Updates in California: New climate reporting obligations under SB 253 & SB 261 

“Transparency in climate reporting isn’t a burden—it’s the new language of business resilience.”

The moment of reckoning 

In the bright, dry air of a California summer, corporations are entering a new era of climate accountability. For years, sustainability managers and finance chiefs have heard rumblings about “the most ambitious corporate climate laws in the US.” Now, the deadlines are real. 

Meet Jamie, the sustainability director for a global manufacturer. In March, Jamie’s team was mapping out climate disclosures for customers and investors—then in July, the California Air Resources Board released landmark clarifications. Suddenly, Jamie’s inbox filled with leadership questions: 

• Will we be caught by these new rules? 
• What data do we need to be collecting, starting now? 
• Are there new deadlines? 
• What does “good faith” mean for Scope 3? 

This blog is for every Jamie out there, and for their colleagues across operations, legal, and finance. Here’s the practical, narrative roadmap to understanding—and thriving—under SB 253 and SB 261. 

Setting the stage: California’s twin climate titans 

California’s climate disclosure laws: A new global standard 

California has long stood at the vanguard of climate policy. SB 253 and SB 261 are the boldest yet—mandating greenhouse gas and climate risk transparency that goes further than any US state or nation to date. The state’s regulators want real information, not just promises. 

If your company is large, and it touches California’s economy, you could face strict GHG and climate risk reporting. 

SB 253 & SB 261 climate risk reporting at a glance:

Are you in the story? Understanding scope with the (short) questionnaire 

Don’t guess. Know for sure. 

Before you allocate resources, don’t just hope your company isn’t in scope – check! 

How to know if you’re in scope: 

You’re likely in scope for at least one of these laws if: 

• Your total annual revenue is over $1B (for SB 253), or over $500M (for SB 261) (1).
• AND you fit any of these “doing business” criteria: 
  • California sales >$735,019 or >25% of global sales 
  • California property >$73,502 or >25% of global property 
  • California payroll >$73,502 or >25% of global payroll 
  • Headquarters or commercial domicile in CA 
• Any transaction in CA for profit — even a one-off (2).
• SB 261: Total annual revenue is over $500M plus any above “doing business” criteria. 
• SB 755: At least $5M/year in California state contracts, with additional requirements at the $25M level—regardless of broader revenue or “doing business” status.

A turning point: The July 2025 CARB FAQ 

What’s new, what’s clear, what’s actionable?

This month, state regulators released fresh technical guidance, the much-anticipated FAQ that rewrote the narrative on several fronts: 

For Jamie and team, this spelled relief. They now knew what counts, and what was expected when stepping up to the regulator’s stage. 

Decision table: All paths and outcomes 

Disclaimer: This information is intended to provide general guidance on California’s ESG disclosure law, SB 253 and SB 261 and related compliance considerations. It does not cover all possible circumstances or exceptions—for example, specific exemptions may apply to certain insurance companies, publicly traded entities subject to SEC rules, or entities governed by other sector-specific regulations.

If you are a contractor:

• If you are a large contractor (revenue >$25M in state contracts under CA SB 755), you are required to annually report Scope 1, 2, and 3 GHG emissions and climate-related financial risks beginning one year after the SB 253 rules are finalised.
• If you are a significant contractor (revenue $5 million to $25 million in state contracts under CA SB 755), you are required to annually report Scope 1 and 2 GHG emissions — starting one year after the SB 253 rules are finalised.
• If you are a contractor with less than $5M in state contracts CA SB 755, you are not required to report under SB253 or SB261.

Given the complexity and evolving nature of these laws, for tailored advice and concrete support specific to your organization, we recommend consulting with Nexio Projects’ expert team. We offer comprehensive services to help you navigate the nuances and ensure full compliance with confidence. 

Your next chapter: Step-by-Step roadmap to compliance 

1. Find your place in the story 

• Complete the eligibility questionnaire to get a tailored answer 
• Document your “doing business” status and rationale 

2. Build the right data infrastructure 

• Assign owners for both GHG metrics and climate risk assessments 
• Start with utility, payroll, property, and sales ledgers—add supplier outreach for Scope 3 

3. GHG inventory for SB 253 emissions reporting

• Track and organize Scope 1 and 2 data for FY25; begin mapping your value chain for Scope 3 (FY26) 
• Schedule limited 3rd-party assurance (independent verification required) 

4. Corporate climate risk compliance for SB 261 

• Use TCFD methodology: governance, strategy, risk management, metrics/targets 
• Assess potential transition/physical risks; plan adaptation and mitigation 

5. Audit & review 

• Hold internal “dry runs” of reporting and assurance 
• Gap check all documents and methods 

6. Engage your stakeholders 

• Train staff: climate is now risk, not just CSR 
• Turn suppliers into data and decarbonization partners 

7. Make your debut: Submission & beyond 

• Use CARB’s portals for submissions 
• Track new guidance and FAQs to refine future disclosures 

Real-world scenarios: Who’s doing what with some concrete examples 

• The global manufacturer ($1.4B, 30% CA sales): 

Must file under SB 253 reporting requirements (all Scopes, annually) and SB 261 (biennial, TCFD-style) 

• The international wholesaler ($700M, significant CA payroll): 

Must file biennially for climate risk under SB 261 compliance

• The mid-size SaaS startup ($450M): 

Out of scope now, but likely to be asked for Scope 3 data by upstream partners 

Meeting the challenge: Key barriers & solutions 

Scope 3 anxiety: Untangling the chain 

• The challenge: 

Scope 3 emissions—those indirect emissions from suppliers and customers—are often the largest and most elusive part of a company’s carbon footprint. Many businesses feel overwhelmed: Where do we start? How do we get reliable data from dozens or hundreds of suppliers, each at a different stage in their own climate journey? 

• Solution pathway: 

Start mapping your entire value chain now. Identify key suppliers (hotspots), major categories of emissions, and where data is most critical. Open a dialogue—don’t just ask for numbers, but provide guidance, resources, and context to make data sharing possible and meaningful. 

How Nexio Projects helps: 

• We offer customized workshops for you and your suppliers, demystifying Scope 3 data collection and sharing proven engagement strategies. 
• Our team will help you develop a prioritized value chain map—so you know where to focus, fast. 
• We provide data collection templates, supplier onboarding packs, and hands-on support for outreach. 
• For advanced partners, we help align supplier programs with platforms like CDP Supply Chain and EcoVadis, creating synergy and reducing duplication for all involved. 
• Crucially, we can calculate scope 1, 2, and 3 emissions for your company taking the analytical and reporting burden off your team, while ensuring accuracy, compliance, and audit-readiness. 

Data quality worries: From patchwork to proof 

• The challenge: 

Disparate spreadsheets, inconsistent methodologies, missing data—these undermine the trustworthiness and credibility of disclosure. For companies facing third-party assurance, the stakes are even higher. 

• Solution pathway: 

Automate data gathering wherever possible, standardize calculation protocols across departments/divisions, and use globally trusted frameworks like ISO 14064 for internal audits. 

How Nexio Projects helps: 

• Our experts build out or optimize your greenhouse gas accounting system—integrating automation tools, robust audit trails, and best-practice controls. 
• We train your teams in standardized data management methodologies and help implement ISO 14064-aligned procedures from day one. 
• Before you go for external verification, we conduct a “pre-assurance” internal review—flagging gaps and risks so you enter audits with confidence (and minimize costly surprises). 

Cultural hurdles: From compliance to culture 

• The challenge: 

Climate reporting shouldn’t be a box-ticking exercise—it requires buy-in across leadership, finance, supply chain, and operations. Siloes, skepticism, or “reporting fatigue” can stall progress. 

• Solution pathway: 

Reframe climate reporting as a core part of business resilience and strategy: a way to demonstrate leadership, mitigate future risks, and unlock innovation. Empower internal ambassadors, set up cross-functional climate “squads,” and reward climate-forward performance at all levels. 

How Nexio Projects helps: 

• We facilitate C-level and cross-department workshops that translate climate goals into strategic business priorities, building understanding and commitment at every level. 
• Our culture-change programs embed climate risk and opportunity into existing management processes—so disclosure is a natural extension, not an add-on. 
• Through executive coaching and communications toolkits, we help sustainability leaders become effective storytellers and change agents within your organization. 

Climate risk regulations in California: Demystifying uncertainty 

• The challenge: 

Assessing climate-related financial risk can be just as daunting as Scope 3 quantification. Companies must not only analyze their direct exposure to climate hazards (physical risks such as wildfires, floods, or extreme heat) but also evaluate how policy changes, market dynamics, and shifting consumer preferences (transition risks) could impact future performance and resilience. Many organizations lack the analytical models or processes to build credible scenarios or quantify financial implications. 

• Solution pathway: 

Adopt the TCFD (Task Force on Climate-related Financial Disclosures) framework to structure your risk assessment. Break down risks into physical and transition categories, prioritize by materiality, and run scenario analyses to understand possible futures. Assess current controls and mitigation plans—and identify gaps. 

How Nexio Projects helps: 

• We facilitate climate risk workshops with cross-functional teams to ensure organization-wide understanding and buy-in. 
• Our experts conduct TCFD-aligned risk and opportunity assessments—evaluating both acute and chronic physical risks, as well as transition risks like regulatory changes and market shifts. 
• We deliver scenario analysis (including stress-testing your value chain under different climate futures) and provide recommendations for mitigation and adaptation. 
• We draft clear, credible climate risk disclosures for public reporting—bridging the gap between climate science and financial planning. 
• Nexio Projects can manage the entire climate risk reporting process for you, integrating risk mapping, stakeholder engagement, and documentation, so your organization is ready for SB 261 and global best practices with minimal disruption. 

Why partner with Nexio Projects? 

Whether you’re just starting or looking to set the industry benchmark, Nexio Projects delivers tools for your decarbonisation roadmap such as: 

• Complete GHG accounting and reporting: 

From initial scoping and detailed emissions inventory (Scopes 1, 2, and 3) to preparation of regulatory-grade reports, Nexio Projects guides your company through each step. We ensure that your GHG calculations align with the globally accepted GHG Protocol standards and prepare your emissions data for CARB submission and third-party assurance with accuracy and confidence. 

• Supplier engagement & scope 3 enablement: 

Handling Scope 3 emissions can be overwhelming without the right tools and approach. We provide customized frameworks and practical supplier engagement strategies that make collection, verification, and reporting of upstream and downstream emissions manageable, enhancing data quality and collaboration across your value chain. 

• Climate risk identification and disclosure: 

We help you design and execute a robust, TCFD-aligned climate risk assessment program per SB 261 requirements. This includes scenario planning, risk quantification (physical and transition risks), mitigation strategy development, and crafting clear, compliant financial risk disclosures that meet regulatory standards and satisfy stakeholder expectations. 

• Data quality and audit readiness: 

Accurate data is the foundation of credible reporting. Nexio Projects supports integration of data management systems, implementation of internal controls, and preparation for external verification. Our pre-assurance audits minimize risk and smooth the path to compliance certification. 

• Strategic advisory and training: 

Change management is vital for embedding climate disclosure into your company’s DNA. We offer workshops and executive training to build internal capacity, transforming compliance requirements into opportunity areas for resilience and innovation. 

By choosing Nexio Projects, you gain a trusted partner with deep regulatory understanding, technical expertise, and a pragmatic approach geared to delivering compliance and empowering your climate leadership. Learn more about our services and success stories on our website. Ready to overcome complexity and turn climate reporting into a competitive edge? 

Take our eligibility questionnaire to ensure the rest of your climate journey.

Take action now in corporate carbon footprint compliance and net zero compliance for California. Contact us for a free consultation today!

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Disclaimer: There are some exemptions for specific companies and a few specialized entity types, but for the vast majority of large businesses, the deciding factors are revenue and presence in California (in different shapes and forms).

References

1. California Legislative Information. (2023). SB-253 Climate Corporate Data Accountability Act. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB253
2. White & Case. (2024). California Climate Disclosure Laws: CARB Affirms Reporting Deadlines Despite Delays. https://www.whitecase.com/insight-alert/california-climate-disclosure-laws-carb-affirms-reporting-deadlines-delays