On October 14, 2025, the California Air Resources Board (CARB) announced a delay in its rulemaking timeline for greenhouse gas (GHG) emissions reporting requirements under the Climate Corporate Data Accountability Act (SB 253) and climate-related financial risk reporting requirements under the Climate-Related Financial Risk Act (SB 261).
Recent Limited Guidance
CARB has been working to develop regulations implementing California’s landmark climate disclosure laws. Under SB 253, businesses with annual revenues exceeding $1 billion that “do business” in California must publicly disclose their direct (Scope 1), indirect (Scope 2), and value chain (Scope 3) GHG emissions. Additionally, SB 261 requires companies that do business in California with annual revenues exceeding $500 million to publish – beginning January 1, 2026 – biennial reports disclosing their climate-related financial risks and mitigation measures.
The anticipated regulations should establish 2026 deadlines for Scopes 1 and 2 reporting and a phased timeline for Scope 3 emissions reporting in 2027 and clarify significant applicability questions that remain unresolved in the statutes, including exactly what it means to do business in California and how corporate relationships would be addressed for purposes of reporting obligations.
The delay comes after CARB released some limited guidance, including frequently asked questions (FAQs) regarding California’s climate disclosure (posted July 9, 2025), a climate-related financial risk report checklist (posted September 2), a preliminary list of reporting/covered entities (posted September 24), and a draft Scopes 1 and 2 GHG reporting template (posted October 10).
- The FAQs address the rulemaking process and information about the submission of initial reports. The guidance is intended to assist companies with initial planning and compliance with both SB 253 (Health & Safety Code Section 38532) and SB 261 (Health & Safety Code Section 38533).
- The financial risk report checklist serves as guidance on developing biennial reports under SB 261. It outlines the minimum disclosure requirements for governance, strategy, risk management, and metrics and targets, with flexibility for qualitative scenario analysis, and consolidated reporting at the parent-company level. The checklist also alleviates the requirement to disclose Scopes 1, 2, and 3 emissions in the initial report.
- The preliminary list of covered entities that may be subject to the Corporate Greenhouse Gas Reporting Program and Climate-Related Financial Risk Disclosure Program is based on 2022 filings, and errors have been noted. In the absence of regulatory development, CARB has yet to issue authoritative guidance on the determination of revenue thresholds and the assessment of parent-subsidiary relationships under the applicable regulations. As a result, the responsibility remains with covered entities to independently assess whether they are subject to the rule. CARB’s published list should not be relied upon as definitive for compliance purposes.
- CARB is soliciting comments until October 27, 2025 on the reporting template for Scopes 1 and 2 emissions.
However, all this guidance falls short of the draft regulations that were expected to provide clarity on key questions such as what it means to do business in California and how corporate relationships affect reporting obligations.
Revised Timeline: Q1 2026
CARB has announced a revised timeline for bringing the initial rulemaking in the first quarter of 2026, rather than the previously anticipated December 2025 board consideration. This represents a significant delay for adopting regulations.
The stated reasons for the delay include:
- Volume of Public Comments. CARB cited the “large volume of public comments” it has received as a primary factor necessitating the extended timeline.
- Ongoing Stakeholder Input. The agency referenced “ongoing input related to identifying the range of covered entities” as requiring additional time for consideration.
Implications for Regulated Entities
The delay in CARB’s rulemaking process creates several significant issues for businesses potentially subject to these regulations. Companies face continued uncertainty over whether they are required to report and risk expending time and resources by creating reports that may not be required, or if required, do not meet regulatory requirements. Without rulemaking, companies do not have exact reporting requirements, methodologies, or compliance standards for the 2026 reporting cycle. Despite the regulatory delay, the statutory reporting deadlines remain unchanged, with rulemaking following the SB 261 deadline, and creating a compressed timeline between final rule adoption and compliance deadlines for SB 253. Organizations are obligated to prepare for compliance without finalized guidance, potentially necessitating adjustments once regulations are adopted.
Unless California’s climate disclosure program is stayed by litigation (a possibility, the likelihood of which is unknown) companies should continue developing internal systems and processes necessary to meet reporting obligations under SB 253 and SB 261, including for GHG emissions data collection. While CARB has indicated it will exercise enforcement discretion for the first reporting cycle, this discretion is limited to Scope 1 and Scope 2 reporting and contingent on companies demonstrating good-faith compliance efforts and maintaining relevant data.
CARB is soliciting feedback on both the SB 253 draft reporting template and the topics addressed in the accompanying memo by October 27, 2025. Companies should consider whether to comment on the template.
Companies should continue tracking CARB’s rulemaking process; with draft regulations anticipated in Q1 2026, there will be opportunities to engage in the rulemaking process. And with CARB citing feedback and complexity as the rationale for the delay, companies should continue engaging with CARB on key topics even outside the rulemaking process.
As public awareness of these requirements increases, companies should prepare for inquiries from investors, customers, and other stakeholders about climate disclosure preparedness.
Finally, companies should not forget about AB 1305, the third in the trio of climate disclosure laws, whose disclosure deadline was January 1, 2025 and which requires companies that operate in California and claim net-zero achievements, carbon neutrality, or significant emission reductions to substantiate those claims on their websites by documenting the accuracy and means of achieving them. Companies that fail to comply may be subject to civil penalties up to $500,000.
The delay in CARB’s rulemaking process underscores the complexity of establishing comprehensive climate disclosure regulations but does not diminish the urgency of compliance preparation. While the regulatory landscape continues to evolve, the direction is clear: enhanced climate disclosure requirements are coming to California, and companies doing business in the state should take proactive measures to prepare for compliance despite the current regulatory uncertainty.
If you have any questions, or would like additional information, please contact one of the attorneys on our Environment, Land Use & Natural Resources team.
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