CARB 2026 California SB 253 Updates

Authors: Cambre Codington and Corey Prigent

Over the past month, the California Air Resources Board (CARB) has provided additional direction on implementation of the Climate Corporate Data Accountability Act [Senate Bill (SB) 253] through both its February 26, 2026 Board hearing and a virtual workshop held on March 23, 2026. At the February 26 hearing, CARB approved the initial regulation establishing administration and implementation fees, adopting several applicability-related provisions, and setting the first-year SB 253 reporting deadline of August 10, 2026. CARB also stated that first-year reporting will cover only Scope 1 and Scope 2 emissions.

Together, the hearing and workshop offered a clearer understanding of CARB’s current approach to implementing SB 253. The Board hearing concentrated on the initial regulation package and CARB’s response to stakeholder comments, while the March 23 workshop discussed additional implementation issues and the next phase of rule development for reporting years 2027 through 2030.

What CARB’s February 26 SB 253 Hearing Clarified:

The initial regulation was approved by the Board, which included definitions for doing business and revenue thresholds, which had been two definitions for which CARB had received a significant number of comments during past workshops and public comment periods. To align with existing regulatory language, CARB adopted the regulatory definitions for “doing business in California” and “revenue” from the California Revenue & Taxation Code §§ 23101(a) and 25120(f)(2), respectively. At the February 26 Board hearing, three main issues were discussed: the exemption of insurance companies from SB 253 reporting, whether the first-year reporting timeline is feasible, and if ongoing litigation should affect implementation. These topics also help explain what CARB decided and how it justified those decisions.

1. Insurance Company Exemption:

One of the most closely watched aspects of the initial regulation was CARB’s decision to exempt certain insurance entities from SB 253 reporting. In the Initial Statement of Reasons (ISOR), CARB stated that entities regulated by the California Department of Insurance or involved in insurance in another state would be excluded from SB 253. CARB described this approach as a continuity measure and part of a broader effort to avoid duplicate reporting where another regulator already manages a disclosure framework for the same sector.

CARB’s materials also identify other excluded categories, including tax-exempt nonprofits and charities, government entities, and majority government-owned entities. As a result, the insurance exemption is part of a broader set of applicability decisions made by CARB in the initial rule.

This issue may continue to attract attention. Questions were raised about CARB’s authority to extend the insurance exemption under SB 253, but CARB’s position at the hearing was that implementation should consider existing regulatory structures and minimize overlapping requirements.

2. Reporting Deadline and Timeline Concerns:

The second major concern was timing. Commenters argued that a 2026 reporting deadline would not give enough time for all potentially covered entities to determine if they are subject to the rules, set reporting boundaries, and gather emissions data for an initial filing. CARB acknowledged these concerns but stuck with the first-year SB 253 reporting deadline of August 10, 2026, which limits the first reporting to Scope 1 and Scope 2 emissions.

CARB’s response focused on the structure of the reporting schedule rather than extending the deadline further. In the ISOR, CARB proposed a February 1, 2026 cutoff date for deciding which fiscal year’s data must be reported in 2026, while allowing the inclusion of more recent data if available. CARB explained that this approach aimed to reduce uncertainty and give entities at least six months after their fiscal year ends before the August 10 deadline. In practice, depending on a company’s fiscal year-end, the reporting window might be longer.

CARB also relied on the enforcement approach published in December 2024. In its February 26 announcement, CARB stated that it will exercise enforcement discretion for genuine first-year submissions and focus on supporting compliance through stakeholder engagement. At the hearing, this flexibility seemed to be part of CARB’s reason for keeping the 2026 deadline.

For entities that might be subject to SB 253, the immediate implication is that CARB did not change the first-year deadline due to timeline concerns. Instead, CARB kept the August 10, 2026 reporting date and highlighted first-year flexibility as part of its implementation plan.

3. Legal and Litigation Clarification:

The third issue involved litigation. Stakeholders questioned whether ongoing legal challenges to California’s climate disclosure laws should influence CARB’s implementation timeline. CARB stated at the hearing that litigation does not currently require delaying SB 253 implementation. Their current litigation page lists the pending challenges to SB 253 and SB 261, while their February 26 announcement notes that, due to a court order, SB 261 is not being enforced, and reporting under that law is voluntary.

This distinction is crucial for understanding CARB’s approach, as litigation still impacts the overall compliance landscape; however, for SB 253, the Board approved the initial regulation package and the first-year reporting deadline. Based on the February 26 decision, CARB continues to move forward with SB 253 implementation while legal issues related to SB 261 remain unresolved.

The February 26 Board hearing did not provide a complete implementation plan, but it clarified CARB’s current position on several key issues raised in stakeholder comments. The hearing mainly focused on the initial regulation package and CARB’s response to those comments. The virtual workshop held on March 23, 2026, served as a helpful follow-up, offering additional discussion on implementation questions and practical issues still under development. As described in the workshop notice, CARB used that session to share more information about the August 10, 2026 deadline for Scope 1 and Scope 2 reporting and to start discussing the next phase of regulation development for 2027 to 2030, including Scope 3 options and economic analysis.

What CARB’s March 23^rd Workshop Clarified:

On March 23, 2026, CARB held a virtual public workshop to provide additional direction on the upcoming SB 253 reporting requirements and to gather stakeholder feedback on concepts under consideration for future rulemaking. Compared with the February 26 Board hearing, which focused on the initial regulation package, the workshop offered more detail on first-year reporting expectations and previewed several topics CARB is considering for the next phase of implementation. CARB also confirmed that additional information on the 2026 reporting intake process and extension request guidance is forthcoming.

2026 Reporting Updates:

For 2026 reporting, CARB reaffirmed that covered companies would report only Scope 1 and Scope 2 emissions. Scope 3 reporting will not be required until later years, and limited assurance will also not be required for the first reporting cycle. CARB also clarified that the draft reporting template released in October 2025 will not be required for 2026 submissions, and that an updated reporting template can be expected later this year for use in future reporting starting in 2027. Additional guidance on the reporting intake process and extension requests is still expected.

The workshop also provided direction on which fiscal year (FY) data companies should use for the first-year filing. For entities with a FY ending on or before February 1, 2026, CARB indicated that FY 2025-2026 data should be reported. For entities with a FY ending after February 1, 2026, CARB advised that FY 2024-2025 data should be used.

What CARB is Considering for Future Rulemaking:

Beyond the 2026 reporting cycle, the workshop focused on concepts CARB is evaluating for future rulemaking. These included how companies should set organizational boundaries, revisions to Scope 1 and 2 reporting requirements, proposed Scope 3 categories, acceptable greenhouse gas (GHG) accounting methods, emission factor datasets, assurance standards, and economic impacts associated with compliance.

Organizational Boundaries:

CARB discussed how reporting entities may define organizational boundaries for GHG reporting. The agency referenced two common approaches: the equity share approach and the control approach. An equity share approach accounts for emissions based on a company’s percentage ownership in an operation, while under the control approach, CARB discussed both financial control and operational control. These decisions will influence which operations and emissions sources are included in a company’s inventory and will be an important component of future reporting legislation.

Reporting Methodology and Data Sources:

CARB also outlined several technical concepts it is considering for future reporting. These included possible updates to the Scope 1 and Scope 2 reporting templates, greenhouse gas accounting methods, and emission factor datasets.

For emissions quantification, CARB discussed four GHG accounting approaches:

• • Spend-based: Calculates emissions using the amount spent on goods and services and an associated emissions factor;
  • Activity-based: Calculates emissions using a measurable activity level, such as quantity purchased, distance traveled, or units produced, along with a related emissions factor;
  • Supplier-specific: Calculates emissions using supplier-specific activity data or emissions factors rather than more general averages; and
  • Hybrid: Uses a combination of spend-based, activity-based, and supplier-specific methods.

The workshop also identified several emission factor sources under consideration, including the United States Environmental Protection Agency (U.S. EPA) and international datasets. These topics signal that CARB may still be working through how much flexibility companies will have in calculating and documenting emissions in future reporting years.

Scope 3 Reporting Options:

CARB also previewed its approach to Scope 3 reporting, which is scheduled to begin in 2027. The agency discussed the full set of upstream and downstream Scope 3 categories, shown in the table below. and presented three possible reporting frameworks for stakeholder feedback: broad applicability across all reporting entities, a sector-based phase-in, or a phased approach focused first on the most commonly reported categories.

They also presented three possible reporting frameworks for stakeholder feedback:

• • Broad applicability: All reporting entities would disclose all Scope 3 categories, along with information such as organizational boundaries, emission factors, and accounting methods, though CARB is considering flexibility for categories considered de minimis if appropriately explained.
  • Sectoral phase-in: Reporting would begin with sectors responsible for the largest share of statewide emissions, such as transportation, technology and energy, cement production, and other manufacturing sectors.
  • Category phase-in: Reporting would begin with the most commonly reported Scope 3 categories, such as business travel, purchased goods and services, fuel and energy-related activities, employee commuting, and waste generated in operations, while allowing companies to voluntarily report the remaining categories.

During the workshop discussion, commenters also noted that the GHG Protocol is currently being updated, which could affect future expectations for Scope 2 and Scope 3 reporting. CARB indicated that it is monitoring those developments.

Assurance Standards

Starting in 2027, CARB expects limited assurance verification for Scope 1 and 2 emissions reporting. During the workshop, CARB identified several assurance standards already used in other jurisdictions that it may recognize under the program. CARB also noted that assurance requirements slated to begin in 2030 are not part of the current rulemaking and will be developed after the agency has had time to evaluate the first few years of reporting.

Economic Impacts

The workshop also addressed the economic analysis that will support future rulemaking under the Standardized Regulatory Impact Assessment (SRIA), which is required for regulations expected to have an economic impact of more than $50 million within a 12 month period. CARB said its initial analysis identified reporting-related activities, such as data collection, emissions inventory development, report preparation, and third-party assurance as the primary cost drivers, with first-year costs expected to be higher than ongoing costs.

CARB estimated an initial cost of about $142,711 per reporting entity and average annual costs ranging from approximately $135,083 – $152,352 depending on the Scope 3 reporting approach under consideration. CARB also noted that these estimates may be conservative, and several commenters stated during the workshop that the projected costs may not reflect the burden many entities are likely to face.

Opportunities for Stakeholder Feedback:

Throughout the workshop, CARB repeatedly encouraged stakeholders to submit written comments on the issues discussed, including reporting design, organizational boundaries, accounting methods, emission factors, assurance, and economic impacts. Comments on both the February hearing and the March workshop are due by April 13, 2026.

If you plan to provide feedback, CARB has encouraged interested parties to submit comments directly in writing via email to ClimateDisclosure@arb.ca.gov so the agency can consider them as it develops future SB 253 rulemaking. For more specifics on CARB’s requested feedback, or to submit public comments, companies can visit CARB’s website.

Conclusion:

Together, the February 26 hearing and the March 23 workshop demonstrate that CARB is continuing to develop the SB 253 program while refining its approach to first-year reporting. Although not every implementation issue has been resolved, CARB has issued additional guidance on applicability, timing, and the structure of the first reporting year, and has begun to outline the next phase of rule development. For companies assessing applicability or preparing for 2026 reporting, these developments offer a clearer view of the agency’s current direction.

For inquiries about ALL4’s services or follow-up questions regarding the SB 253 regulation and proposed future rulemaking, don’t hesitate to get in touch with Cambre Codington (Associate Managing Consultant) at ccodington@all4inc.com and/or Corey Prigent (Consultant) at cprigent@all4inc.com.