The Initial Regulation Implementing California SB 261 and SB 253 Is Final

On October 12, 2026, the Office of Administrative Law (OAL) approved the Initial Regulation implementing SB 261 and SB 253. CARB adopted an earlier version of this regulation on February 26, 2026, and subsequent amended versions were subject to public comment before the final version of the Initial Regulation was submitted to OAL for approval. CARB’s webpage for this rulemaking indicates that the Initial Regulation is effective as of October 12, 2026. 

As a reminder, starting in 2026, business entities organized under U.S. law, doing business in California, and with annual revenues over $500M may be required by SB 261 to make biennial disclosures regarding their climate-related financial risk; and those with annual revenues over $1B will be required by SB 253 to make annual disclosures of their Scope 1 and 2 GHG emissions and, starting in 2027, to also annually disclose their Scope 3 GHG emissions.

Among other things, the Initial Regulation provides that:

• The first reporting deadline for Scope 1 and 2 emissions under SB 253 is November 10, 2026. For 2026 reporting, in lieu of the reporting required by SB 253, reporting entities may submit either Scope 1 and 2 emissions for their prior fiscal year based on information they already had or were collecting on or before December 5, 2024, or a statement of non-reporting on company letterhead indicating that they did not possess and were not collecting Scope 1 and 2 emissions information at that time.
• Scope 1 and 2 emissions are to be reported for the applicable preceding fiscal year and, where a reporting entity’s fiscal year ends after February 1, the applicable preceding fiscal year is the fiscal year ending in the previous calendar year (however, the reporting entity may choose to use its most recent fiscal year).
• Definitions clarifying a number of aspects of SB 261 and SB 253, including that the revenue threshold for determining whether an entity is subject to these statutes is the lesser of the entity’s two previous fiscal years of revenue, and that “revenue” has the same meaning as “gross receipts” in California Revenue and Taxation Code section 25120(f)(2).
• Exemptions from SB 261 and SB 253 for certain entities, including nonprofit or charitable organizations that are tax-exempt under the Internal Revenue Code.
• A framework for the calculation, collection, and enforcement of annual fees under SB 261 and SB 253.

The Initial Regulation (Cal. Code Regs., tit. 17, §§ 96070 – 96077) is available here.