California’s Climate Corporate Data Accountability Act (SB 253) has entered a more practical implementation phase.

With the California Air Resources Board (CARB) now providing greater clarity on reporting timelines, first-year expectations, and phased implementation requirements, organizations doing business in California are moving from regulatory interpretation to operational preparation.

For sustainability, legal, finance, internal audit, and governance teams, the conversation is no longer whether climate disclosure requirements are coming. It is how prepared organizations are to meet them.

While compliance may be the immediate driver, organizations that approach SB 253 strategically have an opportunity to strengthen governance, improve data quality, and build greater confidence in their climate management initiatives and disclosures well beyond regulatory reporting. 

What SB 253 requires in 2026 and getting ready for 2027

SB 253 applies to US-based public and private companies with annual revenues exceeding $1 billion that do business in California. 

The legislation requires disclosure of greenhouse gas emissions, including Scope 1, Scope 2, and Scope 3, making it one of the most significant climate disclosure requirements currently shaping the US reporting landscape. 

CARB’s March 2026 workshop provided important implementation clarity for organizations preparing for compliance. 

Key CARB SB 253 reporting dates:

  • August 10, 2026: First Scope 1 and Scope 2 reporting deadline 
  • 2026 reporting year: No enforcement of limited assurance requirement for first-year Scope 1 and Scope 2 reporting 
  • 2027 onward: Scope 3 reporting requirements begin, alongside increased assurance expectations  

This phased approach gives organizations some practical breathing room, but it should not be mistaken for a simplified compliance exercise. 

The first reporting cycle creates an important opportunity to assess how climate data is collected, governed, reviewed, and documented before reporting expectations become more demanding. 

Does SB253 apply to your organization?

For some organizations, applicability may appear straightforward. For others, the definition of “doing business in California” may require closer legal and operational review. 

CARB’s implementation discussions have helped provide direction, but organizations with complex structures, subsidiaries, interstate operations, or indirect exposure through supply chains may still need to assess scope carefully. 

Questions leadership teams should be asking now include: 

  • Does our organization meet the SB 253 revenue threshold? 
    SB 253 applies to US-based public and private companies with total annual revenues exceeding $1 billion. This includes both public companies and large private entities that meet the threshold and conduct business activity in California. 

  • How does California define "doing business" for SB 253 purposes? 
    CARB has been developing further guidance on this definition. Organizations with sales, employees, registered entities, or operational presence in California should assess their exposure carefully, particularly if they have not previously engaged with California-specific compliance requirements.  

  • Which entities within our corporate structure may fall in scope?
    Organizations with subsidiaries, joint ventures, or affiliated entities operating in California should determine whether those entities are captured individually or within a consolidated reporting boundary. 

  • Are our existing climate disclosures aligned with SB 253 expectations? 
    For multinational businesses already reporting through CDP, voluntary sustainability frameworks, or investor-led climate reporting, existing capabilities may provide a useful foundation. However, regulatory reporting expectations bring a different perception of risk. 

  • Who owns SB 253 reporting accountability internally? 
    Climate disclosures increasingly require coordinated ownership across sustainability, finance, operations, facilities, procurement, legal, and internal audit teams. Establishing clear accountability now is important before reporting timelines tighten. 

Find out more about how to build awareness with multi-level key internal stakeholders, and practical implementation for internal auditors through our training programmes.

The Real SB 253 challenge: Data governance, not just disclosure

For many organizations, the most difficult part of SB 253 will not be reporting emissions figures. 

It will be demonstrating how those figures were developed particularly around:

  • Organizational boundaries 
  • Emissions methodologies 
  • Calculation assumptions 
  • Emissions factors 
  • Reporting consistency 
  • Evidence trails 

This expands  reporting from a sustainability disclosure exercise to a broader governance and internal controls challenge. 

Organizations should be asking:

  • Are emissions calculation methodologies clearly documented? 
    Methodologies should be formally documented, transparent, and consistently applied to support accuracy and auditability.  

  • Are assumptions applied consistently across reporting cycles? 
    Assumptions should be applied uniformly across reporting periods to ensure comparability and reliability of disclosures.  

  • Can underlying source data be traced and independently reviewed? 
    Source data must be traceable with clear evidence trails to enable independent verification and review. 

  • Are internal controls mature enough to sustain consistently high-quality data and information? 
    Internal controls should be sufficiently developed and implemented to support the development of consistent high-quality data and enable the internal and external verification and assurance requirements.     

  • Are reporting responsibilities clearly assigned and does the team have sufficient knowledge to effectively implement those responsibilities? 
    Responsibilities must be clearly defined across functions to ensure accountability and effective governance and team members must be training in those roles to allow for effective implementation of their roles. 

For many businesses, these questions are both compliance and assurance readiness questions. 

Why 2026 is a strategic window for SB 253 assurance readiness

One of the most important updates for 2026 is that limited assurance is not being enforced for first-year Scope 1 and Scope 2 reporting. 

That may create the impression that assurance preparation can wait. 

In practice, the opposite is true. 

Organizations that use 2026 to pressure-test methodologies, strengthen documentation, review internal controls, and identify governance gaps will be significantly better positioned as assurance requirements evolve. 

This is where independent assurance support can provide practical value before assurance becomes mandatory. 

Building internal competence is equally important. Organizations that strengthen internal alignment and awareness and their internal audit capability now will be better positioned to make informed business decisions related to the data, assess data quality, challenge assumptions, test controls, and identify reporting gaps before assurance requirements take effect. Developing these skills internally can help create a stronger foundation for better business decisions and increases credibility and efficiency in external climate disclosures. 

Because the internal team needed to get this right is so diverse: C-Suite, sustainability, finance, operations, facilities, procurement, legal, and internal audit teams, Explore ERM CVS training for the C-Suite, ESG and internal audit professionals looking to build the practical skills and awareness needed to support stronger governance, assurance readiness, and more credible sustainability disclosures here. 

ERM CVS supports organizations through:

  • Assurance readiness assessments 
  • Internal control and governance reviews 
  • Methodology and reporting process evaluations 
  • Pre-assurance support 
  • Gap assessments against expected reporting requirements 
  • Limited and Reasonable Assurance 

For organizations already managing climate disclosures, this can help bridge gaps between voluntary reporting and regulatory reporting expectations. 

Scope 3 will significantly increase complexity

While the immediate focus is on Scope 1 and Scope 2, Scope 3 requirements expected from 2027 introduce a different level of reporting challenge. 

Unlike operational emissions data, Scope 3 often depends on supplier disclosures, third-party estimates, assumptions, and fragmented data sources. 

That creates additional opportunity and complexity around:

  • Supplier engagement 
  • Data completeness 
  • Methodology consistency 
  • Estimation confidence 
  • Documentation quality 
  • Governance ownership 

For organizations with global supply chains, procurement-heavy operations, or decentralized reporting structures, Scope 3 readiness may become one of the most resource-intensive aspects of compliance. 

Take a deep dive into Scope 3 with our training here. 

Summary 

SB 253 is no longer a future regulatory consideration. It is now an operational readiness challenge. 

Organizations that treat 2026 as a strategic preparation year, rather than a temporary grace period, will be in a much stronger position as reporting and assurance expectations increase.

Beyond compliance, this is an opportunity to strengthen internal awareness and alignment, strengthen climate governance, improve business relevant data and information, increase reporting confidence, and build more resilient disclosure capabilities for the years ahead.

To discuss how ERM CVS can support your transition from 2026 disclosures to full assurance readiness in 2027, get in touch with our team.