California publishes guidance for firms on climate disclosure rules
California Air Resources Board says it’s committed to developing regulations by end of the year, but will use its discretion when it comes to enforcement.
California has published guidance for companies captured by its incoming climate disclosure rules.
Under SB 253, now referred to as Health and Safety Code § 38532, entities doing business in California with revenues greater than $1bn are required to disclose their emissions.
This includes providing limited assurance on Scope 1 and 2 disclosures by January 2026, with reporting on Scope 3 value chain entering into force in 2027.
It is estimated that over 5,000 public and private companies are directly affected by the law.
Its sister SB 261 (now Health and Safety Code § 38533) has a wider scope, requiring firms with revenues above $500m to produce biennial reports on their climate-related financial risks.
Reports are required to follow recognised frameworks such as those from the Taskforce on Climate-related Financial Disclosures or the International Sustainability Standards Board.
In the latest FAQ document, published on Wednesday, the California Air Resources Board (CARB) confirmed it plans to develop the regulations “by the end of the year”.
The board also promised to give companies a chance to offer feedback on the rules over the summer.
In response to queries about the additional burden of its requirements on companies already complying with climate disclosure laws elsewhere, it said it would “welcome feedback on how to streamline reporting in ways that are both practical and consistent with our statutory direction”.
CARB reiterated that it would “exercise its enforcement discretion” on the first set of reports, due by January 2026, in recognition that some firms “may need some lead time to implement new data collection processes to allow for fully complete Scope 1 and Scope 2 emissions reporting”.
It would be “reasonable” for debut reports to cover earlier financial years, it said.