California board approves regulation for state’s climate reporting laws

The agency that implements climate disclosure regulations in California approved an initial regulation that will guide companies filing regular reports related to a pair of state laws.

The regulation, approved last week by the California Air Resources Board (CARB), applies to S.B. 253 — which requires companies with more than $1 billion in revenue that do business in the state to report greenhouse gas (GHG) emissions annually — and S.B. 261, intended to require companies with at least $500 million in revenue to file climate risk reports every other year.

“By establishing clear and consistent disclosure requirements, California is ensuring that the state’s investors and consumers have access to reliable information to inform their decisions and is joining other jurisdictions around the world in requiring climate data transparency,” CARB Chair Lauren Sanchez said in a news release. “Many business leaders are already choosing to engage early, a clear indication they recognize the importance of climate-related risk transparency to inform business and consumer decisions.”

More than 120 climate-related financial risk reports have been voluntarily submitted, according to the news release.

The regulation establishes Aug. 10, 2026, as the first-year reporting deadline for S.B. 253, with companies required to report Scope 1 and Scope 2 GHG emissions beginning in 2026 and Scope 3 emissions beginning in 2027. S.B. 261 reporting currently is voluntary, pursuant to a court order issued last November.

Throughout the draft regulation process, the AICPA teamed with CalCPA (the California Society of CPAs) to provide feedback calling for efficiency and consistency in the reporting framework.

Last March, the SEC moved on from its first climate reporting rule one year after approving it, but California and New York are moving forward with legislation that would affect a large swath of U.S. companies. Last month, the New York State Senate passed legislation that would require companies with more than $1 billion in revenue to disclose GHG emissions annually. The legislation now moves to the New York State Assembly.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.