CARB Guidance Explained: Updates to California’s Climate Rules

California has taken another decisive step in advancing corporate climate accountability. In July 2025, the California Air Resources Board (CARB) released its long-awaited guidance on the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). Together, these two laws form the California Climate Accountability Package — a landmark set of disclosure rules that will reshape how thousands of companies measure, manage, and report their greenhouse-gas emissions and climate risks.

Since then, CARB has moved from guidance to formal rulemaking. On 26 February 2026, CARB's Board adopted the California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation, setting the fee structure for both laws and confirming an initial SB 253 reporting deadline. On 24 June 2026, CARB announced it is deferring that deadline by three months and revising parts of the regulation, pending a new public comment period.

What is CARB Guidance?

CARB’s guidance provides the implementation framework for California’s new climate-disclosure laws. It bridges legislation and execution, translating the legal text into how companies should collect, calculate, and disclose emissions and climate-related risks.

While SB 253 and SB 261 set the regulatory requirements, CARB defines the methodologies, timelines, templates, and verification processes that make compliance operational. Its guidance draws on international frameworks including the Greenhouse Gas Protocol (for emissions accounting), Task Force on Climate-related Financial Disclosures (TCFD) (for climate risk reporting), and International Sustainability Standards Board (ISSB) (for disclosure structure and comparability)

This alignment reduces duplication for multinational companies while maintaining rigour and credibility.

Quick recap of SB 253 and SB 261

To understand the guidance, it’s worth revisiting what these two bills require. Together, they create the first mandatory, standardised climate disclosures in the United States, setting a precedent likely to influence federal and state policy.

SB 253: Climate Corporate Data Accountability Act

• Applies to companies doing business in California with annual revenue > $1 billion
• Requires annual public disclosure of Scope 1, 2 & 3 emissions, following GHG Protocol
• Mandates third-party assurance for Scope 1 & 2 emissions beginning in 2027, phasing toward reasonable assurance by 2030; CARB's adopted regulation does not require assurance for the initial 2026 report

SB 261: Climate-Related Financial Risk Act

• Applies to companies doing business in California with annual revenue > $500 million.
• Requires biennial climate-risk reports aligned with TCFD/IFRS S2, posted publicly
• Reports must describe governance, risk management, strategy, and metrics & targets
• Enforcement is currently paused: the Ninth Circuit stayed SB 261 in November 2025 pending a First Amendment challenge, and no ruling has been issued as of mid-2026. Reporting is voluntary in the meantime.

What CARB clarified in its July 2025 guidance

CARB released FAQs and workshops offering clarity on SB 253 in five key areas:

1. Staggered implementation timeline

• 10 November 2026 → Scope 1 & 2 reporting (based on 2025 data); no third-party assurance is required for this first-year report.
• 2027 → Scope 3 reporting (based on 2026 data) Limited assurance also becomes mandatory for Scope 1 & 2 emissions from this year onward.
• 2028 onwards → Scope 1 & 2 assurance escalates from limited to reasonable assurance. Whether Scope 3 will require limited assurance from this point is still under review in CARB's ongoing second rulemaking phase, alongside organisational boundary rules and accounting methodology.

2. Scope 3 boundaries

Scope 3 reporting was explicitly aligned with the GHG Protocol Value Chain Standard, covering both upstream and downstream activities including purchased goods, transportation, waste, use of sold products, and end-of-life treatment. CARB emphasised transparency over perfection, expecting data quality to improve over time.

3. Verification requirements

No assurance is required for the first-year 2026 Scope 1 & 2 report. Verification requirements for future years — under standards such as ISSA 5000, AA1000, ISO 14064, and AICPA criteria — are being developed in CARB's second rulemaking phase, launched in March 2026, and are not yet finalised. 

4. Reporting format

CARB has published an optional Scope 1 & 2 reporting template, but its use is voluntary for 2026. A mandatory, standardised submission format is expected from 2027 onward.

5. Alignment with federal and global standards

While CARB continues to reference the EU CSRD for interoperability, the federal alignment point is now moot. On 29 May 2026, the SEC formally proposed rescinding its own 2024 climate disclosure rule in its entirety, with comments due 3 August 2026, meaning there is currently no active federal climate disclosure rule to align with. 

What changed in 2026

The two laws are moving at different speeds, for different reasons. SB 253, the emissions law, is progressing. CARB adopted its Initial Regulation on 26 February 2026, setting fees, key definitions, and a first reporting deadline of 10 August 2026. It also opened the door to a possible exemption for insurers, a move the law's original authors have pushed back on. On 24 June 2026, CARB pushed that initial deadline back three months, to 10 November 2026, while it finalises some remaining details.

SB 261, the climate-risk law, is stuck for a different reason: a court case, not a delay from CARB. In November 2025, the Ninth Circuit blocked enforcement of SB 261 while a legal challenge plays out. Oral arguments were heard in January 2026, but there's still no ruling as of July 2026. Because of this, CARB isn't enforcing SB 261's original deadline, and reporting under it is currently voluntary. That said, over 170 companies had already filed reports by late June 2026.

List of in-scope companies

In mid-October, a non-exhaustive list of entities expected to report under SB 253 and SB 261 was published. The list, derived from public business registry and revenue data, is meant to help organisations identify potential obligations and facilitate outreach to subsidiaries or parent companies. Inclusion does not guarantee final coverage, but omission doesn’t confer exemption. Companies must still self-assess against the revenue and business-presence thresholds.

Continuing rulemaking

CARB issued its Notice of Proposed Rulemaking in December 2025 and adopted the Initial Regulation on 26 February 2026. A March 2026 workshop opened the next rulemaking phase, covering Scope 3 boundaries, GHG accounting methodology, and assurance standards for 2027 reporting — this phase remains open and unfinished.

Who does the California Climate Accountability Package affect?

More than 5,400 companies are estimated to fall under SB 253 and SB 261, based on CARB's applicability criteria and current revenue thresholds. However, the ripple effects will extend far beyond that group. Because Scope 3 disclosure extends across value chains, thousands of small-to-mid-size suppliers will be asked for emissions data by customers and investors. 

How companies should prepare 

1. Map data to the October template. Align internal systems with the draft fields so you can generate source-level activity data and audit trails by early 2026.
2. Prepare the SB 261 report, but don't rush to publish. Use the CARB Checklist to finalise climate-risk content, governance, and metrics — enforcement is currently paused pending the Ninth Circuit's ruling, so treat this as building a publish-ready report rather than hitting a live deadline.
3. Build assurance-ready evidence. Implement internal data-quality controls to make third-party verification smoother and less costly.
4. Engage suppliers now. Begin Scope 3 data collection templates and communication before the 2027 phase-in.
5. Invest in reliable tools. Choose platforms that integrate directly with operational and financial data, reducing manual input and error.
6. Monitor CARB updates. Subscribe to their mailing list and docket notifications for the final template, company-list updates, and rule adoption.

How Zevero supports compliance with California Climate Rules

Zevero helps organisations turn regulatory complexity into action. Our platform combines AI-powered carbon accounting with hands-on guidance from sustainability experts to simplify compliance with California’s Climate Accountability Package. We help you measure accurately, align your emissions data with your climate-risk narrative, and ensure disclosures meet the expectations of TCFD, ISSB, and other global frameworks.

→ Get in touch to see how Zevero can support your reporting under SB-253 and SB-261.

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