Which companies are in scope?
SB 253 applies to companies that:
- Do business in California.
- Have more than $1 billion in total annual revenue.
The law applies to public and private companies, including corporations, partnerships, limited liability companies, and other business entities. Its reach extends nationwide and internationally. You do not need to be headquartered in California to fall within the scope of the law.
You should review your revenue position at the appropriate parent-entity level. For many groups, consolidated revenue will be central to the $1 billion revenue threshold analysis. The assessment can become more complex when you operate through:
- Parent companies and subsidiaries.
- Private equity or portfolio-company structures.
- Joint ventures.
- Multiple legal entities.
- Limited liability companies.
- Complex ownership arrangements.
CARB’s proposed revenue definition draws on gross receipts under the California Revenue and Taxation Code. You may need to review how you report gross receipts, how revenue is treated under the Internal Revenue Code, and how it appears in California corporate tax filings.
SB 253 is separate from SB 261, which addresses climate-related financial risk. SB 261 applies to U.S. business entities with more than $500 million in annual revenue and requires biennial climate-related financial disclosures. If you meet the relevant thresholds, you may need to prepare for both laws as part of your wider climate risk and risk management program.
What do you need to report?
SB 253 requires annual GHG emissions reporting for entities with more than $1 billion in revenue.
You must report:
- Scope 1 emissions: Direct greenhouse gas emissions from sources that your company owns or controls.
- Scope 2 emissions: Indirect emissions from purchased electricity, steam, heating, or cooling.
- Scope 3 emissions: Other indirect emissions across your upstream and downstream value chains.
Scope 3 emissions can include purchased goods and services, transportation, business travel, employee commuting, waste, and the use of sold products.
You must follow the Greenhouse Gas Protocol for emissions calculations and reporting. Your disclosures should conform to Greenhouse Gas Protocol standards and clearly explain your organizational boundaries, data sources, emissions factors, assumptions, estimates, and exclusions.
SB 253 also requires you to submit emissions data to a public digital platform. Independent third-party verification forms part of the law’s broader reporting framework, with assurance expectations expected to develop over future reporting cycles.
For a practical explanation of the three emissions categories, see Sweep’s guide to Scope 1, Scope 2, and Scope 3 emissions.
What does the latest CARB guidance change?
CARB’s September 2026 guidance provides practical details for your first reporting cycle. It explains how you can use available data and submit your report while CARB continues developing the longer-term reporting framework.
1. You can use existing Scope 1 and Scope 2 data
For the first reporting cycle, you can use Scope 1 and Scope 2 emissions data that you already had, or were already collecting, when CARB issued its December 5, 2024 enforcement notice.
That data may come from:
- An existing sustainability or annual report.
- An internal carbon accounting system.
- Energy, facilities, or fleet management systems.
- A previous voluntary emissions reporting initiative.
- Earlier greenhouse gas emissions calculations.
You should document where the data came from, which methodology you used, and any known limitations. CARB’s flexibility around source data does not remove the need for a reasonable basis and a clear audit trail.
2. You may be able to submit a statement of non-reporting
If you were not collecting, and had not planned to collect, Scope 1 and Scope 2 emissions data when CARB issued its 2024 enforcement notice, you may submit a statement of non-reporting for the first cycle.
CARB has requested that you provide this statement on company letterhead.
If you use this option, retain internal documentation that explains:
- Why the emissions data was unavailable.
- Which systems and teams you reviewed.
- What steps you took to assess your reporting position.
- How you plan to prepare for future reporting.
This statement does not create a permanent exemption from SB 253. You should treat it as part of the first reporting process and continue building your emissions reporting capabilities.
CARB will accept multiple reporting formats for 2026. You may submit:
- An existing annual report that includes Scope 1 and Scope 2 emissions.
- Emissions data previously reported to another program or voluntary initiative.
- CARB’s draft Scope 1 and Scope 2 reporting template.
You do not need to rebuild your entire reporting process simply to fit one prescribed format. Choose the approach that gives you the clearest, most accurate, and most traceable report.
You can review the latest instructions and templates on CARB’s corporate GHG reporting resources page.
4. You do not have to use one specific emissions factor dataset
CARB will not require you to use a single emissions factor dataset for 2026 GHG emissions reporting.
You should still record:
- The emissions factors you used.
- The source and date of each factor.
- The activity data behind your calculations.
- Any estimates, exclusions, or assumptions.
- The person or team responsible for review and approval.
This gives you flexibility while preserving accountability. Your calculations should remain consistent, explainable, and supported by evidence.
5. Limited assurance is not required for the first cycle
CARB will accept your 2026 submission whether or not you have obtained limited assurance.
This does not remove the importance of third-party assurance. It applies to the first reporting cycle while CARB develops the longer-term approach to assurance, reporting, and methodology. You should continue preparing for future limited assurance and, potentially, reasonable assurance requirements.
Even without formal assurance, you should conduct an internal review before filing. Sweep’s guide to what auditors look for under SB 253 explains how data quality, documentation, and traceability can affect your readiness.
6. CARB will focus on good faith efforts during the first cycle
CARB has said it will exercise enforcement discretion during the first reporting cycle. You should make a good faith effort to report, retain relevant emissions data, and document the decisions behind your submission.
Enforcement discretion does not cancel the reporting requirement. SB 253 allows administrative penalties of up to $500,000 per year for non-filing, late filing, and other failures to meet reporting requirements.
Until 2030, penalties related to Scope 3 emissions apply only to non-filing. You should still begin preparing for Scope 3 reporting now because Scope 3 emissions reporting starts in 2027.
CARB has also established an annual fee for emissions reporting administration. The state board may adjust that fee based on the California Consumer Price Index, so include it in your reporting budget.
