California SB 253 and SB 261 are moving forward toward their 2026 start dates. These laws effectively create a new baseline for corporate climate reporting for public and private companies in the United States. CARB’s rulemaking is delayed into 2026 and there is active, but so far unsuccessful litigation–now including Exxon and a business-group challenge headed for the Supreme Court. Companies are being told to prepare as if disclosures will be required on the original timeline.

The “California Climate Disclosure Laws” are really a package of two statutes:

• SB 253–Climate Corporate Data Accountability Act (CCDAA) Requires companies with greater than $1B global revenue doing business in CA to publicly disclose Scope 1, 2 and 3 GHG emissions annually.
• SB 261–Climate-Related Financial Risk Act (CRFRA). Requires companies with greater than $500M global revenue doing business in CA to publish a climate-related financial risk report every two years, aligned broadly with TCFD-style frameworks. First reports are due January 1, 2026. CARB is the implementing agency for both.

Implementation and CARB rulemaking status

SB 253-Emissions Disclosure

• CARB’s California Corporate GHG Reporting Program page is live and confirms that covered entities will need to report global Scope 1, 2 and 3 emissions.
• Statutorily, Scope 1 and 2 reporting begins in 2026, Scope 3 in 2027, with timing to be set by CARB.
• CARB has issued draft materials, including a voluntary template for Scope 1 and 2 reporting for the first cycle. Announced that formal draft regulations for both SB 253 and SB 261 are pushed into Q1 2026, missing the original 2026 deadline.
• CARB has signaled possible June 30, 2025 as the working date for first Scope 1 and 2 disclosures but this may shift depending on when the final regs are adopted.

SB 261–Climate-Related Financial Risk Disclosure. There is delay and uncertainty around regulatory detail and mechanics, but not around the basic obligation or the 2026 go live--legislative sponsors and recent guidance have repeatedly said deadlines are not being pushed back.

• First climate-related financial risk reports are still due Jan. 1, 2026, every two years thereafter and must be made public
• CARB has published a Draft Checklist (Sept 2, 2025) to guide report content; it’s explicitly framed as a “starting point” for covered entities.
• A public docket will open Dec. 1, 2025 for reporting entities to post the link to their initial SB 261 report.

Litigation Status

There is real legal uncertainty, but no court has blocked the laws. There are two main tracks. 1) Business group/Chamber challenge and 2) the Exxon lawsuit. So far, no court has enjoined the statutes and regulatory delay and the possibility that the Ninth Circuit or the Supreme Court could narrow or strike down the laws later.

Business Group/Chamber Challenge

• Business associations sued CARB and the state, arguing both SB 253 and SB 261 are unconstitutional compelled speech and therefore pre-empted by the First Amendment.
• In August 2025, the district court denied a preliminary injunction allowing the laws to proceed while litigation continues. The court applied a Rational Basis Review to SB 253, finding sufficient stat interest in investor justification to let it proceed for now. Regarding SB 261, the district court applied Intermediate Scrutiny to SB 261 finding enough investor-related justification to let it proceed for now.
• Plaintiffs appealed; argument in the Nith Circut is schedule for January 2, 2026–after the first SB 261 deadline.
• Very recently, business group have also sought emergency relief from the U.S. Supreme Court to pause the laws, arguing irreparable First Amendment harm and compliance costs.

Exxon

• On October 25, 2025, ExxonMobil filed its own suit in the Eastern District of California again asserting first Amendment violations and pre-emption (esp. SB 261 vs federal securities law)
• Exxon specifically attacks the use of the GHG protocol and global emissions coverage under SB 253 and SB 261’s requirement to speculate about future climate-related financial risks.

Practical Status for Covered Companies

Most guidance is in agreement that companies should assume initial SB 261 reporting and SB 253 data work will still be expected on the current timeline unless and until a higher court says otherwise. Stakeholders and regulated entities expect further guidance and final regulations in Q1 and Q2 2026, but not a wholesale delay of the statutory scheme.

“No Regrets” actions for 2025-2026–prepare to comply but build flexibility for litigation outcomes.

• Confirm in-scope status: assess revenue “doing business in CA” footprint, and entity structure for SB 253 (greater than 1B) and SB 261 (greater than $500 M).
• Map data and governance owners: Identify responsible owners for GHG data, risk, finance and disclosure–often found across sustainability, finance, risk and legal.

For SB 261 (immediate)

• Use CARBs Draft Checklist as the defacto structure for the 2026 climate-related financial risk report
• Align with existing TCFD/ISSB processes wehre possible to avoide duplicate work.
• Decide where the public report will live (website placement, governance around approvals)

For SB 253 (build the foundation)

• Inventory current Scope 1, 2 and 3 categories (e.g. purchased goods, use of sold products, transport) and start building data pipelines and controls.
• Evaluate whether existing tools/software can produce assurance-ready numbers once CARB finalizes details.
• Controls, assurance and documentation. Begin treating climate and emissions data like financial data; version-controlled methodologies, clear assumptions and evidence trails.
• Consider early discussions with auditors/assurance providers to understand readiness expectations and independence constraints

Legal and communications strategy

Prepare clear internal and external messaging on how disclosures are prepared and how uncertainties are handled

Track litigation and CARB workshops but avoid using lawsuits as a reasaon to stall no-regrets work.

How the California Disclosure Rules interact with ESG/SEC disclosure at a high level.

• California’s laws are now effectively the leading U.S. mandatory regime after the SEC climate rule stalled and is itself tied up in litigation. Ensure board/management understands that California plus CRSD plus ISSB are converging into an effective global baseline.
• Many commentaries are recommending multinational companies treat CA and EU CSRD and IFRS S1/S2 as the combined baseline for climate and carbon reporting–even if the CA rules are ultimately narrowed by courts–because the systems build and controls work will be largely reusable.