CORPORATE GOVERNANCE | 2026-09-17

California's Climate Disclosure Deadlines Arrive in 2026: What SB 253 and SB 261 Require of Companies Doing Business in the State

With the SEC standing down from its own climate rule, California's SB 253 and SB 261 have become the operative disclosure mandates for large companies doing business in the state, carrying reporting deadlines in 2026 and penalties of up to $50,000 per year.

California has moved to the center of corporate climate disclosure. As the U.S. Securities and Exchange Commission stepped back from defending its own climate-disclosure rule, two California statutes filled the gap: SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act. Together they reach public and private companies alike that do business in California above defined revenue thresholds, and their obligations begin to bite in 2026. Companies wi

Why California's Climate Laws Now Set the Standard

For several years, the expectation was that the Securities and Exchange Commission's climate-disclosure rule would define the baseline for public-company climate reporting. That expectation has shifted. With the SEC ending its defense of its climate rule, the federal rule is not taking effect, and the disclosure obligations that remain enforceable for many large companies now flow from state law — most prominently, California's.

California enacted two complementary statutes. SB 253, the Climate Corporate Data Accountability Act, requires disclosure of greenhouse gas emissions. SB 261, the Climate-Related Financial Risk Act, requires a periodic report on the climate-related financial risks a company faces and the measures it has adopted to reduce and adapt to those risks. Because both laws apply to companies "doing business" in California above revenue thresholds — not merely to companies incorporated or headquartered there — their reach extends well beyond the state's borders.

SB 253: Greenhouse Gas Emissions Disclosure

Who Is Covered

SB 253 applies to companies doing business in California with total annual revenue at or above $1 billion. The threshold is measured by total revenue, and the "doing business in California" test sweeps in many companies headquartered elsewhere that nonetheless have significant California operations, sales, or property.

What Must Be Reported and When

Covered companies must begin annual disclosure of their Scope 1 and Scope 2 greenhouse gas emissions in 2026, following the finalization of implementing regulations earlier in the year. Scope 1 covers direct emissions from sources a company owns or controls; Scope 2 covers indirect emissions from purchased electricity, steam, heating, and cooling. Scope 3 emissions — the broader category of value-chain emissions, including those from suppliers and product use — are phased in later, with reporting required beginning in 2027.

Assurance Requirements

SB 253 contemplates third-party assurance of the reported emissions data, phasing in over time from limited to more rigorous assurance. That means the emissions figures are not simply management estimates; they are subject to independent verification, which raises the stakes on the accuracy of the underlying data collection.

SB 261: Climate-Related Financial Risk Reporting

The Report and Its Framework

SB 261 requires covered companies to prepare a climate-related financial risk report that discloses the company's climate-related financial risk and the measures it has adopted to reduce and adapt to that risk. The report is to be prepared in accordance with the framework recommended by the Task Force on Climate-related Financial Disclosures (TCFD), a widely used structure organized around governance, strategy, risk management, and metrics and targets.

Timing and Penalties

The climate-related financial risk disclosure obligations began to run in 2026. Critically, SB 261 carries a financial penalty: a company that fails to publish a required report can face penalties of up to $50,000 per year. That penalty converts what some boards might otherwise treat as a voluntary sustainability exercise into a hard compliance obligation with a defined downside.

Governance Implications for Boards and General Counsel

Disclosure Controls and Data Integrity

Because emissions figures may be independently assured and because the financial-risk report speaks to matters investors and regulators care about, both statutes push climate data into the domain of disclosure controls. Boards should confirm that the company has a documented process for collecting, reviewing, and validating the underlying data, and that responsibility for the reports is clearly assigned within management.

Consistency Across Disclosures

Companies that make climate-related statements in multiple places — a sustainability report, investor materials, and now the SB 253 and SB 261 filings — face litigation and enforcement risk if those statements diverge. A central governance task is ensuring that the climate story a company tells is consistent across all of its disclosures, because inconsistencies invite scrutiny.

Board Oversight

The TCFD framework that anchors SB 261 begins with governance. Boards should be able to describe how they oversee climate-related risks and opportunities, and that oversight should be reflected in committee charters and board minutes. A company that files a risk report describing robust oversight it cannot substantiate creates a gap between disclosure and reality.

Practical Steps for 2026 Compliance

Companies that do business in California and approach the revenue thresholds should take several steps now. Confirm whether the company meets the "doing business in California" test and the applicable revenue threshold. Inventory the data needed for Scope 1 and Scope 2 reporting and identify gaps well before the reporting deadline, given the assurance requirement. Stand up or refresh the TCFD-aligned processes needed for the SB 261 risk report, and assign clear ownership. Finally, align the new California filings with the company's other public statements to avoid inconsistency.

How Trembach Law Helps

Trembach Law advises companies, boards, and general counsel on securities and corporate-governance matters, including compliance with California's SB 253 and SB 261 climate-disclosure regimes. The firm helps clients determine coverage, build disclosure controls around emissions and climate-risk data, align climate statements across filings, and document board oversight. For a review of your company's California climate-disclosure obligations, call (818) 514-7680.

Related practice pages: Securities & Corporate Governance · Calabasas Securities & Governance Attorney.

This article is for general information and is not legal advice. Coverage and obligations depend on a company's specific revenue, operations, and California nexus.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

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