By Chad Spitler, Founder and CEO, September 2025
UPDATE: Includes information provided by the August 21, 2025 CARB Workshop, September 2, 2025 Draft Checklist, and July 9, 2025 FAQs.
The California Air Resources Board ("CARB") continues to host workshops and release information documents, to guide companies on the upcoming regulatory process for the state's climate-related disclosure requirements. The guidance is meant to help companies prepare for initial reporting under SB 253 and SB 261 and to understand the evolving regulatory framework.
To help companies with the agency's updated guidances, we have pulled forward some key themes and continue to update this page based upon new resources.
One of the key questions from the regulatory text was what it means to "do business" in the state. CARB clarified some key questions in its release, noted below.
A) CARB is developing regulations to define "doing business in California" based on the California Corporations Code definition.
This replaces the earlier decision to define revenue through the CA Franchise Tax Code. Under the revised concept, an entity is considered to be doing business in California if:
Exempt companies include non-profits, companies whose only business in California is the presence of teleworking employees, government entities, and certain wholesale electricity entities.
CARB will be sending out a list of all businesses that it deems eligible in September 2025. Companies should also plan to independently assess the applicability of the laws with their own legal counsel.
B) Revenue Thresholds and Applicability
The two California climate disclosure laws apply to different revenue thresholds:
Companies may be subject to both laws or only one, depending on their revenue levels.
As of 8/21, Due to the lack of consensus, CARB is now considering defining revenue as “the total global amount of money or sales a company receives from its business activities, such as selling products or providing services.”
C) Out-of-State Business Considerations
Companies exceeding revenue thresholds must report even if the majority of their business is outside California, provided they meet the "doing business in California" criteria.
Reporting Timeline:
Verification Requirements:
Enforcement Notice: CARB issued an Enforcement Notice in December 2024 allowing reporting entities to submit emissions data based on information they already possess or collect, recognizing the need for lead time to implement new data collection processes.
Reporting Timeline:
Reporting Frameworks and Key Details:
California’s climate disclosure laws will impose compliance costs and resource demands for companies across the spectrum – and even small companies will need to invest in new data collection systems, specialized staff, and third-party verification services. The mandatory nature means that non-compliance carries enforcement penalties, while also enhancing public scrutiny of your business. Companies should be aware that newly public disclosures will give investors, competitors, and stakeholders unprecedented visibility into how companies assess climate risks across their operations and be prepared for new questions.
CARB continues to be in information-gathering stage and will open up public comment again on September 11, 2025. The rulemaking entity plans to finalize regulations by end of 2025.
We are here to help when you and your company when you are ready to get started. For more information on these rules, check out our past insights.
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.
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