SB 253 California, or the Climate Corporate Data Accountability Act, is a California climate law passed in October 2023 that requires large companies doing business in the state to disclose their greenhouse gas (GHG) emissions annually.
This includes not just emissions from a company’s own operations, but also emissions from its supply chain and product use—collectively known as Scope 1, 2, and 3 emissions under SB 253 California.
California isn’t asking companies to “try their best” anymore. It’s mandating full-scope climate transparency—and backing that mandate with legal and financial consequences.
Who Needs to Comply with SB 253?
You must comply with SB 253 if:
Your business earns over $1 billion in total annual revenue, and
You do business in California (even if you’re based outside the state or the U.S.)
This includes public and private companies, LLCs, partnerships, and corporations across all industries—from tech and logistics to food, fashion, and finance.
If your revenue crosses the $1B threshold and you operate in California—even through a subsidiary or distribution channel—you’re likely in scope.
What Emissions Must Be Reported?
SB 253 requires disclosure of three types of emissions:
Scope 1: Direct emissions from your owned or controlled sources (e.g., fuel combustion, company vehicles)
Scope 2: Indirect emissions from the energy you purchase (e.g., electricity, steam, cooling)
Scope 3: All other indirect emissions, upstream and downstream, including:
Purchased goods and services
Transportation and distribution
Employee commuting
Use and disposal of your products
Scope 3 is the biggest and most complex category, and it’s where most emissions usually lie.
Reporting Timeline: When Does SB 253 Start?
Year
Requirement
2025
California Air Resources Board (CARB) finalizes regulations
2026
First public disclosure of Scope 1 and 2 emissions
2027
First public disclosure of Scope 3 emissions (due within 180 days of Scope 1/2 disclosure)
2030
Reasonable assurance begins for Scope 1 and 2; limited assurance for Scope 3
Until then, limited assurance applies to Scope 1 and 2 starting in 2026. Scope 3 assurance will be optional until 2030.
What Standard Does SB 253 Follow?
SB 253 uses the Greenhouse Gas Protocol as its baseline. This globally recognized standard provides consistent methods for calculating and disclosing emissions.
The law also allows for:
Use of industry averages and proxy data for Scope 3
Flexibility in the initial reporting years
Future updates (post-2033) to adopt better global standards if needed
If your company already uses GHG Protocol to report to CDP or for voluntary disclosures, you’ll have a head start.
What Happens If You Don’t Comply?
SB 253 gives the state real enforcement power.
Penalties:
Up to $500,000 per year for non-filing, late filing, or inaccurate reports (unless made in good faith)
Between 2027 and 2030, penalties related to Scope 3 only apply for complete failure to file—not for errors or estimation gaps
Good faith matters:
Companies disclosing in good faith under SB 253 California reduce exposure to penalties, especially in early reporting years.
How Is This Different from SEC or CSRD?
Requirement
SB 253
SEC Proposal
CSRD (EU)
Jurisdiction
California
U.S. Public Companies
EU + Global Companies
Scope 3 Required
Yes
Possibly (controversial)
Yes
Assurance Required
Yes
Yes (proposed)
Yes
Applies to Private Companies
Yes
No
Yes
Revenue Threshold
$1B
Market cap–based
>€40M (or group-wide thresholds)
If your company operates globally, you may need to harmonize multiple reporting frameworks. SB 253 adds a U.S.-based, state-level obligation that’s as rigorous—if not more than others.
Why This Law Matters
California is effectively regulating global companies through its market power.
SB 253 doesn’t just create more paperwork. It forces companies to:
Map their full emissions footprint
Invest in supplier data collection
Prepare for assurance-level scrutiny
In return, it offers something valuable: clarity. Investors, regulators, and the public get a standardized view of corporate climate performance.
How Sprih Helps
Sprih supports enterprises at every step of SB 253 California compliance—from data collection to third-party assurance.
Automated Scope 1, 2, 3 data collection, including integrations with logistics partners, utility systems, and ERPs
Smart emissions calculations, aligned with GHG Protocol
Audit-ready reporting for third-party assurance
Supplier engagement tools to streamline Scope 3 data
Customizable dashboards to track performance and identify hotspots
We’re already working with leading companies—including logistics majors and pharma giants—to help them prepare for SB 253. You don’t have to figure it out alone.
FAQs
What is SB 253 and what does it require companies to do?
SB 253, officially the Climate Corporate Data Accountability Act, is a California law mandating that large companies doing business in the state disclose their greenhouse gas emissions annually—including Scope 1 (direct), Scope 2 (indirect from purchased energy), and Scope 3 (value‐chain emissions) following the internationally recognized GHG Protocol.
Which companies must comply with SB 253?
Any public or private U.S. corporation, LLC, partnership or equivalent entity with over $1 billion in global annual revenue that is “doing business in California”—as defined by thresholds in sales, payroll or property presence—is in scope.
When do reporting requirements under SB 253 take effect?
Scope 1 and 2 emissions must be reported in 2026 using fiscal year 2025 data, while Scope 3 emissions reporting begins in 2027 based on fiscal year 2026 data. CARB is required to adopt regulations by July 1, 2025, though draft rules may arrive later.
What level of third‑party assurance is required for emissions reported under SB 253?
Starting in 2026, companies must obtain limited assurance for Scope 1 and 2 emissions. By 2030, reasonable assurance will be required for those, and limited assurance for Scope 3 disclosures becomes mandatory if not earlier—depending on market readiness.
How will enforcement of SB 253 work in its early years?
CARB issued an enforcement notice stating that no penalties will be taken in 2026 for incomplete Scope 1 and 2 reporting, provided companies show a good‑faith effort to collect relevant emissions data in fiscal year 2025. However, CARB can still act if firms fail to demonstrate genuine compliance preparation.
What penalties can companies face for non‑compliance with SB 253?
Entities that violate reporting rules—including late submissions, missing data, or inaccurate disclosures—can face civil penalties up to $500,000 per year. Scope 3 safe‑harbor provisions may apply initially, but full enforcement begins later.
Why is SB 253 considered significant beyond California?
SB 253 covers around 5,300 to 5,400 companies and is seen as one of the strictest climate disclosure laws in the U.S. It sets a high bar above federal SEC rules and aligns with global mandates, influencing how companies prepare climate reporting nationwide.
What should companies do now to prepare for SB 253 compliance?
Organizations should assess whether they meet revenue and business thresholds, begin developing systems to collect Scope 1/2/3 emissions data, and engage third‑party assurance providers. Even though detailed regulations are pending, building infrastructure for compliant disclosures is urgent.
