Which companies must comply with SB 253?

SB 253 applies to US entities (public or private) with total annual revenues exceeding $1 billion that 'do business in California.' The California Franchise Tax Board defines 'doing business' broadly — it includes companies with sales, property, or payroll in California. This captures an estimated 5,000+ companies, many headquartered outside California.

Does SB 253 require Scope 3?

Yes. SB 253 mandates disclosure of Scope 1, 2, AND 3 emissions. Scope 3 reporting begins one year after Scope 1 and 2. This is one of the first US laws to require comprehensive value chain emissions disclosure and goes further than the SEC rule in this regard.

How does SB 253 interact with the SEC rule?

They are complementary but different. SB 253 applies to public AND private companies (SEC rule only covers public companies). SB 253 mandates Scope 3 (SEC requires it only if material). SB 253 applies based on California revenue threshold (SEC applies to all registrants). Companies in scope for both must satisfy the more stringent requirement.

California Climate Corporate Data Accountability Act (SB 253)

What Is SB 253?

The Climate Corporate Data Accountability Act (Senate Bill 253), signed by Governor Newsom in October 2023, requires large companies doing business in California to publicly disclose their greenhouse gas emissions across Scopes 1, 2, and 3. It is one of the most ambitious corporate emissions disclosure laws in the United States.

SB 253 fills a critical gap in US climate disclosure — it covers private companies (unlike the SEC rule) and mandates Scope 3 reporting (which the SEC rule makes conditional). For many large US companies, this will be their first mandatory emissions disclosure obligation.

Who It Applies To

SB 253 applies to any entity that:

Is a partnership, corporation, LLC, or other business entity, AND
Has total annual revenues exceeding $1 billion, AND
Does business in California as defined by the California Revenue and Taxation Code

"Doing business in California" is defined broadly by the Franchise Tax Board: having sales, property, or payroll in California, or being organized in California. This captures companies headquartered in any state (or country) that have significant California operations or sales.

Approximately 5,000-10,000 companies are expected to be in scope.

Key Requirements

Scope 1 emissions: Direct emissions from owned or controlled sources
Scope 2 emissions: Indirect emissions from purchased electricity, heat, and steam
Scope 3 emissions: All other indirect emissions across the value chain (all 15 GHG Protocol categories)
Methodology: Must follow the GHG Protocol Corporate Standard and Corporate Value Chain Standard
Assurance: Emissions data must be independently verified by an assurance provider
Public disclosure: Reports will be published on a publicly accessible platform administered by the California Air Resources Board (CARB)

Timeline

October 2023: SB 253 signed into law
January 2025: CARB begins developing implementing regulations
2026: Scope 1 and Scope 2 reporting begins (for FY2025 data)
2027: Scope 3 reporting begins (for FY2026 data)
Limited assurance required initially, with reasonable assurance phasing in

Note: Governor Newsom signed amendments in 2024 that delayed implementation and modified some provisions. Check CARB's website for the latest regulatory timeline.

Compliance Steps

Determine applicability: Confirm whether your entity meets the revenue and California business thresholds
Build GHG inventory: Establish comprehensive Scope 1, 2, and 3 measurement following GHG Protocol
Scope 3 preparation: Begin Scope 3 measurement early — it's the most challenging and time-consuming component
Engage assurance provider: Select an assurance provider familiar with GHG Protocol requirements
Data systems: Build or upgrade systems for annual emissions calculation and reporting
Monitor CARB regulations: Track CARB's rulemaking for specific reporting format and submission requirements
Coordinate with other frameworks: Align SB 253 reporting with SEC, CSRD, CDP, and SBTi requirements to avoid duplication

Penalties

CARB enforcement: Administrative penalties for non-compliance or inaccurate reporting
Maximum penalty: Up to $500,000 per reporting year (as amended)
No private right of action: SB 253 does not create a private cause of action for citizens to sue companies
Safe harbor: Limited safe harbor for Scope 3 emissions reporting, acknowledging data challenges

How Council Fire Can Help

Council Fire helps companies prepare for SB 253 compliance — from GHG inventory development (including the challenging Scope 3 categories) through assurance readiness and integration with other reporting frameworks. Contact us for SB 253 support.