The California Air Resources Board (CARB) continues to progress its climate disclosure laws, but the path forward remains unclear. Despite statutory deadlines that have been on the books since 2023, CARB has repeatedly shifted its own rulemaking timeline while still expecting companies to meet firm compliance dates.
The agency missed its July 2025 deadline for finalizing SB 253 regulations, deferred initial rulemaking to Q1 2026, and only released draft reporting templates in October 2025—leaving reporting entities to prepare for requirements that remain partially undefined. Adding to the uncertainty, the Ninth Circuit issued a last-minute injunction against SB 261 on November 18, 2025, just weeks before its January 1, 2026 reporting deadline. For companies attempting to plan compliance strategies, this moving target has made an already complex undertaking significantly more difficult.
That said, the most recent CARB workshop and related guidance do provide some useful clarifications for what companies will face over the next several years. In this article, we’ll detail those new clarifications and changes, highlight the requirements under SB 253 and SB 261, and cover actionable steps companies can take now to prepare for compliance.
Executive Summary: The Current State of CARB’s Climate Reporting Rules
- SB 261 Enforcement Temporarily Halted; SB 253 Proceeds: The Ninth Circuit granted an injunction pending appeal against SB 261, suspending its January 1, 2026 reporting deadline while litigation continues. SB 253 (GHG emissions disclosure) was not enjoined, and companies should continue preparing for the now-proposed August 10, 2026 deadline for Scope 1 and 2 emissions.
- CARB Delays Rulemaking Again—Final Rules Now Expected Q1 2026: Despite holding three public workshops throughout 2025, CARB has pushed formal rulemaking to Q1 2026 due to the volume of public comments. Companies will have minimal time between final rule publication and compliance deadlines.
- Key Definitions Finalized: CARB has reverted to statutory tax-code-based definitions for "revenue" (based on gross receipts under California Revenue and Taxation Code § 25120(f)(2)) and "doing business in California," providing more predictability for coverage assessments.
- Assurance Provider Requirements Still Under Development—CPA Firms Well-Positioned: CARB has not finalized standards for approved assurance providers and will address this in a later rulemaking cycle. Limited assurance will be required starting after 2026, transitioning to reasonable assurance by 2030.
As a licensed CPA firm, Schellman is uniquely positioned to serve as an assurance provider as these requirements mature. CPA firms must adhere to rigorous ethical standards and professional conduct rules established by the AICPA and state boards of accountancy—the same standards that govern financial statement audits.
This rigor will become increasingly important as regulations tighten toward reasonable assurance, mirroring developments in the EU under CSRD where statutory auditors play a central role in sustainability assurance. Organizations should begin building relationships with qualified assurance providers now to avoid bottlenecks as the verified climate disclosure market grows.
Recent Clarifications and Changes to CARB’s Climate Reporting Rules
CARB has confirmed that companies will not need limited assurance for their 2026 greenhouse gas disclosures. Entities submitting Scope 1 and Scope 2 data for the first time may provide the information without hiring a third party to verify the numbers. Organizations that already have assured emissions data may submit that information, but doing so remains optional at this time.
CARB's Enforcement Notice issued on December 5, 2024, introduced another important clarification. Any company that was not collecting emissions data, or did not intend to collect it, at the time that the notice was released, can submit a statement explaining that data was not being collected. These companies will not be required to submit Scope 1 or Scope 2 data for the 2026 filing year. This approach gives organizations more time to develop internal systems for future reporting without rushing to produce numbers they were not proactively preparing.
The November 2025 workshop also announced a revised SB 253 reporting deadline of August 10, 2026, for initial Scope 1 and 2 emissions disclosures, revising the previously proposed date of June 30, 2026. This extension provides entities at least six months after their fiscal year-end to prepare required disclosures.
Requirements Under SB 253 and SB 261
SB 253 applies to companies with annual global revenue above one billion dollars that conduct business in California. These entities will ultimately report Scope 1, Scope 2, and eventually Scope 3 greenhouse gas emissions. Scope 1 and Scope 2 reporting begins in 2026, with Scope 3 reporting following in 2027. CARB has circulated a draft reporting template, which companies may choose whether or not to use during the first year.
SB 261 applies to companies with annual global revenue above five hundred million dollars. These entities were originally required to publish climate-related financial risk reports following the TCFD framework beginning January 1, 2026. However, in November 2025, the Ninth Circuit issued an injunction that temporarily paused enforcement of SB 261. SB 253 was not affected by that decision and remains in force.
Ninth Circuit Injunction: What It Means
On November 18, 2025, the same day as CARB's third workshop, the U.S. Court of Appeals for the Ninth Circuit issued an injunction halting enforcement of SB 261 pending appeal. The order came after the U.S. Chamber of Commerce and other business groups filed an emergency application with the U.S. Supreme Court.
Key Points:
- SB 261 is enjoined during the pendency of the appeal. The January 1, 2026, reporting deadline is currently unenforceable.
- SB 253 is NOT enjoined and remains on track for implementation in 2026.
- Oral arguments are scheduled for January 9, 2026.
- The Ninth Circuit's brief order provided no reasoning, leaving questions about whether the court views the First Amendment challenge as likely to succeed.
The plaintiffs argue that both laws compel companies to express speculative, politically-charged messages about climate risks in violation of the First Amendment. The district court previously denied their preliminary injunction request, finding the laws likely to withstand First Amendment scrutiny. The Ninth Circuit's decision to enjoin SB 261 (but not SB 253) suggests the appellate court may view climate-risk disclosure requirements differently than the more factual emissions reporting requirements.
Practical Implications:
- For SB 261: Companies do not need to publish climate-risk reports by January 1, 2026, while the injunction remains in effect. However, if the Ninth Circuit denies the longer-term injunction after oral arguments, enforcement could resume immediately.
- For SB 253: Continue all preparation activities. The August 10, 2026 deadline remains intact.
Climate Reporting Readiness: Practical Steps for Companies Now
Companies should begin by confirming whether they are covered by SB 253, SB 261, or both laws.
If a company is covered by SB 253, the next step is to determine whether emissions data was being collected when CARB issued the Enforcement Notice in December 2024. If data was being collected, the company should prepare to submit the best available Scope 1 and Scope 2 information by August 10, 2026. If not, the company may submit a simple statement that data was not being collected at that time and prepare for future reporting cycles.
Companies that already have assured emissions data may include it if they choose. Firms covered by SB 261 should monitor developments surrounding the injunction while continuing internal preparation, so they are ready to move forward if reporting requirements resume.
Additional strategic steps to consider:
- Leverage the SB 261 pause: Use this window to align climate-risk reporting frameworks across jurisdictions (SEC, CSRD, California) and develop consistent data and governance processes.
- Engage assurance providers early: Given the anticipated shortage of qualified verifiers, begin conversations with assurance providers now to ensure availability for future reporting cycles when limited and reasonable assurance requirements take effect.
- Submit feedback to CARB: The public comment period remains open for input on definitions, exemptions, and reporting templates.
Gaps and Uncertainties in Current Climate Reporting Guidance
Several elements of California's climate disclosure laws are still being refined. CARB has not finalized long-term assurance standards, the format for future submissions, or the precise approach companies must take when reporting Scope 3 emissions beginning in 2027. Additional rulemaking will determine how subsidiaries and multinational groups should report, how the information will be made public, and how the state will enforce the requirements.
The ongoing litigation adds another layer of uncertainty. A ruling from the Ninth Circuit could come weeks or months after the January 9, 2026 oral arguments, and the outcome could significantly reshape compliance timelines for SB 261. Companies should continue to track developments and remain aware of updates to adjust their compliance plans accordingly.
How Schellman Can Help You Navigate Climate Reporting Compliance
Schellman offers support across all facets of California climate disclosure compliance. As a licensed CPA firm, we provide independent third-party assurance services for GHG emissions reporting—bringing the same rigor and professional standards that govern accounting practices to your climate disclosures. We also offer footprint measurement and reporting disclosure support for organizations building their emissions inventories and climate risk reporting capabilities.
Due to independence requirements, we cannot provide both assurance and measurement/disclosure services to the same client. However, whether you need help preparing for compliance or verifying your data, our team can help you determine the right path forward.
Staying Ahead of Climate Reporting Requirements
California's climate disclosure rules are advancing, but the regulatory landscape remains in flux. CARB's pattern of delayed guidance combined with active federal litigation has created a challenging environment for compliance planning. For 2026, companies may submit emissions data without assurance, and those that were not collecting data at the end of 2024 may provide a brief statement explaining that situation.
This is an important window for organizations to assess their readiness, develop reporting processes, and establish relationships with assurance providers before requirements fully mature. Schellman continues to monitor these developments closely, and our team is prepared to help organizations navigate both compliance requirements and the verification process as assurance standards are finalized.
To learn more about California’s evolving climate reporting laws, Schellman’s sustainability services, or how to prepare for GHG assurance, contact us today. In the meantime, discover additional insights in these helpful resources:
- What is the California Climate Corporate Accountability Act?
- Greenhouse Gas Calculations vs. Greenhouse Gas Verification
- 5 Key Benefits of Integrating ESG Into Your Compliance Assurance
- Sustainability Reporting: Key Insights for Businesses
Last updated: December 2025
About the Authors
Ben Montalbano is Technical Director of Schellman's Sustainability Practice and an accomplished energy economist and data scientist with over 15 years of experience in sustainability reporting, energy industry research, and data analytics. He leverages his deep expertise at the intersection of energy systems and sustainability, along with a robust technical skillset, to deliver scalable and impactful sustainability solutions. Prior to joining Schellman, Ben was independently engaged by a Fortune 10 technology company to manage key projects related to the measurement and disclosure of greenhouse gas emissions. Previously, he led data analytics for Wells Fargo's Supply Chain Sustainability team, where he developed a dynamic supply chain emissions model for the bank. Before his tenure at Wells Fargo, Ben co-founded and successfully exited a boutique energy advisory firm specializing in oil and natural gas market research.
Ben has co-authored several publications for the Oxford Institute for Energy Studies and been published in several other energy industry journals. He has presented his work at numerous internationally recognized venues, including the Center for Strategic and International Studies (CSIS) and the Clingendael Institute. He studied Economics and Russian at the University of Colorado Boulder.
Becky Myers is a Technical Lead of Schellman's Sustainability Practice and has been working in ESG since 2022, implementing ESG reporting processes, preparing external-facing disclosures, developing measurement methodologies, and accounting for GHG emissions with a specialization in Scope 3 and overall data assurance.
Prior to joining Schellman, Becky was the Manager of ESG Data and Analytics at Cardinal Health where she was responsible for executing the ESG reporting strategy as well as the design and implementation of the ESG reporting process in alignment with GRI, SASB, and TCFD frameworks. In addition to mastering these established frameworks, she was actively involved in preparing Cardinal Health for the upcoming Corporate Sustainability Reporting Directive (CSRD) requirements, ensuring that all reporting processes were meeting evolving EU regulations.
Becky also has 5 years of audit and project management experience and began her career with several years of accounting experience. She holds a Bachelor of Science degree with a specialization in Accounting from The Ohio State University.