California's Climate & Sustainability Regulations
10 September 2026
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California’s climate-related reporting regulations
California has long stood at the forefront of climate and sustainability progress and legislation. With its large economy – the fourth largest in the world behind the U.S., China, and Germany – it is in a unique position to shape national and global environmental policy.
In recent years, the state has enacted a suite of ambitious laws aimed at increasing corporate accountability and accelerating the transition to a low-carbon economy. Notably, the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261) require thousands of businesses operating in California to disclose their greenhouse gas emissions and climate-related financial risks, respectively.
California has also introduced the Voluntary Carbon Market Disclosures Acts (AB 1305) – aimed at strengthening the integrity of voluntary carbon offsetting and climate goal-related claims – as well as more sector-specific sustainability requirements like the Responsible Textile Recovery Act (SB 707) and the Fashion Environmental Accountability Act (AB 405).
Understanding California’s climate risk and GHG emissions reporting requirements
SB 253: Climate Corporate Data Accountability Act
SB 253 applies to large corporations (>$1 billion in revenue enterprise-wide) doing business in California and requires them to report on Scope 1, 2, and 3 emissions along certain timelines beginning in 2026 (Scope 3 reporting begins in 2027).
2026 Reporting Requirements
The California Air Resources Board (CARB) has clarified reduced reporting requirements for 2026, including:
- Scope 1 and 2 emissions for the prior fiscal year
- Can report through existing annual reports including Scope 1 and 2 GHG emissions (such as existing sustainability reports or assurance reports that include GHG data)
- Can report using CARB’s voluntary Scope 1 and 2 reporting template (but CARB has reiterated that this is voluntary and all information other than Scope 1 and 2 GHG data is something they recommend rather than require for 2026)
- No assurance requirement for 2026
- Companies who were not already collecting or planning to collect Scope 1 and 2 GHG emissions as of December 5, 2024, can submit a letter to CARB noting this and not report emissions in 2026
- By November 10, 2026
- CARB had originally proposed a deadline of August 10, 2026, but has since proposed updating the regulatory requirement for 2026 to November 10. This is still pending official approval.
- CARB’s online intake form – use of this is optional but it provides an easy way to submit required contact information (used for submission fee invoicing) as well as emissions data
- Email contact information and emissions data to CARB at [email protected]
2027 and Beyond Reporting Requirements
CARB is undertaking an additional rulemaking process to define requirements for SB 253 in 2027 and beyond. They have released initial concepts for requirements, which include:
- Scope 1 and 2 GHG emissions
- Proposed requirements closely aligned with GHG Protocol; will be based on current rather than the currently being updated GHG Protocol
- Limited assurance is planned to be required
- Scope 3 emissions
- Proposing to phase in reporting by Scope 3 categories starting with Category 1 (Purchased Goods and Services), Category 3 (Fuel and Energy Related Activities), Category 5 (Waste Generated in Operations), Category 6 (Business Travel), and Category 7 (Employee Commuting), which CARB felt were most commonly reported and have most formalized methodology
- Assurance not proposed to be required for Scope 3 in 2027
- Companies can voluntarily report other categories. Companies can exclude data if that exclusion would not be reasonably expected to influence decisions, assessments, or understanding of users of the disclosure, opening the possibility companies could exclude non-material Scope 3 categories.
- Nov. 10 is the proposed deadline for 2027 and beyond
These are undergoing public review and comment. They have not been released as an official regulatory proposal as of September 2026.
How Anthesis Can Help
Anthesis provides holistic solutions for measuring and reporting Scope 1, 2, and 3 GHG emissions for regulatory compliance and strategic carbon and energy management.
| SB 253 Potential Requirements | How Can Anthesis Help |
|---|---|
| Report Scope 1 and 2 GHG emissions aligned with GHG Protocol guidance | Comprehensive GHG inventory development and GHG emissions baselining and measurement for Scope 1 and 2 aligned with the GHG Protocol using Anthesis Intelligence to streamline data collection and calculations, and support assurance-readiness |
| Scope 3 GHG emissions beginning with Category 1 (Purchased Goods and Services), Category 3 (Fuel and Energy Related Activities), Category 5 (Waste Generated in Operations), Category 6 (Business Travel), and Category 7 (Employee Commuting) beginning in 2027 | Scope 3 GHG inventory calculation methods aligned with GHG Protocol tailored to meet companies’ data maturity levels, combined with clear and expert guidance on internal data collection and the application of assurance-ready estimation methods to address data gaps |
| Potentially additional Scope 3 categories in future years | Scope 3 screening and hotspot analysis across upstream and downstream value chains to identify and calculate relevant or material emissions categories |
| Limited assurance of Scope 1 and 2 GHG emissions in 2027, with potential to add assurance requirements for Scope 3 emissions and expand to reasonable assurance requirements in the future. | Robust data controls and digital calculation tools designed to support GHG data collection and produce audit-ready, GHG Protocol-aligned emissions inventories, backed by extensive experience supporting third-party assurance requirements. |
SB 261: Climate-Related Financial Risk Act
SB 261 requires companies with over $500 million in annual revenue (enterprise-wide) who are also doing business in California to publicly disclose climate-related financial risks, risk assessment processes, risk management, and related metrics and targets.
SB 261 disclosure was originally required by January 1, 2026, but the rule is under legal challenge and not being enforced until this is resolved. The U.S. Ninth Circuit Court of Appeals heard arguments on the case in January 2026, but there is no announced timeline for a decision.
Even while enforcement of SB 261 is being upheld, there are reasons to consider undertaking climate risk assessment and disclosing on climate-related risks, including
- Other similar regulatory requirements including the E.U.’s CSRD, Australia’s ISSB-based climate-related reporting requirements, the U.K.’s climate-related reporting requirements, and other jurisdictions implementing similar requirements.
- Stakeholder demand for information on climate risks including ongoing investor, lender, and insurance provider support for climate-related disclosures; ESG rater criteria; and alignment with peer and best practice disclosures.
- Internal risk management which often does not fully account for climate-related risks, including physical risks which are becoming more of a current reality than a future risk.
How Anthesis Can Help
At Anthesis, we help companies navigate SB 261 and other climate risk reporting requirements with clarity and confidence. Our approach is focused on regulatory compliant assessment of physical and transition risk assessments, financial impact analysis, and the development of compliant disclosures, while also supporting broader strategic risk management efforts.
| SB 261 Potential Requirements | How Anthesis Can Help |
|---|---|
| Assess climate-related financial risks. | Assess physical and transition risk across scenarios and time horizons aligned with regulatory requirements. |
| Report and disclose financially material climate risks. | Assess financial impact pathways depicting how identified climate risks may impact financial position and/or performance. |
| Adopt measures to reduce and adapt to climate-related financial risks. | Integrate climate risks into your company’s enterprise risk management processes through recommendations |
| Report and disclose climate-related risks and measures adopted to reduce and adapt to them, in accordance with TCFD or IFRS. | Assess existing climate risk assessment and management process and public facing disclosures for alignment with regulatory requirements, identify gaps, and develop a roadmap of key actions to support compliance. Develop a climate risk report with disclosures aligned with TCFD or IFRS S2, the frameworks than underpin SB 261. |
AB 1305: Voluntary Carbon Market Disclosures Act
AB 1305 is intended to strengthen the integrity of voluntary carbon offsetting and climate goal-related claims. The bill affects companies of any size operating within California which:
- Market and/or sell voluntary carbon offsets in California.
- Purchase and/or use carbon offsets to make climate-related emission claims (such as carbon neutrality and/or net zero emissions) within California.
- Make any climate-related emission claims within California.
AB 1305 became effective in January 2024, with first disclosures due by January 2025.
Textile & apparel legislation
SB 707: Responsible Textile Recovery Act
SB 707 introduces the first extended producer responsibility (EPR) framework for textiles in the U.S., requiring producers to manage the recycling and reuse of their products.
The law mandates the formation of Producer Responsibility Organizations (PROs) to handle collection, sorting, and recycling, with full implementation expected by 2030. Companies are encouraged to prepare for compliance by assessing their environmental impact and developing sustainable practices.
AB 405: Fashion Environmental Accountability Act
Still in the process of being introduced, AB 405 is a new bill that will impact the fashion industry, encouraging increased accountability in reducing Green House Gas (GHG) emissions and greater supply chain transparency.
AB 405 would apply to businesses selling fashion goods in California with annual gross receipts exceeding $100 million (referred to as “fashion sellers”). The bill excludes fashion sellers that sell used fashion goods and does not include multi-brand retailers, unless the total annual gross receipts of all of the private labels under the retailer exceed $100 million.
In scope companies will need to establish a quantitative GHG emissions baseline, as well as both short-term and long-term reduction targets. Beginning in 2027, companies will also need to disclose supply chain details. Finally, companies will also need to have insight into their supplier’s chemical and wastewater testing, and include this information – along with the GHG emissions inventory – in an annual Environmental Due Diligence Report.
Anthesis support
Anthesis is equipped to support clients in preparing for and complying with any of the above regulations.
Our Net Zero and Decarbonisation services provide strategic guidance on energy and carbon transitions, and all related reporting needs. We offer California-specific insights and decision-making support to ensure sustainable business growth in both the short and long term.
Meanwhile, Our Supply Chain and Responsible Sourcing team can help you embed sustainability into your procurement and production processes, creating a wealth of benefits from mitigating and managing risks, complying with global and local regulations, enhancing and protecting your reputation, and creating competitive advantages that contribute to long-term business success in both the California and more global landscapes.
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