{"id":28148,"date":"2025-06-17T15:01:45","date_gmt":"2025-06-17T15:01:45","guid":{"rendered":"https:\/\/www.trccompanies.com\/?post_type=news-and-insights&p=28148"},"modified":"2026-03-19T15:11:07","modified_gmt":"2026-03-19T15:11:07","slug":"creating-lasting-value-while-preparing-for-californias-approaching-climate-disclosure-laws-sb253-and-sb261","status":"publish","type":"news-and-insights","link":"https:\/\/www.trccompanies.com\/fr\/insights\/creating-lasting-value-while-preparing-for-californias-approaching-climate-disclosure-laws-sb253-and-sb261\/","title":{"rendered":"Creating Lasting Value While Preparing for California\u2019s Approaching Climate Disclosure Laws (SB253 and SB261)"},"content":{"rendered":"\n\n
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Updated July 25, 2025<\/em><\/p>\n

Climate-related risks abound for businesses today, including supply chain disruptions, storm-related flooding, regional <\/span>droughts<\/span> and wildfires, and increasing disclosure requirements. However, responding strategically to these challenges also creates opportunities for innovative businesses to increase efficiencies, boost revenue, improve organizational and community resilience, enhance brand <\/span>value<\/span> and raise employee engagement.<\/span><\/span>\u00a0<\/span><\/p>\n

In 2024, MSCI found that annual returns from climate risk leaders on their All Country World Index<\/a> (ACWI) outperformed those of laggards by 2-3% annually<\/a> over the last 10 years. Whether companies are just starting their climate disclosure journey or are adapting existing reports to <\/span>comply with<\/span> new standards, companies can create lasting value by assessing their climate-related risks and opportunities and innovating to move beyond compliance.<\/span><\/p>\n

In the US, California is working toward comprehensive, <\/span>comparable<\/span> and clear climate disclosures, with the reporting deadlines for the California Corporate Climate Disclosure laws (Senate Bills 253 and 261) fast approaching. California\u2019s economy is the<\/span>\u00a0fourth-largest in the world<\/a>, having surpassed Japan in March. Therefore, <\/span>it\u2019s<\/span> essential that investors, <\/span>regulators<\/span> and stakeholders understand businesses\u2019 climate-related risks, to assess progress toward a resilient economy. Effective disclosures also provide a meaningful pathway for businesses to reduce risk and increase resilience for the long-haul. To unlock the full potential of climate disclosures, companies should thoughtfully apply their physical and transition risk assessments to improve organizational and community resilience.<\/span><\/p>\n

What is California\u2019s Corporate Climate Disclosure Package? <\/strong><\/h2>\n

In October 2023, California passed two laws requiring increased climate-related reporting from large companies with economic activities in the state, starting in 2026. The first law<\/span><\/span>, Senate Bill (SB) 253<\/a>, requires that companies \u201cdoing business in California\u201d with over <\/span>$1 billion<\/span> in annual revenue publicly <\/span>disclose<\/span> their greenhouse gas (GHG) emissions and obtain assurance on the disclosures, with a <\/span>nonfiling<\/span> penalty of $500,000 per year.<\/span><\/p>\n

Specifically, SB253 requires Scope 1 and 2 disclosures starting in 2026 for 2025 emissions (with limited assurance in 2026 phasing to reasonable assurance in 2030) and Scope 3 emissions disclosures starting in 2027 for 2026 data, with limited assurance beginning in 2030. For organizations unfamiliar with the scopes, Scope 1 emissions are controlled by the reporting entity, while Scope 2 emissions are controlled by upstream power producers and Scope 3 emissions are controlled by both upstream and downstream entities, according to the category.<\/span><\/span>\u00a0<\/span><\/p>\n

Emitting activities reported under Scope 1, 2 and 3 emissions<\/em><\/p>\n

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The second law, SB 261<\/a>, tackles climate-related risks and opportunities, requiring that companies \u201cdoing business in California\u201d with over $500 million in annual revenue publish a climate-related financial risk disclosure by January 1, 2026 that is aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) \u201cor any successor thereto,\u201d with biennial disclosures after 2026 and a non-compliance penalty of $50,000 in each reporting year. The TCFD provides a framework for companies to conduct a climate scenario analysis, assessing the physical risks and transition risks and opportunities across their value chain, using the following categories.<\/span><\/span>\u00a0<\/span><\/p>\n

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Since the bills passed, the California Air Resources Board<\/a> (CARB) has been working to craft \u201cimplementing regulations\u201d outlining exactly who is in-scope and how businesses will need to calculate emissions and assess climate-related risks. In September 2024, a third bill<\/span><\/span>, SB 219<\/a>, clarified some administrative requirements in the original two bills and extended the timeline for CARB to publish its implementing regulations.<\/span>\u00a0<\/span><\/p>\n

These three bills\u2014together, the Corporate Climate Disclosure Package\u2014represent a step-change in sustainability reporting in the US, requiring comprehensive and comparable disclosures by the largest companies doing business in California.<\/span>\u00a0<\/span><\/p>\n

Who Will Have to Report Under the Laws?<\/h2>\n

Since the bills\u2019 passage, many companies have wondered, what counts as \u201cdoing business in California?\u201d And which frameworks or protocols should <\/span>be used<\/span> to <\/span>comply with<\/span> the laws? These questions will be answered definitively when CARB <\/span>finalizes<\/span> their <\/span>implementing<\/span> regulation(s)\u2014 expected by the end of 2025. In the meantime, TRC\u2019s practitioners experienced in climate risk<\/a>, resilience and sustainability advisory services are closely <\/span>monitoring<\/span> CARB\u2019s progress to keep our clients informed of upcoming regulatory requirements.<\/span><\/span>\u00a0<\/span><\/p>\n

On May 29, 2025, CARB held a <\/span><\/span> workshop<\/a> announcing their intended definitions of key terms and compliance requirements (called \u201cinitial staff concepts\u201d). This workshop was part of CARB\u2019s \u201cpre-rulemaking\u201d informal stakeholder engagement. Once CARB issues a \u201cNotice of Proposed Rulemaking,\u201d there will be a 45-day formal comment period, <\/span>a possible amendment<\/span> phase and then final <\/span>regulation<\/span> adoption before the end of the year.<\/span><\/p>\n

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During the workshop, CARB announced several draft definitions affecting which entities are in-scope, as follows:<\/span><\/span>\u00a0<\/span><\/p>\n