California Air Resources Board Releases FAQs on California Climate Disclosure Regulations

The California Air Resources Board (CARB) has released a Frequently Asked Questions (FAQ) document to help companies navigate and plan for California’s Corporate Greenhouse Gas (GHG) Reporting Program established by the Climate Corporate Data Accountability Act (California Health and Safety Code Section 38253, more commonly known as Senate Bill [SB] 253) and Climate‐Related Financial Risk Act (California Health and Safety Code Section 38533, more commonly known as SB 261), as amended by SB 219 (collectively referred to as the “California Climate Disclosure Regulations”). The FAQ is divided into two sections: the first covers the regulatory development process, and the second addresses the submission of initial reports. The FAQ document highlights the compliance dates, which remain unchanged, and that it does not amend the legal requirements “that are already in the statutes.”

CARB confirmed that it will actively engage stakeholders in workshops and solicit public feedback to refine definitions, reporting frameworks, and implementation plans and that it is aiming to develop proposed regulations by the end of the year. Further, the FAQs note that CARB had presented proposed definitions related to determining “total annual revenue” and “doing business in California” at its first public workshop on May 29, 2025. CARB’s initial proposal for the term “total annual revenue” would be to define it as gross receipts in line with California Revenue and Taxation Code (RTC) Section 25120(f)(2). CARB’s initial proposal for the definition of “doing business in California” is based on the Franchise Tax Board definition, which refers to RTC Sections 23101(a) and 23101(b).

These FAQs provide information on deadlines, reporting periods, and assurance considerations to help preparers submit their initial reports as part of their compliance with the California Climate Disclosure Regulations.

The FAQs reiterate the requirement related to initial reporting, stating that “reporting entities must report Scope 1 and Scope 2 GHG emissions in 2026, on a date to be set by CARB through the regulatory process, covering the prior fiscal year. Scope 3 emissions reporting begins in 2027, covering the prior fiscal year.” The FAQs refer to CARB’s December 2024 Enforcement Notice in which CARB recognized that companies may need more time to implement processes to collect Scope 1 and Scope 2 emissions. CARB has indicated that it will exercise enforcement discretion for the first report due in 2026 if companies take “good faith measures to comply” and that CARB will consider “when those measures were taken.”

The FAQs note that, for Scope 1 and Scope 2 GHG emissions reported under SB 253, entities are “required to obtain an assurance (or verification) . . . by an independent third-party assurance provider . . . at a limited-assurance level beginning in 2026.” The timeline for reporting these emissions and obtaining assurance (or verification) will be determined during “public consultation and through the rulemaking process.”

The FAQs emphasize that entities within the scope of SB 261 must submit their first report by January 1, 2026, covering the most recently completed fiscal year. Accordingly, reporting entities would report on either their 2023–2024 fiscal year or 2024–2025 fiscal year, depending on their fiscal year-end. In addition, CARB announced that it will be creating a public docket on which companies will be able to post their reports starting on December 1, 2025. The purpose of a public docket would be to promote transparency by allowing the public to view the reports in one location. Companies may wish to consider the additional public attention or scrutiny their submissions may generate.

The FAQs indicate that entities will have some flexibility in choosing a climate-related financial risk reporting framework but should apply the “principles embedded in that chosen framework” when reporting. Two such principles that CARB emphasized were the determination of materiality and providing disclosures regarding climate-related risk. The FAQ includes examples illustrating these two principles from the Task Force on Climate-Related Financial Disclosures (TCFD).

The FAQs also highlight that although entities’ reports must provide disclosures about “climate-related financial risk,” disclosure of information that is outside the scope of the law’s definition of this term is not required.

CARB encourages stakeholders to review the FAQs and provide feedback on definitions, reporting frameworks, and potential exemptions. For more information, visit CARB’s Web site or contact climatedisclosure@arb.ca.gov.