California Air Resources Board Hosts Second Workshop to Discuss Corporate Greenhouse Gas Disclosures and Climate-Related Financial Risk Reporting

At its public workshop in May 2025, CARB initially proposed defining total revenue as gross receipts in a manner consistent with Section 25120(f)(2) of the California Revenue and Taxation Code (RTC). After receiving feedback that this definition is too expansive, CARB is now proposing that revenue be defined as “the total global amount of money or sales a company receives from its business activities, such as selling products or providing services.” The proposed definition would be consistent with the definition of revenue used by major data tracking and reporting services.

At its public workshop in May 2025, CARB initially proposed defining “doing business in California” on the basis of RTC Section 23101. The updated proposed definition would be consistent with the California Secretary of State’s database for business entities (i.e., “any entity with a designated agent for services of process in California” would meet this definition).

As initially proposed at CARB’s May workshop, CARB plans to use existing cap-and-trade regulations that define a subsidiary as a “business in which another company (the parent or holding company) owns more than 50% of its voting stock.”

CARB proposed that the scope of the regulations would exclude not-for-profit companies, companies with a presence in California solely because of teleworking employees, government entities, and the California Independent System Operator or business entities whose only activity in California consists of wholesale electricity transactions that occur as part of interstate commerce.

CARB proposed a single due date of June 30, 2026, by which entities must report greenhouse gas emissions. CARB is requesting feedback on the use of a single due date as well as on the feasibility of the proposed timeline. Under the bill, emissions reporting will be based on data for the prior fiscal year, which CARB confirmed should be 2025 data in the first year of reporting. CARB plans to release draft reporting templates for Scope 1 and 2 emissions by the end of September for public feedback.

CARB will open a public docket on December 1, 2025, for entities to post the link to their reports on their public Web sites. The reports are due no later than January 1, 2026.

CARB stated that entities may use one of several frameworks to meet the disclosure requirements, including Task Force on Climate-Related Financial Risk Disclosures (TCFD) and IFRS Sustainability Disclosure Standards. Each report submitted to CARB should contain a statement on which reporting framework is being applied, discuss which recommendations and disclosures have been compiled and which have not, and provide a short summary of the reasons why recommendations/disclosures have not been included as well as discussion of any plans for future disclosures. CARB indicated that an entity’s reporting should take into account the four overriding principles of TCFD (i.e., governance, strategy, risk management, and metrics and targets). In addition, CARB noted that the minimum reporting requirements would not need to include certain TCFD requirements in the first year — specifically, for strategy reporting, an entity would not need to perform a climate-related scenario analysis and, for metrics and targets reporting, disclosure of Scope 1, 2, or 3 GHG emissions would not be required.

CARB indicated that it will provide additional guidance on minimum compliance requirements.

SB 253 requires entities to obtain limited assurance on Scope 1 and 2 emissions in the initial year of reporting. CARB indicated that it intends to leverage existing assurance standards and processes to meet the assurance requirements and is seeking feedback on which assurance standards to accept. CARB also emphasized the importance of assurance providers demonstrating independence and objectivity (e.g., avoiding conflicts of interest). On the basis of stakeholder input to date, CARB is considering four potential assurance standards: (1) American Institute of Certified Public Accountants (AICPA) attestation standards, (2) International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, developed by the International Auditing and Assurance Standards Board (IAASB); (3) AA1000, developed by AccountAbility; and (4) the International Organization for Standardization (ISO) 14060 family of standards.

For more information on the second virtual workshop, see CARB’s Web site.