CARB Confirms California Climate Risk Reports On Hold, Pending Appeal

As a result of the Ninth Circuit order, the new deadline for SB 261 reports is still to be determined for this first year of compliance. CARB has previously confirmed that the extended timeline for finalizing the initial implementing regulations does not impact the deadline for first year reporting. As such, the new deadline could be set before or after the implementing regulations are approved, depending on how long the appeal takes.

Going forward, the legislation codifying SB 261 requires climate-related financial risk reports to be uploaded to each Covered Entity’s website by January 1 every other year, and CARB does not have any authority to change this date.

In response to comments received, CARB confirmed if a Covered Entity (e.g. a subsidiary entity) does not have its own website, it can make a new website or page for the purpose of posting the required climate-related financial risk report. However, CARB did not clarify that a subsidiary Covered Entity could post it on their parent company’s website.

Unlike the January 1, 2026 deadline for posting the reports on each Covered Entity’s website, the public docket through which links to the report must be submitted will remain open from December 1, 2025 to July 1, 2026. While this is to give Covered Entities additional time to submit the links, CARB refused to affirmatively approve multiple requests from participants at the November working group session to make further revisions and edits to the climate-related financial risk reports between the website posting deadline and the docket submission deadline.

CARB opened the public docket to submit SB 261 reports on December 1, 2025. Although no longer required by January 1, 2026, Covered Entities can voluntarily post and submit their reports now. When making the submission, Covered Entities should keep in mind the following instructions:

• Company statements should be on official letterhead and should use the following file naming convention: “CompanyName_Statement_date”.

• For parent/subsidiaries submitting consolidated reports, the statement should include a list of Covered Entity subsidiaries that are using the report to satisfy their SB 261 reporting requirements.

• The company statement should be uploaded as an attachment to the submission, while the link to the climate-related financial risk report can be submitted in the “Message” field of the submission form.

• The submitter will need to provide their name and contact information in the submission form.

Most of the prior guidance on the minimum requirements for climate-related financial risk reports for this first year of compliance has stayed the same since our prior alert: the accepted frameworks (including relevant industry-specific guidance), the required additional statements set forth by CARB, the four key principles to be covered (governance, strategy, risk management and metrics and targets) and the guidance around enforcement discretion for this first year all remain the same.

The main update is that Covered Entities that are still in the early stages of evaluating climate-related risks and may not have a full report ready by the deadline should nevertheless submit a report disclosing how climate-related risks relate or may be relevant to the Covered Entity’s business, even if no material risks have been identified or risk mitigation strategies and actions taken. This is in addition to the required descriptions about what components of the TCFD (or other approved framework) have been followed and not followed, and plans to address those gaps in the next report.

Additionally, while not strictly required, Covered Entities are encouraged to include a description of gaps, limitations, estimates and assumptions that were used and made in connection with the Covered Entity’s assessment of climate-related financial risks. Such disclosure is helpful not only to the market, but also helps protect the Covered Entity from potential disclosure liability risk.

The new deadline for the greenhouse gas emissions report covering Scope and Scope 2 emissions for this first year is August 10, 2026. Although subject to final approval by the CARB board in Q1 2026, we expect this deadline will be approved, as it is intended to align with the verification deadline under California’s Mandatory Greenhouse Gas Reporting Regulation. Future year deadlines will be established by subsequent rulemaking, so companies should not assume the 2027 deadline will also be August 10.

In short, most Reporting Entities will be required to produce fiscal year 2025 data in the report due August 10, 2026 (but may provide fiscal year 2026 data if preferred). Certain Reporting Entities with early fiscal year ends (on or before February 1, 2026) will be required to product fiscal year 2026 data in this first report. CARB’s stated intention with these cutoffs is to allow each Reporting Entity at least six months to compile the applicable data and finalize the report.

As noted in the Enforcement Notice that CARB published on December 5, 2024,CARB will exercise its enforcement discretion for this first year of compliance and allow Reporting Entities some flexibility in complying with SB 253 requirements. Since existing practices of Reporting Entity companies vary widely as to the collection of greenhouse gas emissions data and preparation of such reports, during the November working group session, CARB presented a few different ways a Reporting Entity may satisfy the SB 253 reporting requirement in 2026:

• If a Reporting Entity has an existing report that covers Scope 1 and Scope 2 emissions and was prepared in accordance with the Greenhouse Protocol (“GHG Protocol”), then the Reporting Entity can submit that report to satisfy the SB 253 requirement.

• If a Reporting Entity already submits annual Scope and Scope 2 emissions data through another regulatory program or a voluntary program, then the Reporting Entity can submit that same information to CARB to satisfy the SB 253 requirement.

• A Reporting Entity may choose to submit data using CARB’s Draft Scope 1 and 2 GHG Reporting Template, although use of this template is not required for the greenhouse gas emissions report due August 10, 2026. CARB has stated it does not plan to update this template, as its use is optional in the first year. CARB’s future guidance on SB 253 for subsequent reporting years may include a revised template.

• If a Reporting Entity was not collecting Scope 1 and/or Scope 2 emissions data or was not planning to collect such data as of December 5, 2024 (the date of the Enforcement Notice), then such Reporting Entity is not required to submit Scope 1 and Scope 2 data for this first reporting cycle. However, they must submit a separate statement on company letterhead to CARB, stating that the Reporting Entity is not submitting a report and indicating that, in accordance with the Enforcement Notice, the Reporting Entity was not collecting such data or planning to collect such data at the time the Enforcement Notice was issued. CARB intends to open a public docket closer to August 10, 2026 that Reporting Entities should use to submit these statements.

As part of CARB’s enforcement discretion, it will not object if limited assurance is not included this first year’s report, if a Reporting Entity does not have it ready in time. However, Reporting Entities that already have obtained limited assurance should still include it in their report. Reporting Entities with emissions data but not assurance should submit the emissions data report and are not required to submit a separate statement about not having assurance (although it may be helpful to note it in the report, for ease of CARB’s compliance review). CARB clarified that limited assurance will be required beginning in 2027 and the subsequent deadlines for when reasonable assurance will be required have not changed.

Although not required in this first year’s report, CARB is soliciting feedback on which of the fifteen Scope 3 categories listed in the GHG Protocol are most used by companies and/or most helpful for investors and consumers, as it prepares implementing regulations for Scope 3 emissions reporting under SB 253. Comments should be sent to climatedisclosure@arb.ca.gov.

CARB reiterated that only in-scope subsidiaries that are determined to be a “subsidiary” under California’s Cap-and-Invest program (the extended and renamed successor program to the original Cap-and-Trade program) can use their parent-level consolidated reports. If they do not satisfy those requirements, the in-scope subsidiary must prepare its own individual report.

Separately, CARB clarified that consolidated reports do not need to be limited to include only the consolidated data of in-scope entities: a consolidated report that includes data from an in-scope subsidiary and other not-in-scope subsidiaries can still be used to satisfy the requirements under both SB 261 and SB 253.

SB 219 allows parent companies to submit reports on their in-scope subsidiary’s behalf, even if the parent company itself is not an in-scope entity. However, CARB seems to take this literally (i.e., the parent can submit on behalf of the subsidiary) and declined to confirm when asked by participants during the November working group session that the in-scope subsidiary entity can itself submit a link to the parent company’s report. CARB did acknowledge the question, however, and noted they would put together some additional FAQs on this point.

Fee invoices will be issued to in-scope entities after the CARB board adopts CARB’s proposed implementing regulations, which includes the proposed fee amounts. It is unclear how CARB will issue such fee invoices (for example, whether these will precede the submission of the required reports—particularly for the greenhouse gas emissions report under SB 253—or whether it will rely on company lists based on the FTB database or some other database). What is clear is that companies will not need to pay the annual fee until further notice from CARB.

CARB also reiterated that fees are assessed for each in-scope entity, and while parent companies can pay all owed fees in one combined payment, the amount must reflect the fees separately owed by each in-scope entity in that parent company’s corporate structure. This annual fee assessment applies for both SB 261 and SB 253, even though the report required under SB 261 is only bi-annual.