what companies need to know about the new wave of sustainability laws
Despite the recent US administration roll back on federal climate regulations, California and other states and localities have continued – and even expanded – climate action, making them leaders in North America and the world by advancing sustainability goals, promoting green business practices, and developing new climate laws.
In the movement to improve transparency, standardise climate-related disclosures, and shift climate transparency from emerging best practice to statutory requirement, California passed the following twin laws in October 2023.
GHG emissions law.SB-253, the Climate Corporate Data Accountability Act, mandates the disclosure of GHG emissions.
Climate risks law.SB-261, the Greenhouse Gases: Climate-Related Financial Risk Act, mandates the disclosure of climate-related financial risks and measures adopted to reduce and adapt to such risks.
Since then, the California Air Resources Board (CARB) has been developing implementation frameworks in response to SB 253 and SB 261.
California’s laws – the essentials
SB 253 – reporting begins 30 June 2026: requires companies doing business in California with > $1 billion annual revenue to publicly disclose Scope 1 and 2 GHG emissions (with Scope 3 phased in) rolled out through a reporting and assurance schedule.
SB 261 – reporting begins 1 January 2026: requires companies doing business in California with > $500 million revenue to disclose climate-related financial risks (strategy, governance, risk management, metrics/targets aligned to TCFD/ISSB frameworks) on a biennial cadence, with the first statutory deadlines falling in the 2025–2026 window, as CARB finalises guidance and checklists.
CARB has been actively running workshops, FAQs and draft checklists through 2024–2025 to flesh out operational detail (materiality, boundary definitions, assurance levels, how “doing business in California” is interpreted) and a later ruling (SB-219) has adjusted some aspects of timing and consolidation options.
Context across North America
Canada is also tightening disclosure expectations: regulators and large professional services firms report increased alignment with TCFD/ISSB (climate risks and opportunities assessment and reporting) pillars and movement toward mandatory reporting that will affect large issuers and regulated entities. National laws (e.g. net-zero accountability) and provincial rules create a mosaic of requirements that, together with California’s laws, will capture many multinational firms.
The practical effect: companies face multiple overlapping regimes (state, national, investor expectations), rising demands for verified emissions data, climate risk assessments, and transparency about methodology – rather than simply high-level pledges.
What this means strategically
Data capture is now a compliance priority. You must gather and consolidate Scope 1–3 data across jurisdictions, with audit trails suitable for independent assurance.
Governance must be cross-functional. Finance, legal, risk, procurement, and sustainability need one playbook for disclosures.
Materiality and scenario work are table stakes. SB 261’s financial-risk framing mandates companies to link emissions and risk to balance-sheet impacts and strategy.
Opportunity for advantage. Early, accurate disclosure reduces litigation and regulatory risk, and improves access to capital pools that increasingly screen on climate performance, especially when it comes to climate-related risks.
Practical first steps (for the next 90 days)
Run a threshold check: confirm whether your global revenue and California nexus bring you into scope. CARB has published a preliminary list of reporting entities and is inviting companies that believe they may be subject to these requirements to provide feedback on this list and the thresholds here.
Start a carbon data gap assessment for Scopes 1–3
Engage external assurance and legal counsel early – rules presuppose assurance and the precise definition of ‘doing business in California’ is of key importance.
Build supplier engagement plans now: Scope-3 is phased but inevitable for most large corporates.
Begin or continue your climate risk journey: Establish internal climate-related risk governance; embed climate risk within your overarching business risk processes; obtain expert help in identifying and assessing your physical and transition risks and climate-related opportunities.
Bottom line
California’s SB 253 and SB 261 are a practical glimpse of the future: mandatory, verifiable climate disclosures that tie emissions and climate risks directly to corporate financial reporting and public accountability. North American companies should treat these laws not as a niche regulatory headache, but as a structural change requiring investment in data, governance, and strategy – and as an early mover opportunity for those who start ahead of the final publications.
How we can help
51toCarbonZero’s climate transition platform makes your emissions data traceable, transparent, and dependable. We streamline the process of data ingestion and creating auditable, investor-grade reports, enabling confident disclosure under California’s new requirements – and positioning you ahead of upcoming federal and global standards.
Our climate risk and opportunities service is aligned to SB 261 and the ISSB’s IFRS S2, and offers an iterative annual reporting cadence – starting small and building out to enable your company to manage and mitigate against climate breakdown.
It’s important not to delay beginning your data capture and risk assessments – the first year you will need to report on for both laws is fiscal year 2025, with reports due in 2026.
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