Why California’s Climate Laws Matter

California climate disclosure laws are setting a new standard for corporate transparency and accountability. In 2023, the state passed two landmark laws—SB 253 and SB 261—that raise the bar for corporate transparency on emissions and climate risk. If your company generates significant revenue and operates in California, you’ll likely be required to comply.

And this isn’t just about California. These laws are setting the standard for what climate disclosure could look like across the U.S. in the coming years.

Overview of the California Climate Accountability Package

Together, SB 253 and SB 261 form the California Climate Accountability Package. While they’re often mentioned in the same breath, they serve two distinct purposes:

• SB 253 requires companies to disclose their greenhouse gas emissions (Scope 1, 2, and 3).
  
• SB 261 requires companies to disclose their climate-related financial risks.
  

Both laws aim to make corporate climate accountability more consistent, comparable, and actionable—for investors, regulators, and the public.

What Is SB 253 and Who Must Comply?

SB 253 (Climate Corporate Data Accountability Act) mandates large companies to report and publicly disclose their greenhouse gas emissions.

Who must comply?

Any partnership, corporation, LLC, or similar business that:

• Earns over $1 billion in annual revenue, and
• Does business in California, regardless of where it’s headquartered
  

This includes private companies and those not publicly listed.

What does it require?

Starting in:

• 2026: Companies must disclose their Scope 1 and Scope 2 emissions
• 2027: They must also disclose their Scope 3 emissions
  

All disclosures must conform to the Greenhouse Gas Protocol, the global standard for carbon accounting.

What Is SB 261 and Who Must Comply?

SB 261 (Greenhouse Gases: Climate-Related Financial Risk) focuses on transparency around how climate change threatens a business’s financial future.

Who must comply?

Any business entity that:

• Has over $500 million in annual revenue, and
• Does business in California
  

Note: Insurance companies are exempt.

What does it require?

Starting in 2026, and then every two years:

• Companies must prepare and publish a climate-related financial risk report
• Reports must follow the Task Force on Climate-related Financial Disclosures (TCFD) framework
• Companies must explain how they are reducing or adapting to these risks
  

Reporting Thresholds and Timelines

These laws apply regardless of a company’s headquarters—if you operate in California, you’re in scope.

Key Compliance Requirements

For SB 253:

• Use GHG Protocol standards
• Get third-party assurance on data
• Disclose emissions through a state-contracted reporting organization
• Include company aliases, logos, and any relevant trade names in disclosures
• Update emissions data annually
  

For SB 261:

• Align your risk disclosures with TCFD or equivalent frameworks
• Detail the financial impact of climate-related risks (e.g., supply chain disruptions, physical risk, regulation risk)
• Share measures taken to mitigate or adapt to these risks
• Publish report on your public website
  

Penalties for Non-Compliance

California isn’t treating this as a symbolic gesture. These laws have teeth.

SB 253

• Up to $500,000 per year in administrative penalties
• Penalties apply for failure to file, late filing, or data misstatements (unless made in good faith)
  

SB 261

• Up to $50,000 per year for not publishing a report or publishing an inadequate one
  

Importantly, penalties for Scope 3 disclosures under SB 253 won’t apply until 2030, unless the report is completely missing.

The Role of Third-Party Assurance

Under SB 253, your emissions disclosures must be verified by an independent third-party:

• 2026: Limited assurance for Scope 1 and 2
• 2030 onward: Reasonable assurance for Scope 1 and 2
• Scope 3: Limited assurance begins in 2030

The state wants to ensure disclosures are audit-grade and not subject to greenwashing or vague estimation. This makes selecting the right assurance provider critical.

How Sprih Supports Compliance

Sprih works with large enterprises—especially in high-risk sectors like pharma, logistics, food, and real estate—to:

• Automate data collection across Scope 1, 2, and 3 emissions
• Connect and engage hundreds of suppliers without friction
• Manage complex emission factors, units, and activity types
• Prepare for third-party assurance with audit-ready data
• Produce disclosures aligned with SB 253, SB 261, CSRD, and SEC
  

Sprih helps teams cut through the complexity and stay ahead of deadlines without burning out internal teams or resorting to patchy spreadsheets.

Final Thoughts

California climate disclosure laws mark a turning point. They bring clarity to what businesses must report and when—and raise the bar for climate accountability across the U.S.

The expectations are clear. The timelines are short. The data demands are significant. But with the right tools, partnerships, and internal alignment, businesses can meet these requirements and use them to build trust, resilience, and long-term value.