Which Companies Must Comply with SB 253 & SB 261?

2 min. read
Anviksha Mishra

companies complying to california climate laws

If your company operates in California and meets a certain revenue threshold, two new climate disclosure laws: SB 253 and SB 261, probably apply to you. Here’s what you need to know.

What Is SB 253?

SB 253 is California’s Climate Corporate Data Accountability Act. It requires large companies to publicly disclose their greenhouse gas (GHG) emissions, including Scope 1, 2, and eventually Scope 3.

Who Must Comply with SB 253?

Any company that:

Is organized in the US (any state or D.C.)
Does business in California
Has total annual revenues over $1 billion

If that’s your company, you’re considered a “reporting entity” under SB 253.

What Must Be Disclosed?

Emission Scope	Description	Deadline
Scope 1	Direct emissions from owned or controlled sources	Annually starting 2026
Scope 2	Indirect emissions from purchased electricity, steam, heat, or cooling	Annually starting 2026
Scope 3	All other indirect emissions (e.g., supply chain, product use)	Annually starting 2027

All disclosures must follow the Greenhouse Gas Protocol standards and be third-party assured.

What Is SB 261?

SB 261 is focused on climate-related financial risk. It requires companies to report how physical and transition climate risks could impact their business—and what they’re doing about it.

Who Must Comply with SB 261?

Any company that:

Is organized in the US
Does business in California
Has total annual revenues over $500 million

These are referred to as “covered entities” under SB 261.

📌 Note: Companies in the insurance business are exempt.

What Must Be Disclosed?

Every two years, covered entities must publish a Climate-Related Financial Risk Report. It must include:

How climate risks could affect financial performance
Measures the company is taking to adapt or reduce these risks

The report must align with TCFD (Task Force on Climate-Related Financial Disclosures) or an equivalent standard.

Quick Comparison: SB 253 vs SB 261

Feature	SB 253	SB 261
Focus	Greenhouse gas emissions	Financial risks from climate change
Revenue Threshold	$1 billion+	$500 million+
Applies to	All business types	All, except insurance companies
Reporting Frequency	Annually	Every two years
Required Framework	GHG Protocol	TCFD or equivalent
Public Disclosure	Yes, via emissions platform	Yes, on company website
Enforcement	Up to $500K/year in penalties	Up to $50K/year in penalties

When Do These Rules Take Effect?

Law	First Deadline
SB 253 – Scope 1 & 2 Reporting	2026
SB 253 – Scope 3 Reporting	2027
SB 261 – Climate Risk Report	January 1, 2026

Internal Action Items

Check if your total annual revenue exceeds $500M (SB 261) or $1B (SB 253)
Confirm you’re “doing business” in California
Assign teams to lead GHG accounting (SB 253) and climate risk disclosure (SB 261)
Identify appropriate reporting standards (GHG Protocol, TCFD)
Plan for third-party assurance (especially for SB 253 Scope 1 & 2 by 2026)