On Nov. 18, 2026, the United States Court of Appeals for the Ninth Circuit issued a preliminary injunction enjoining the enforcement of California’s SB 261, which had an initial compliance deadline of Jan. 1, 2026. The same day, the California Air Resource Board (CARB) issued updated guidance concerning its rule-making efforts for both SB 253 and 261.
The Ninth Circuit’s injunction may provide temporary relief to companies doing business in California, since the initial Jan. 1, 2026, deadline is no longer enforceable. However, SB 261 has not been invalidated, and since the ultimate outcome of the underlying litigation is unclear, covered entities may wish to continue preparing for SB 261 compliance in the near term.
We have updated the below FAQ to reflect CARB’s updated guidance.
What Are These Laws?
- California SB 253 (the Climate Corporate Data Accountability Act) requires regulated companies to annually disclose their emissions beginning in August 2026.
- California SB 261 (the Climate-Related Financial Risk Act) requires regulated companies to disclose climate-related financial risks and mitigation measures every other year. The Ninth Circuit has paused enforcement of SB 261.
- Revenue thresholds. Public and private U.S. entities “doing business in California” with annual revenues exceeding $500 million in revenue in the prior fiscal year are subject to SB 261. SB 253 has a higher revenue threshold of $1 billion in the prior fiscal year.
- Rulemaking uncertainty and doing business in California. The California Air Resource Board (CARB) is in the process of developing its regulations implementing the laws but is not expected to have final regulations in place until sometime in 2026. The regulations may clarify some of the open questions under both laws, including how to calculate revenues and what “doing business in California” means. Pending final regulations, CARB’s current guidance indicates that revenues should be calculated on a global basis (not just from California), and that “doing business in California” means engaging in transactions for financial gain within California, being organized or commercially domiciled in California, or having California sales exceeding specified thresholds ($735,019 for 2024). Merely owning property or having payroll in California are no longer considered factors in determining “doing business in California” under CARB’s updated guidance. Further, under the current guidance, entities controlling more than 50% of an entity doing business in California may be deemed to be doing business in California themselves.
- CARB’s initial list. CARB published its preliminary list of about 4,000 entities that may have a reporting obligation under SB 253 and SB 261.1
- SB 253 – disclosure of emissions. Beginning in 2026, subject entities must publicly disclose Scope 1 greenhouse gas (GHG) emissions (from owned or operated facilities) and Scope 2 GHG emissions (from consumed electricity, heating, or cooling) annually and must include Scope 3 GHG emissions (indirect or downstream emissions such as from purchased goods or business travel) starting in 2027. A third-party consultant must be retained to certify such emissions.
- SB 261 – disclosure of climate risks and mitigation measures. Covered entities must publish biennially a climate-related financial risk report (following the Task Force on Climate-Related Financial Disclosures (TCFD) framework or equivalent). The TCFD framework calls for the disclosure of (i) the organization’s governance around climate-related risks and opportunities, (ii) the actual and potential impacts of climate-related risks and opportunities on the organization’s business, strategy, and financial planning, (iii) the metrics and targets used to assess and manage relevant climate-related risks and opportunities, (iv) and details regarding how the organization identifies, assesses, and manages climate-related risks.
- Stakeholders may wish to analyze whether their organizations meet the “doing business in California” and revenue thresholds under either SB 253 or SB 261, even if they have not been identified on CARB’s initial list.
- If filings are required, an organization may wish to retain qualified counsel and/or an experienced consultant firm. In addition, companies should consider identifying an internal compliance team with clear functional roles to begin preparing any required SB 253 or 261 filings as soon as possible. Qualified counsel may help enhance statutory compliance in a manner that mitigates potential legal exposure that might result from climate-based statements and representations, while a qualified consultant could assist in data collection and preparation of the required reports.
Who Is Subject to These Laws?
What Is Required of Covered Entities?
Considerations
1 Companies potentially subject to SB 253 or 261 regulations must still comply with statutory requirements even if not listed by CARB.