Time is Running Out: Are You Ready for California's New Climate Disclosure Rules?

Companies generating $500MM or more in revenue will soon face mandatory carbon emissions and climate risk reporting in California (SB 253 and SB 261). Over 5,000 businesses— even those without a physical presence in the state—will be impacted, and the clock is ticking.

The Biggest Risk? 

Most companies don’t realize how much time it takes to collect, validate, and analyze emissions and climate risk data. When deadlines are tight, a missing data point can mean the difference between compliance and failure.

For example: In a recent project call, we identified two critical gaps in a client's GHG emissions data. The person responsible for the missing data was on extended leave, and no one knew how to retrieve the information. This put the entire reporting timeline in jeopardy—an all-too-common scenario for companies unprepared for the complexity of climate disclosures.

What This Means for Your Business

• Companies with $1BN+ in revenue must report Scope 1, 2, and 3 emissions under the Climate Corporate Data Accountability Act (SB 253).
• Companies with $500MM+ in revenue must disclose climate-related financial risks under the Climate-Related Financial Risk Act (SB 261).
• Reporting begins January 1, 2026—and delays in preparation could leave you scrambling.

SB 219: Key Updates You Need to Know

A recent amendment to SB 261 and SB 253, SB 219, has introduced more flexibility into the original CA reporting requirements —but don’t be fooled into thinking you have extra time to prepare. The complexity of data collection and reporting still requires immediate action. Here are some of the biggest updates to the original proposals: 

• Extended Deadline for CARB Regulations: The California Air Resources Board (CARB) now has until July 1, 2025, to finalize its reporting rules, but waiting until then to prepare will leave you with little time to comply.
• Scope 3 Emissions Reporting Schedule: CARB will determine the timing for Scope 3 emissions disclosures, replacing the previous 180-day requirement. However, collecting Scope 3 data is often the most time-consuming process—start now.
• Consolidated Reporting: Companies can now report emissions at the parent company level, simplifying compliance for subsidiaries.
• Fee Payment Timing: The requirement to pay an annual fee at the time of filing has been removed, offering some flexibility for companies. 

What You Need to Do Now

• Assess Your Reporting Obligations—Know what data you need and where to find it.
• Develop and Test Your Compliance Strategy—Avoid last-minute surprises.
• Ensure Your Data is Accurate—Errors can lead to costly compliance risks.

Start Preparing Now

Third Economy has helped companies like yours navigate complex reporting regulations. We can help you get ahead of SB 253 and SB 261 (and all of SB 219's amendments) before the deadlines put your business at risk.

Jacqueline Rhoades, Partner, Third Economy
Jacqueline.rhoades@thirdeconomy.com

Disclaimer: The information provided does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only.