California regulators have released a detailed Frequently Asked Questions (FAQ) document to assist companies in preparing for the state’s upcoming mandatory climate disclosure requirements under two climate-related laws: the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Disclosure Act (SB 261).
What the FAQ Covers
- SB 253 requires public and private companies with over $1 billion in annual revenue that do business in California to report their Scope 1 and 2 greenhouse gas emissions beginning in 2026, and Scope 3 emissions beginning in 2027.
- SB 261 applies to companies with over $500 million in annual revenue, requiring them to prepare biennial reports disclosing climate-related financial risks, with the first reports due in 2026.
- The FAQs provide clarity on:
- What it means to be “doing business” in California under these laws
- When and how the disclosure requirements will be phased in
- Third-party assurance timelines
- How and where companies must file their reports
Why It Matters
These laws represent a significant shift in U.S. climate-related disclosure policy, introducing mandatory reporting for large companies doing business in California. They are expected to impact thousands of companies across various sectors, including businesses headquartered outside the state.
According to ESG Today, the California Air Resources Board (CARB), the agency responsible for implementing SB 253, estimates that the law could affect over 5,300 companies. Meanwhile, over 10,000 companies are estimated to fall under the scope of SB 261, which is overseen by the California Department of Financial Protection and Innovation (DFPI).
Implications for Businesses
- Companies subject to these laws must begin preparing for data collection, verification, and disclosure processes related to emissions and climate risks.
- The Scope 3 requirement, which includes emissions across the value chain, is considered one of the more complex aspects of the law.
- While implementation is set to begin in 2026, the FAQ provides an opportunity for early planning and internal alignment with the upcoming rules.
How EcoActive ESG Can Support
At EcoActive ESG, we support organizations in adapting to evolving regulatory expectations. Our platform offers tools to:
- Calculate, organize, and manage emissions data across Scope 1, 2, and 3
- Prepare disclosure-ready documentation
- Track regulatory timelines and streamline reporting
We help businesses align with global and regional reporting mandates, giving you the tools to act early and stay compliant.
Access the official FAQ document released by the California Air Resources Board here
