Why California Climate Disclosure Matters in 2026
California climate disclosure is becoming one of the most influential regulatory forces shaping ESG reporting in 2026. New legislation, shifting deadlines, and legal developments are pushing companies to rethink how they measure emissions, assess climate risks, and prepare for assurance. Even with ongoing court reviews, California’s climate rules are moving forward, and organizations that prepare early will be best positioned for compliance and long-term competitiveness.
From my work supporting ESG reporting teams, I’ve seen how early preparation protects companies from costly restatements and last-minute operational stress. Organization that significantly underestimated supplier data challenges were forced into an intensive rebuild of their Scope 3 dataset. California’s rules give companies far less room for reactive work, making proactive planning essential.
What Changed: SB 253 and SB 261 Updates Explained
Recent developments have reshaped the California climate disclosure timeline. The Ninth Circuit Court issued a temporary injunction delaying SB 261, the climate-risk reporting requirement, until early 2026. This delay is temporary, not a repeal. Companies should expect updated timelines once the court completes its review.
Meanwhile, SB 253 remains fully in effect, and the California Air Resources Board (CARB) continues to implement emissions reporting requirements. These changes confirm that California climate disclosure will continue advancing even as court reviews continue. The latest CARB workshop confirmed several key updates:
-
New deadline for Scope 1 and 2 reporting: August 10, 2026
-
Limited assurance for Scope 1 and Scope 2 emissions begins in 2026, with Scope 3 limited assurance phased in by 2030
-
Scope 3 emissions reporting required beginning 2027, after guidance is finalized
-
CARB will allow partial Scope 1 and 2 data in 2026 if companies show good-faith efforts and keep all relevant emissions records
Many companies are treating 2026 as an informal starting point for building year-over-year emissions comparability. Strengthening methodologies early can help avoid future recalculations or inconsistencies.
Climate policy advisors echo this urgency. According to PwC’s SB 253 / SB 261 guide, companies subject to the law will begin reporting Scope 1 and 2 emissions in 2026, with Scope 3 emissions required from 2027 onward, indicating a phased implementation approach rather than full immediate coverage.
How to Know If You Are a Covered Entity
According to CARB and legal experts, under SB 253 and SB 261 companies must pass two thresholds to qualify as in-scope: a global revenue test and a “doing business in California” test, though CARB has not yet finalized exact criteria for what counts as “doing business.” As of mid-2025, CARB proposed definitions, and issued a preliminary list of potentially covered entities, but the list is non-exhaustive and CARB itself cautions against relying exclusively on it for compliance decisions.
Four Actions Companies Must Take Now
Even with SB 261 delayed, California’s climate disclosure framework continues advancing. These four steps help companies stay ahead. Preparing for California climate disclosure means strengthening internal workflows, aligning teams, and ensuring leaders understand new expectations.
1. Reassess Your Covered-Entity Status
CARB’s updated definitions may change whether a company is covered. Re-evaluating now reduces future compliance risk.
2. Prepare Climate-Risk Reports for 2026
Although timelines shifted, companies still need climate-risk disclosures aligned with TCFD and ISSB guidance (source). Progress made today prevents time compression once final deadlines are released.
3. Build Audit-Ready Emissions Data Systems
Limited assurance becomes mandatory in 2027. CARB encourages companies to start early. This means strengthening documentation, controls, supplier engagement, boundary setting, emissions calculation methodologies.
4. Begin Scope 3 Work
Scope 3 is the most complex requirement. Accurate reporting requires supplier data collection, activity-based methods, value-chain mapping, use of GHG Protocol categories. Given the scale, organizations should begin work now.
The Three Pillars of California Disclosure Readiness
To help companies structure their preparation, the following framework summarizes the essential pillars of readiness:
Pillar 1: Technical Accuracy
Robust emissions methodologies aligned with GHG Protocol, TCFD, and ISSB.
Pillar 2: Operational Readiness
Strong internal controls, documented processes, and assurance pathways supporting multi-year compliance.
Pillar 3: Strategic Integration
Using emissions and climate-risk insights to inform procurement, budgeting, and long-term planning.
Companies using all three pillars build scalable, credible reporting systems.
Why Acting Now Matters for Compliance and Competitiveness
California’s climate disclosure laws are setting the pace for U.S. regulatory expectations. As CARB continues to refine the rules, many companies are already treating 2026 as a transition year to build stronger emissions systems and climate-risk reporting processes. Acting early gives organizations more time to resolve data gaps, engage suppliers, and strengthen internal governance before assurance expectations expand in later reporting cycles.
Preparing now helps companies:
-
Strengthen the accuracy and completeness of emissions data
-
Reduce long-term compliance costs
-
Build internal capacity for climate reporting
-
Improve transparency and credibility with stakeholders
-
Avoid last-minute operational bottlenecks as deadlines approach
Companies that begin readiness work today will be better positioned when California’s full disclosure requirements take effect and better prepared for the growing expectations of investors, customers, and regulators across the United States.
How the Sustainability Academy Helps You Prepare
More than 30,000 professionals worldwide have completed Sustainability Academy certifications. These CPD-certified programs help organizations prepare for SB 253 and SB 261 with confidence.
Online Certificate on Sustainability (ESG) Reporting
Covers:
- ESG reporting frameworks
- Climate-risk disclosure practices based on leading global standards
- Materiality assessments
- Data governance and reporting structures
- Stakeholder expectations in sustainability reporting
A strong foundation for California’s climate-risk requirements.
Online Certificate on Carbon Reduction Strategy
Covers:
- How to measure and manage Scope 1, Scope 2, and Scope 3 emissions
- Core carbon accounting principles
- How to prepare organizations for external verification
- Methods for engaging suppliers in emissions data collection
- Systems for gathering and organizing carbon-related information
Directly supports SB 253’s emissions disclosure requirements.
FAQs About California Climate Disclosure
What is the California climate disclosure law?
It refers to SB 253 and SB 261, which require companies to disclose emissions and climate-related financial risks.
When are Scope 1 and Scope 2 reports due?
By August 10, 2026, under SB 253.
Is Scope 3 reporting mandatory?
Yes, Scope 3 becomes required in 2027.
Prepare Now for California’s 2026-2027 Climate Reporting Deadlines
California’s climate rules are rapidly setting the direction for U.S. sustainability reporting. Organizations that strengthen their data systems today will stay ahead of expanding compliance expectations and build trust with investors and stakeholders.
The Sustainability Academy’s online certifications give professionals the tools they need to lead this transition. Both programs are designed to support professionals managing California climate disclosure obligations in 2026 and 2027.