Updates on Required California Climate Risks, and Greenhouse Gas Emissions Reporting with Assurance

The California Air Resources Board (CARB) conducted its second virtual public workshop on August 21, 2025, outlining proposed updates to the compliance requirements of SB 253 and SB 261. The CARB staff provided updates on the regulatory development timeline and considerations for assurance requirements. Other topics included updates on proposed definitions for determining covered entities, such as “revenue”, “doing business in California”, and “parent– subsidiaryparent–subsidiary” relationships. Additionally, CARB disclosed the anticipated filing fees per entity.   

Key Takeaways 

• Companies subject to SB 253 and SB 261 must report greenhouse gas emissions with limited assurance and climate-related financial risks, following specified guidelines and timelines, with flexibility for using various disclosure frameworks and addressing data limitations in initial reports. 
  
  
• Companies subject to SB 253 and SB 261 should stay informed on CARB developments, evaluate compliance readiness, and prepare for assurance requirements by engaging with stakeholders and potential assurance providers. 
  
  
• The California Air Resources Board (CARB) is updating compliance requirements for SB 253 and SB 261, focusing on definitions for revenue, doing business in California, and parent-subsidiary relationships, alongside anticipated filing fees for entities. 

Development and Implementation of Regulation  

CARB developed initial concepts for determining whether an entity is subject to SB 253 or SB 261. It focused on three major concepts: revenue, doing business in California, and parent–subsidiary relationships.”  

Revenue 

CARB has proposed an alternative definition not tied to the California Revenue and Taxation Code Section 25120 (f)(2).  Revenue would be defined as “the total global amount of money or sales a company receives from its business activities, such as selling products or providing services.” This definition does not deduct operating costs or other business expenses. 

Doing business in California 

CARB explored the initial definition based on California tax code section 23101 and planned to cross-reference with registries like the California Secretary of State and Franchise Tax Board.  

CARB emphasized that companies subject to SB 253 and SB 261 will be responsible for compliance, even if they are not initially included on CARB’s list of subject companies or part of its outreach efforts. 

Parent and Subsidiary Relationships

CARB seeks to identify subsidiaries through the evaluation of commercial databases, cross-referenced with the Secretary of State database and/or the Franchise Tax Board database. CARB also suggested a voluntary reporting process for parent-subsidiary relationships to avoid the need to report multiple entities for the same parent company. 

Exempted Entities 

CARB considered the following exemptions: 

• Non-profits 
• A company whose only business in California is the presence of teleworking employees 
• Government entities 
• A California Independent System Operator (CAISO) or a business entity whose only activity within California consists of wholesale electricity transactions that occur in interstate commerce 

Reporting Timelines 

CARB confirmed key dates that companies will need to meet:  

• SB 253: Scope 1 & 2 reports, which will include a limited assurance report due June 30, 2026; Scope 3 reports begin in 2027. CARB indicated that a draft reporting template for Scopes 1 and 2 will be released by September 2025. 
• SB 261: Biennial climate–related financial risk reports due January 1, 2026. 

Guidance on SB 261 Reporting: Climate Risks 

CARB advised the issuing of minimum requirements for the first cycle of reports required under SB 261. Key points are discussed below. 

• Location: Disclosures for SB 261 must be posted to company websites by January 1, 2026, and biennially afterwards, with links to the company’s public website posted to a CARB portal that will be open between December 1, 2025, and July 1, 2026. 
  
  
• Framework flexibility: Entities may report under the Taskforce of Climate Related Financial Disclosures (TCFD), International Financial Reporting Standards (IFRS) S2, or other regulated disclosure frameworks, but must explicitly identify the selected framework and explain its application. For companies building internal climate scenarios for the first time, qualitative information disclosure is permitted. but establishing metrics and targets is not included in the initial minimal reporting requirements from a TCFD perspective. 
  
  
• Disclose or explain: The statutory text of SB 261 provides that companies can identify and define gaps in their reporting, rather than provide disclosure aligning with all elements of disclosure frameworks. Consistent with this, CARB reiterated that companies may take a disclose or explain approach, but that will require that companies provide clear identification and explanation of reporting gaps. In addition, companies should provide a brief summary of the reasons why recommendations or disclosures have not been included, as well as a discussion of any plans for future disclosures.   

Guidance on SB 253 Reporting: GHG Emissions 

CARB emphasizes that the first reporting cycle SB 253 disclosures should focus on good-faith efforts, and disclosures should reflect the best available data. Key points are as follows. 

• Framework alignment: Companies are expected to calculate and disclose emissions consistent with the GHG protocol (Scopes 1, 2, and eventually 3), but CARB signaled flexibility in the first cycle to accommodate data gaps and methodological constraints – recognizing that companies may rely on estimates, third-party data, or phased methodologies at the outset. 
  
  
• Scopes 1 and 2 emissions: Entities must report direct and indirect emissions from owned or controlled operations, using recognized protocols and emissions factors. 
  
  
• Scope 3 emissions: Although disclosure of value-chain emissions is required by the 2027 reporting cycle, CARB acknowledged that these estimates may be incomplete at the outset. Companies should disclose the map categories, data owners, methodologies used, highlight data limitations, and provide a plan for improving accuracy over time. 
  
  
• Third-party assurance: For 2026 disclosures over 2025 data, it must include limited assurance for Scopes 1 and 2 emissions. While CARB indicated that it would not provide a list of accredited assurance providers, it cited potential standards for limited assurance, including those performed under the American Institute of CPAs (AICPA) standards. As established by CARB, limited assurance would likely include a sampling plan, review of the reporting entity’s data management system, limited data checks, limited conformance checks, a review of process documentation, a review of the log for any errors found and corrected by the reporting company, and a report and statement of the assurance provider’s conclusion 

Regulatory Roadmap  

From August 21 until September 11, 2025, CARB will continue to solicit public comments for feedback on concepts presented in the workshops. 

On October 14, 2025, CARB plans to issue a notice of proposed rulemaking, which begins a 45-day public comment period pursuant to California’s Administrative Procedures Act. 

CARB’s board will meet from December 11-12, 2025, to consider the adoption of the proposed rule. 

Implementation Fee proposed 

For SB 253 and SB 261 implementation fees, CARB staff suggested issuing a flat fee per regulated entity, dividing the annual program cost by the number of covered entities.  

Based on these estimates and the current estimation of the number of reporting entities and covered entities, an entity subject to SB 253 would be assessed an annual fee of $3,106, and an entity subject to SB 261 would be assessed an annual fee of $1,403. 

Next Steps 

For potentially in-scope companies, they should consider: 

• Monitor CARB Developments: Stay current on CARB’s rulemaking process, workshops, and guidance to anticipate compliance timeline and requirements under SB 253 and SB 261
  
  
• Assess Framework & Compliance Readiness: Build a clear understanding of the reporting framework (e.g., GHG protocol for SB 253, TCFD for SB 261) and evaluate the organization’s current data, processes, and controls to identify gaps.
  
  
• Plan for Assurance Requirements: Engage with internal stakeholders and potential assurance provider early. SB 253 requires limited assurance, beginning in 2026 (scope 1 and 2) and reasonable assurance starting in 2030. Developing documentation, internal controls, and evidence trails will streamline future assurance engagements.  

At EisnerAmper, we help organizations manage their internal and external stakeholders’ expectations and deliver tailored solutions and strategies based on the individual needs of the organization and compliance requirements. To learn how our team can help you navigate the updated California requirements, contact us below.