deadline. The proposed regulations align revenue definitions with California's tax code and exclude certain entities like nonprofits and government-owned businesses.
Why It's Important?
These regulations are significant as they aim to increase transparency and accountability among large corporations regarding their environmental impact. By mandating emissions and climate risk disclosures, California is setting a precedent that could influence national and international climate policy. The regulations could lead to increased operational costs for companies as they adapt to comply with the new requirements. However, they also present an opportunity for businesses to demonstrate leadership in sustainability. The legal challenges from business groups, including the U.S. Chamber of Commerce, highlight the tension between regulatory efforts to address climate change and concerns over economic and free speech implications.
What's Next?
A public hearing is scheduled for February 26, 2026, to consider the final approval of the proposed regulations, with a possibility of continuation on February 27. The public comment period will open on December 26, 2025, and close on February 9, 2026. Stakeholders, including businesses and environmental groups, are expected to participate actively in the public review process. The outcome of ongoing legal challenges could also impact the implementation of these regulations. Companies affected by the regulations may need to prepare for compliance while monitoring the legal landscape for any changes.
