California SB 253: scope 1 and 2 reporting

Who must report under California SB 253?

SB 253 applies to partnerships, corporations, limited liability companies and other business entities formed under US law with total annual revenue of more than one billion dollars in the prior fiscal year, measured across the whole entity, not just in California, that do business in California. The California Air Resources Board's rules draw on the test used for California franchise tax to decide whether an entity is doing business in the state, which includes thresholds for sales, property and payroll in California. Subsidiaries can be covered by a report prepared at the parent level. See sustainability reporting explained. For how each test is applied entity by entity, see who must report under SB 253.

What is due on 10 November 2026?

The first report covers scope 1 and scope 2 emissions. Companies with a fiscal year ending between 2 February and 31 December 2026 report emissions for the fiscal year that ended in 2025; companies whose fiscal year ends between 1 January and 1 February 2026 report that fiscal year. The original deadline of 10 August 2026 was moved to 10 November 2026 when the Board withdrew its first regulation on 24 June 2026 to clarify it. The revised regulation was in a further consultation in September 2026, but the Board has said the November deadline stands, and it has published reporting guidance and an online intake platform for submissions.

California SB 253: a company's first report

A US manufacturer with revenue of 3 billion dollars, sales and a plant in California, and a calendar fiscal year reports its 2025 emissions in its first report. Using the GHG Protocol, it calculates scope 1 emissions of 2,440 tonnes of carbon dioxide equivalent from burning natural gas, its vehicle fleet and refrigerant leaks. Its scope 2 emissions from purchased electricity are 8,000 tonnes using grid-average emission factors, the location-based method, and 3,600 tonnes using the market-based method, which reflects renewable electricity certificates it bought.

The report gives scope 1 of 2,440 tonnes and scope 2 by both methods, as the GHG Protocol requires, with the methods, emission factors and boundaries explained. No assurance report is needed this year, but the company prepares its data and controls as if one were, because limited assurance of scope 1 and 2 is planned from 2027. See calculating scope 1 and 2 emissions.

What if a company does not have complete data?

In December 2024, the Board issued an enforcement notice saying it would not penalise incomplete first reports from companies making a good-faith effort, using the data they already had or were collecting at the time of the notice. Companies that were not collecting scope 1 and 2 data when the notice was issued may submit a statement to that effect instead of a report, although customers, lenders and investors may read that unfavourably. The notice does not excuse failing to file at all.

What are the fees and penalties?

Reporting entities pay an annual fee to fund the programme. The Board's fee assessment date for 2026 is 10 December 2026, with 60 days to pay; its preliminary estimate of around 3,000 to 4,000 dollars per entity was not final when this guide was checked. Penalties for failing to report or for other violations can reach 500,000 dollars per reporting year. Penalties for misstatements in scope 3 emissions are limited in the early years to failures to file, recognising that scope 3 relies on estimates and others' data. See SB 253 penalties and fees.

What comes next?

From 2027, companies must also report scope 3 emissions, the emissions in their value chains, and limited assurance of scope 1 and 2 by an independent provider is planned under rules CARB is still finalising, rising to reasonable assurance in 2030. Scope 3 assurance is expected to follow later. Companies that will report scope 3 in 2027 need supplier data and calculation methods in place during 2026. See the CSRD after the Omnibus for groups that also report in the EU. For what limited assurance involves, see sustainability assurance explained. See the 15 scope 3 categories.

What is the status of SB 261?

SB 261 requires companies with more than 500 million dollars of revenue doing business in California to publish a climate-related financial risk report every two years, starting in 2026. On 18 November 2025, the US Court of Appeals for the Ninth Circuit granted an injunction pausing its enforcement while an appeal by business groups is decided; oral argument was heard on 9 January 2026. The Board has said it will not enforce the 1 January 2026 deadline while the injunction is in place. SB 253 is not affected by the injunction. See California SB 261 and IFRS S2 climate disclosures, which SB 261 reports may follow.

This guide is general information. It is not tax or legal advice for your situation.