Who must report under SB 253

Who must report under SB 253?

SB 253, the Climate Corporate Data Accountability Act, as amended by SB 219 in 2024, applies to a reporting entity: a partnership, corporation, limited liability company or other business entity formed under the laws of California, any other US state, the District of Columbia or an act of Congress, with total annual revenues above 1 billion dollars, that does business in California. Being listed on a stock exchange does not matter: privately held companies are covered too. Companies formed outside the United States are not reporting entities, although their US subsidiaries may be. See California SB 253.

How is revenue measured?

Revenue means the entity's total annual revenues worldwide, not its California sales. CARB's regulations measure it as gross receipts, using the lesser of the entity's revenue in its two previous fiscal years, so a company crossing the threshold for one year only is not yet covered. The 15-day modifications CARB released in July 2026 confirm that the test applies to each entity on its own revenue rather than the consolidated revenue of its group, and exclude transactions with other members of the same combined reporting group. A holding company with little revenue of its own is therefore not covered merely because its subsidiaries are.

What does doing business in California mean?

CARB uses the definition in section 23101 of the California Revenue and Taxation Code: actively engaging in any transaction for financial or pecuniary gain, together with either being organised or commercially domiciled in California, or having California sales above an annually adjusted threshold, 757,070 dollars for 2025, or 25% of total sales if lower. Sales of wholesale electricity in interstate commerce are left out of the test. The threshold is applied to each entity separately.

Who must report under SB 253: a group of five companies

A US group asks which of its entities are covered by SB 253, and by SB 261, which uses the same tests with a 500 million dollar threshold.

Only the Texas operating company is covered by SB 253. The holding company's own revenue, after excluding intercompany charges, is far below the threshold. The California company is covered by SB 261 but not SB 253. The UK company is not a US entity, and the Ohio company does not do business in California. The parent can still file the Texas company's report and pay its fee on a consolidated basis, which many groups prefer because their emissions are measured at group level anyway.

Which entities are excluded?

Government entities and nonprofit and charitable organisations are excluded, as are entities whose only link to California is wholesale electricity sales. Insurance companies were excluded from 2026 emissions reporting under CARB's initial regulations; from 2027 they are expected to meet SB 253 through reporting linked to the California Department of Insurance. Entities whose only presence in California is employees working remotely from there have also been treated as outside scope. Because the regulations were still awaiting final approval when this guide was checked, companies near a boundary should read the final text.

When are reports due and what do they cover?

The first reports, due on 10 November 2026, cover scope 1 and scope 2 emissions, for most companies for their 2025 fiscal year, and CARB will accept data based on what companies were already collecting. No assurance is required for these first reports. Scope 3 reporting is expected from 2027, with limited assurance of scope 1 and 2. Each covered entity pays an annual fee: CARB will issue fee notices by 10 December 2026, payable within 60 days; see SB 253 penalties and fees. See limited and reasonable assurance and calculating scope 1 and 2 emissions. See SB 253 scope 3 reporting from 2027.

What should companies do now?

List every US legal entity in the group, record each one's revenue for the last two fiscal years excluding intercompany transactions, and test its California sales, place of organisation and commercial domicile against the doing business rules. Document the conclusions, because CARB can ask how they were reached. Groups with several covered entities should decide whether to file one consolidated report. See California SB 261 for the climate risk law that uses the same tests.

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