Clarification of CARB's Updated FAQ: Streamlining California Climate Reporting Requirements
The California Air Resources Board (CARB) has released a FAQ document to provide clarity on the state's landmark climate disclosure laws, SB 253 and SB 261. These laws, set to take effect in 2026, require large businesses in California to report greenhouse gas (GHG) emissions and climate-related risks respectively.
According to the FAQ document, companies must report Scope 1 and Scope 2 greenhouse gas (GHG) emissions under SB 253, starting in 2026, with Scope 3 emissions to follow. The reports will be submitted via a digital platform to be identified by CARB. For SB 261, companies are required to report climate-related financial risks, but no specific platform has been announced yet.
The FAQ document also mentions that the TCFD guidelines are acceptable for reporting climate-related financial risks under SB 261, and IFRS S2-aligned reports will also be acceptable. CARB is considering using the Revenue and Tax Code to define revenue thresholds for applicability, but is also soliciting stakeholder feedback rationales to consider exemptions.
One of the key considerations in the FAQ document is the data year for the first year reports. Initial reports under SB 261 will cover the prior fiscal year, similar to SB 253. CARB also allows SB 261 first year reports to reflect FY 2023/2024 data or FY 2025/2025 data.
The FAQ document contains key clarifications surrounding the climate reporting rules. CARB's guidance suggests a pragmatic, flexible, and non-punitive approach to help businesses meet the intent of the climate disclosure laws. Companies can base their SB 261 disclosures on the best available information, and CARB recognizes that the quality and data sources may change over the course of the year.
As of June 2025, CARB has not finalized the implementing regulations for SB 253 or SB 261, which means many details, including specific reporting requirements and thresholds, are still pending. CARB is continuing to solicit feedback on definitions for "doing business" and "revenue" that would define applicability under both SB 253 and SB 261, as well as allowable exemptions.
The public docket for submitting SB 261 climate-related financial risk reports will be posted by CARB on December 1, 2025, and will remain open until July 1, 2026. The California Air Resources Board (CARB) held a public workshop on May 29th, 2025, regarding California's climate disclosure laws SB 253 and SB 261. Six weeks later, on June 9th, 2025, CARB released a FAQ document to clarify inquiries from the workshop.
This guidance is crucial for the thousands of companies preparing for inaugural disclosures. The FAQ document is meant to assist companies with initial planning, including for submitting climate-related financial risk reports. For precise answers to these questions, including the exact platform for submitting SB 261 reports and the extension of good faith efforts, waiting for the release of the full FAQ document or final regulations from CARB is advisable.
- The FAQ document from California Air Resources Board (CARB) states that companies must adhere to the Task Force on Climate-related Financial Disclosures (TCFD) guidelines when reporting climate-related financial risks under SB 261.
- Corporate sustainability and climate-change are intertwined in the newly established climate disclosure laws SB 253 and SB 261 in California, as large businesses are required to report greenhouse gas emissions and climate-related financial risks respectively from 2026 onwards.
- Companies are encouraged to rely on the best available information for their SB 261 disclosures, as California Air Resources Board (CARB) recognizes that the quality and data sources may evolve over the course of the year to support environmental-science and financial scrutiny within business operations.
