California SB 253 vs SB 261: Key Differences (2026)

California SB 253 vs SB 261: Key Differences (2026)

Both laws were signed in October 2023. Both are enforced by CARB. Both use the same jurisdictional trigger. But as of October 2026, they are on completely different legal tracks, and treating them as equally uncertain is one of the most common compliance mistakes finance and ESG teams are making right now.

SB 253 is live and enforceable, with a November 10, 2026 deadline for first-year Scope 1 and 2 reporting. SB 261 is enjoined by a Ninth Circuit injunction, with no current enforcement date. That asymmetry should drive every resourcing and sequencing decision your team makes today.

This article compares the two laws on every dimension that matters: who they cover, what they require, when they're due, what assurance they demand, and what the litigation means for your compliance program right now.

Key takeaway: SB 253 and SB 261 are not two versions of the same obligation. One is a quantitative GHG inventory; the other is a narrative risk report. They require different teams, different data, and different timelines, and right now only one of them can actually penalize you for non-compliance.

What Is SB 253 and What Is SB 261?

SB 253, the Climate Corporate Data Accountability Act, requires annual GHG emissions reporting in conformance with the GHG Protocol. SB 261, the Climate-Related Financial Risk Act, requires preparation of a climate-related financial risk report aligned with TCFD recommendations or an equivalent standard.

These are fundamentally different documents. SB 253 produces a quantitative emissions inventory, a set of numbers built from energy bills, fuel records, and supply chain data. SB 261 produces a narrative risk disclosure covering governance, strategy, risk management, and metrics, the same four pillars as a TCFD report. The first is primarily a finance and operations exercise; the second is a board-level strategy and governance exercise.

For a deeper look at how TCFD compares to IFRS S2 as a framework for SB 261, see our TCFD vs IFRS S2 transition gap analysis.

Who Must Comply: Revenue Thresholds and Entity Scope

The revenue thresholds are different, and the gap between them matters.

A company with $700 million in annual revenue is subject to SB 261 but not SB 253. A company with $1.1 billion in revenue is subject to both. The laws use different terms for covered companies, SB 253 calls them "reporting entities" and SB 261 calls them "covered entities," but the jurisdictional trigger is identical: doing business in California.

CARB estimates that approximately 2,596 entities are subject to SB 253 and 4,160 are subject to SB 261, reflecting the broader reach of the lower revenue threshold.

What Does "Doing Business in California" Mean?

CARB's final regulation, approved October 12, 2026, formally defines the terms used to determine applicability, including what constitutes doing business in California. This definition is now codified in the CARB Final Regulatory Order.

Prior to the final regulation, practitioners commonly referenced the California Franchise Tax Board's definition, which treats a company as doing business in California if any of the following apply:

• California sales exceed approximately $735,000
• Real or tangible property in California exceeds approximately $73,500
• Compensation paid in California exceeds approximately $73,500
• The company is headquartered or commercially domiciled in California

Critically, both laws apply to public and private US entities, as well as subsidiaries of non-US-headquartered entities. As PwC notes, "California estimates that the laws will require thousands of public and private US entities doing business in California, including subsidiaries of non-US headquartered entities, to disclose greenhouse gas emissions and climate-related financial risks." This is a key distinction from the SEC climate rule, which applies only to SEC registrants. A private company with $1.2 billion in revenue and a California sales office is in scope for SB 253, full stop.

What Each Law Actually Requires You to Disclose

SB 253: A GHG Inventory, Not a Narrative

SB 253 requires a quantitative GHG emissions inventory built in conformance with the GHG Protocol. For the first reporting year (2025 data, due November 10, 2026), only Scope 1 and Scope 2 emissions are required. Scope 3 is expected to begin in 2027.

CARB's September 2026 reporting guidance details exactly what the first-year submission must contain. The report covers:

• Scope 1 direct emissions from owned or controlled sources
• Scope 2 indirect emissions from purchased energy
• Organizational boundary methodology
• Emission factor sources used

If your company already files with CDP or produces a GHG Protocol-aligned inventory for another purpose, that data is a strong starting point. The inventory work sits primarily with finance, operations, and sustainability data teams.

For the Scope 3 picture, including the four accounting methods CARB is considering (spend-based, activity-based, supplier-specific, and hybrid), see our Scope 3 emissions disclosure methodology guide and our how-to on calculating all 15 Scope 3 categories.

SB 261: A TCFD-Style Risk Report, Not an Emissions Count

SB 261 requires a biennial report on climate-related financial risks and the measures taken to mitigate and adapt to those risks, aligned with TCFD recommendations or an equivalent standard. This is a governance and strategy document, not a data file.

The four TCFD pillars, governance, strategy, risk management, and metrics and targets, form the structural spine of an SB 261 report. Companies that already produce TCFD-aligned disclosures, or that report under IFRS S1/S2 or ESRS, may be able to leverage existing reports. However, CARB has not formally codified which frameworks qualify as "equivalent" to TCFD, so the equivalence determination remains an open question for companies relying on ISSB or CSRD reporting to satisfy SB 261.

SB 261 penalties for non-compliance are up to $50,000 per reporting year, significantly lower than SB 253's cap of $500,000 per reporting year.

Current Legal Status: The Asymmetry That Changes Everything

This is the part most comparison articles get wrong by treating both laws as equally uncertain.

SB 253 enforcement is active. The court denied the motion for injunction against SB 253. CARB's final regulation was approved by the California Office of Administrative Law on October 12, 2026, establishing November 10, 2026 as the deadline for first-year Scope 1 and 2 reporting. Fee invoices went out on September 10, 2026.

SB 261 enforcement is suspended. On November 18, 2025, the Ninth Circuit granted a motion for injunction against SB 261 enforcement. CARB has confirmed it will not enforce SB 261's January 1, 2026 statutory deadline while the appeal proceeds, and plans to provide an alternate reporting date once the appeal resolves. In December 2025, CARB opened a voluntary docket for SB 261 submissions, but submission is not required.

The underlying case, Chamber of Commerce v. Sanchez, heard oral argument in January 2026. The panel focused on First Amendment questions around SB 261's narrative-style disclosures and the constitutional burden of SB 253's Scope 3 requirements. As of October 2026, no decision has been issued. Notably, California signaled openness to severing Scope 3 from SB 253 if the court finds it constitutionally problematic, which creates genuine uncertainty about whether Scope 3 will survive in its current form.

Assurance Requirements: A Major Difference

SB 253 will require third-party assurance. SB 261 will not.

For the first reporting year (2025 data, due November 10, 2026), no assurance is required under SB 253. Starting in 2027, limited assurance for Scope 1 and Scope 2 emissions becomes mandatory. CARB's March 2026 workshop proposed five assurance standards under consideration:

• ISSA 5000
• ISAE 3000/3410
• AICPA AT-C 210/205
• AA1000AS v3
• ISO 14064-3

The final standard has not been selected. For a detailed comparison of assurance requirements across SB 253 and CSRD, see our sustainability assurance requirements comparison.

SB 261 carries no assurance requirement at any stage. This means companies can begin building their TCFD risk disclosure infrastructure without engaging an assurance provider, though the quality and auditability of the underlying data will matter when enforcement eventually resumes.

Penalties and Enforcement Relief

• SB 253: Up to $500,000 per reporting year for non-filing or late filing. For the first year, CARB has indicated no penalties will be imposed as long as companies demonstrate a good-faith effort. There is also a safe harbor for Scope 3 misstatements made with a reasonable basis and disclosed in the report.
• SB 261: Up to $50,000 per reporting year. Enforcement is currently enjoined, so no penalties are being assessed.

The good-faith standard for SB 253 in 2026 is real relief, but it is not a free pass. Companies that made no effort to collect Scope 1 and 2 data cannot simply claim good faith. CARB's December 2024 Enforcement Notice, incorporated into the final regulation, is the operative document defining what qualifies.

How to Submit Your SB 253 Report by November 10, 2026

CARB published a voluntary intake platform on September 1, 2026 for submitting fee contact information and GHG emissions data. Use of the platform is not required. Companies may also submit via email to climatedisclosure@arb.ca.gov.

Three submission paths exist:

1. Submit via the intake platform with your Scope 1 and 2 emissions report
2. Submit via email to climatedisclosure@arb.ca.gov
3. Submit a statement of non-reporting (via the platform or email) notifying CARB that you will not submit 2026 emissions information in reliance on the 2024 Enforcement Notice

The statement of non-reporting option is a legitimate compliance pathway that many in-scope companies do not know exists. It is not an exemption, but it documents your position and invokes the good-faith enforcement relief.

For a full walkthrough of the November 10 submission process, see our SB 253 GHG reporting guide for CFOs.

How to Sequence Your Compliance Program Right Now

Given the legal asymmetry, the right resource allocation is not equal investment in both laws. It is SB 253 first, SB 261 infrastructure second.

Immediate priorities (before November 10, 2026):

1. Confirm whether you meet the $1 billion threshold and the "doing business in California" definition under CARB's final regulation
2. Complete your Scope 1 and Scope 2 GHG inventory for fiscal year 2025 in conformance with the GHG Protocol
3. Choose your submission path: intake platform, email, or statement of non-reporting
4. Register fee contact information with CARB (invoices went out September 10, 2026)

Parallel priorities for SB 261 (while enforcement is enjoined):

1. Determine whether you meet the $500 million threshold (you may be subject to SB 261 but not SB 253)
2. Assess whether your existing TCFD, IFRS S1/S2, or ESRS reporting can satisfy SB 261 when enforcement resumes, noting that CARB has not formally codified equivalence
3. Build the governance and risk management infrastructure for a TCFD-style report; this work takes longer than a GHG inventory and benefits from the runway the injunction provides
4. Monitor the Ninth Circuit's decision in Chamber of Commerce v. Sanchez closely

Do not pause SB 261 preparation entirely. CARB has stated it will provide an alternate reporting date once the appeal resolves, and that date could arrive quickly. Companies that use the injunction period to build their risk disclosure infrastructure will be in a materially stronger position than those who wait.

FAQ

Does SB 261 apply to private companies? Yes. Both SB 253 and SB 261 apply to public and private US entities, as well as subsidiaries of non-US-headquartered companies, that meet the revenue thresholds and do business in California. Private companies above $500 million in revenue that have never faced mandatory climate disclosure before are in scope for SB 261 once enforcement resumes.

Can I use my existing TCFD or ISSB report to satisfy SB 261? Possibly. SB 261 allows alignment with TCFD or "an equivalent standard," which suggests IFRS S1/S2 (ISSB) or ESRS (CSRD) reporting may qualify. However, CARB has not formally codified which frameworks count as equivalent. Until it does, companies relying on ISSB or CSRD reports for SB 261 compliance carry some residual uncertainty.

Is Scope 3 required under SB 253 right now? No. Scope 3 is not required for the November 10, 2026 first-year submission. CARB's July 2026 workshop proposed five Scope 3 categories beginning in 2027, but the final rule has not been issued. There is also a constitutional question: the Ninth Circuit panel specifically scrutinized the Scope 3 burden, and California has signaled openness to severing it if the court finds it problematic.

What is the penalty difference between SB 253 and SB 261? SB 253 carries penalties up to $500,000 per reporting year for non-filing or late filing. SB 261 carries penalties up to $50,000 per reporting year. SB 261 penalties are not currently being assessed due to the Ninth Circuit injunction.

How does this interact with the SEC climate disclosure rule? The SEC's climate disclosure rule applies only to SEC registrants and is itself in litigation following the agency's proposal to rescind it. California's laws apply to both public and private companies doing business in California, regardless of SEC registrant status. The two regimes do not formally substitute for each other. For the current status of the SEC rule, see our SEC climate disclosure rule status guide.

Do I need an assurance provider for the November 10, 2026 submission? No. Third-party assurance is not required for the first-year SB 253 submission. Limited assurance for Scope 1 and 2 is expected to begin in 2027, with CARB still selecting among five proposed standards. SB 261 has no assurance requirement at any stage.