The California Air Resources Board (CARB) has released a detailed FAQ to guide large companies in preparing for upcoming mandatory climate reporting, reinforcing California’s leadership in advancing ESG transparency and a robust carbon neutral strategy. The FAQ clarifies compliance timelines and expectations under two landmark climate disclosure laws: the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). 

Effective January 1, 2026, companies operating in California with over $1 billion in revenue must report annually on Scope 1, 2, and 3 greenhouse gas emissions. Businesses with revenues over $500 million are required to publish a biennial report on their climate-related financial risks, including physical and transition risks to operations, supply chains, investments, and financial markets. 

Key Reporting Timelines: 

• Scope 1 & 2 emissions reporting begins in 2026 (covering 2025 data); first-year reporting may rely on existing data. 

• Scope 3 emissions reporting starts in 2027. 

• Limited third-party assurance for Scope 1 & 2 begins in 2026, with reasonable assurance required by 2030. 

• First financial risk reports are due by January 1, 2026, followed by biennial updates. 

The FAQ, which follows a recent public workshop, helps companies navigate reporting requirements, data readiness, and assurance expectations. It also outlines risk assessment criteria related to climate impacts on financial performance, employee health, supply chains, and investor value. 

With these regulations, California sets a precedent for nationwide climate disclosure mandates, empowering investors and stakeholders with clearer data on corporate sustainability performance. The CARB FAQ offers a critical roadmap for businesses to meet new regulatory standards and align their operations with California’s net-zero goals and ESG commitments. 

Source: 

https://www.esgtoday.com/california-releases-faq-to-guide-companies-beginning-mandatory-climate-reporting/