On Monday, December 16, the California Air Resources Board (CARB) issued an information solicitation inviting feedback on the implementation of SB 253 and SB 261. Comments are due by February 14, 2025. This information request arrives on the heels of a new CARB enforcement advisory focused on SB 253. 

SB 253, the Climate Corporate Data Accountability Act, requires U.S.-based entities with more than $1 billion in annual revenue doing business in California to annually report greenhouse gas emissions. SB 261, the Climate Related Financial Risk Act, requires U.S.-based entities with more than $500 million in annual revenue doing business in California to biennially report any climate-related financial risks they have identified and any measures they have adopted to reduce and adapt to those risks. For more details about these laws and their implementation timelines, please read our previous alert on 2024 amendments to the laws and our post on preparing for compliance.  We also published posts spotlighting SB 253 and SB 261 when the California legislature originally passed them.

In its solicitation, CARB posed a set of questions for stakeholders focusing on the following topics.

General Applicability, Standards, and Reporting Processes

• How CARB should determine applicability of the laws, including how “doing business in California” should be defined and whether particular types of businesses should be covered. 
• How CARB can best promote harmonization across jurisdictions, including how CARB can minimize duplication of efforts for entities that are required to report similar information under other programs.

SB 253

• Whether CARB should standardize areas of GHG emissions accounting in which the GHG Protocol allows for flexibility (i.e. boundary setting, apportionment among multiple ownerships).
• What options exist for third-party assurance for Scope 3 emissions and what standards should be used to define “limited assurance” and “reasonable level of assurance.”
• How already-occurring voluntary emissions reporting should inform CARB’s approach to implementing SB 253.

SB 261

• What other types of existing climate financial risk disclosures entities are already preparing, and whether current reporting is consistent with the Final Report of Recommendations of the Task Force on Climate-Related Financial Disclosures.

The full list of questions is available in the solicitation. While CARB is particularly interested in stakeholders’ responses to these questions, it welcomes additional feedback on the implementation of SB 253 and SB 261.

CARB Enforcement Advisory on GHG Emissions Reporting Law

Just prior to publishing the information request, on December 5, CARB issued an enforcement advisory stating that it plans to exercise “discretion” in enforcing SB 253 (the GHG emissions reporting requirement) during the first 2026 reporting cycle, recognizing that companies may need additional time to implement the data collection processes necessary to comply with the reporting requirements.

The advisory states that, for the first reports due in 2026, reporting entities may submit Scope 1 and 2 emissions data from the prior fiscal year that can be determined from information reporting entities “already possess” or are “already collecting” at the time the notice was issued. CARB states that it will “exercise enforcement discretion for the first report cycle, on the condition that entities demonstrate good faith efforts to comply” with the law. And for the first reporting cycle, CARB will not take enforcement action for “incomplete reporting against entities, as long as the companies make a good faith effort to retain all data relevant to emissions reporting for the entity’s prior fiscal year.” CARB notes that it plans to provide guidance for subsequent reporting cycles as part of its rulemaking process.

Together, these updates provide a clearer picture of where CARB currently stands with respect to implementation and planned enforcement of its signature climate disclosure laws. However, many implementation details remain to be settled and companies have a window to provide early feedback to the agency.   

Covington’s Carbon Management and Climate Mitigation practice has extensive experience and capabilities advising on climate mitigation strategies, regulatory frameworks, and agency engagement. Our global team is ready to assist clients as they engage with regulatory agencies and prepare to comply with climate reporting rules in California, the EU, and other jurisdictions.