California has introduced legislation to cover carbon accounting and sustainability reporting for companies which meet the stated thresholds. For the first time, there is a legal obligation for eligible companies to disclose key carbon and sustainability data and reports in the USA. This includes full carbon accounting of Scope 1, 2 and 3 emissions and an assessment of climate-related risks and mitigation strategies.
SB 253 โ Climate Corporate Data Accountability Act
Why is the legislation in place?
This legislation has been introduced to ensure that large organizations are addressing and quantifying all applicable Scope 1, 2 and 3 carbon emissions. This requirement ensures that organizations identify and publicly disclose carbon impacts across the entire value chain and align with best-practice carbon and sustainability reporting requirements.
Who is required to report?
Organizations, both public and private, that are based or undertake business in California with an annual revenue of over $1 billion dollars are required to comply.
What are the timeframes for reporting?
Organizations are required to report on Scope 1 and 2 emissions from 1 January 2026. This expands to Scope 1, 2 and 3 emissions from the 1 January 2027.
Limited assurance is required for Scopes 1 and 2 data from 1 January 2026. From 1 January 2030 onwards, reasonable assurance will be required for Scope 1 and 2, with limited assurance being introduced for Scope 3 data.
Reporting Requirements
- Scope 1, 2 & 3 Emissions: Quantification of aย complete carbon footprint, inclusive of all applicable Scope 1, 2 and 3 categories (covering 100% of business operations and associated emissions).
- Assurance: Third-party assurance is required to ensure the reported emissions are credible and transparent, while aligning with international best-practice standards. Organizations can showcase suitable and recognized assurance by securing accreditation with ISO 14064.
- Publication: The participating organization is required to publish the Scope 1, 2 and 3 carbon footprint to a digital platform (to be provided by CARB). This will ensure the data is available for all relevant stakeholders to access.
SB 261 โ Climate-Related Financial Risk Act
Why is the legislation in place?
The legislation has been introduced to require large companies to publicly disclose associated climate-related financial risks and the measures being actioned to reduce and adapt to risks. The reporting requirements are in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) or any equivalent standard (e.g. IFRS S2) which comprehensively addresses governance, strategy, risk management, metrics and targets.
Who is required to report?
Organizations based, or undertaking business in California with a revenue of over $500 million, excluding insurance companies, must comply with SB 261. If a subsidiary of a larger group undertaking falls in-scope to the regulations, this can be amalgamated and reported at the group level.
What are the timeframes for reporting?
Organizations are required to publish the first SB 261 report to their company website by 1 January 2026, with a link to the report being logged on the California Air Resource Board (CARB) docket by the 1 July 2026. The report is required to be published biennially, every 2 years, thereafter.
Reporting Requirements
- Strategy & Governance: Understanding and reporting on key areas including board oversight, decision-making integration, climate resilience, scenario analysis and financial planning.
- Risk, Management & Metrics: Details relating to how climate-related risks are mitigated and establishing a plan for the short- to long-term future is required to be disclosed. Organizations must detail associated metrics and target disclosures to measure the progress being made.
- Publication: Organizations are required to upload the report on to company websites in an easy-to-access and non-paywall format in an area which allows all relevant stakeholders to access the data.
How NUS Can Help
NUS has a dedicated global Energy and Sustainability Services (ESS) division designed to support industrial and commercial organizations with all aspects of Scope 1, 2 and 3 carbon reporting and decarbonization strategies.
Our compliance experts ensure organizations fulfil legal reporting duties at the international, national and local levels.
For more information, download a sample and request our International Guide to Sustainability Compliance and Initiatives.
Key related services:
- Scope 1, 2 and 3 GHG Assessments
- Carbon Footprint Dashboard
- International / National Energy Compliance
- Decarbonization Strategies
Get in touch
To discuss what the newly enacted California carbon and reporting legislation means for your organization, contact NUS Consulting Group today.