California ESG Reporting Requirements: Updated For 2025

California is known for leading the way in environmental and sustainability rules, and its ESG regulations are set to have a big impact beyond the state. As one of the largest economies in the world, California’s influence often reaches across the U.S. and even internationally, pushing companies to change how they report on sustainability.

These rules bring tougher requirements for transparency and accountability. But how do they fit in with existing national and global reporting standards, and what challenges will businesses face?

We’ve explored the California Regulations in previous posts, which you can read here and here.

In this blog, we’ll examine California’s ESG reporting requirements, their effects, and how they differ from other major reporting frameworks that are shaping the future of corporate reporting.

Latest Updates: California Climate Disclosure Laws 2025

In late September of 2025, the California Air Resources Board (CARB) released its initial list of companies it expects to fall under the requirements of SB 253 and SB 261. Access the Preliminary List of Reporting/Covered Entities.

CARB has also announced a revised timeline for the rulemaking process. The agency now plans to present the proposed regulations in Q1 2026, instead of October 2025, citing the large volume of public comments and ongoing work to identify covered entities. While the update doesn’t change the expected reporting start dates, some beginning in 2026, CARB has said it will use enforcement discretion during the early reporting cycles to give companies time to adapt.

The 9th District Court of Appeals preliminarily enjoined enforcement of SB 261, whose pending deadline was set for Jan 1, 2026, while the court considers an appeal filed by the US Chamber of Commerce. The appeal relates to a challenge to both SB 261 and SB 253 based mostly on a First Amendment violation claim. The courts action does not impact SB 253, the due date for which remains August 2026 according to updates released by CARB in a workshop on Nov 18, 2025.

Understanding California’s Climate Disclosure Laws: SB 253, SB 261 & AB 1305

California’s climate regulations are reshaping how companies report on sustainability. These rules place a strong focus on mandatory Scope 3 emissions disclosure, material climate risk reporting, and non-materiality-based requirements. The recent SB 219 amendments to SB 253 and SB 261 introduce flexibility, such as extended timelines for regulatory development and Scope 3 reporting, while maintaining core reporting obligations for Scope 1, 2, and 3 emissions.

Scope 1 and 2 emissions disclosure begins in 2026, with limited assurance required, moving to reasonable assurance by 2030. For SB 261, the first climate risk reports are due January 1, 2026, with biennial updates. CARB has released a draft checklist based on TCFD and ISSB that highlights governance, strategy, risk management, and metrics/targets as minimum disclosure areas. Companies may omit elements if explained, and qualitative scenario analysis is acceptable.

Breaking Down the California ESG Regulations by Bill

Regulation	Description	Purpose
AB 1305	Requires companies engaged in voluntary carbon markets to disclose project details, including protocols, verification, and project outcomes, on their websites.	Reduces greenwashing and increases accountability in carbon offset claims by enhancing transparency for carbon-neutral and net-zero declarations.
SB 253	Mandates that companies with over $1 billion+ in revenue disclose Scope 1, 2, and 3 GHG emissions annually; allows consolidated parent-level reporting. Scope 1 & 2 disclosures begin in 2026; Scope 3 in 2027. Limited assurance required initially, with reasonable assurance by 2030.	Increases transparency of corporate climate impacts, enabling stakeholders to better assess carbon footprints and hold companies accountable.
SB 261	Requires companies with $500 million+ in revenue to report material climate risks and management strategies biennially, aligned with TCFD guidelines. First reports due January 1, 2026; biennial reporting thereafter. CARB checklist aligns with TCFD/ISSB but allows flexibility.	Provides stakeholders with insights into climate risks and resilience, supporting evaluations of long-term sustainability.

California Tightens Carbon Offset Rules with SB 285

California is taking steps to ensure its corporate emissions reporting is more transparent and effective with Senate Bill 285, introduced by State Senator Josh Becker. The bill targets carbon offsets used under the Climate Corporate Data Accountability Act (SB 253), requiring them to meet strict criteria—such as avoiding harmful practices like enhanced oil recovery and protecting local air and water quality. Crucially, SB 285 enforces a “like-for-like” principle: fossil fuel emissions (locked away for millions of years) must be balanced by equally permanent carbon removal methods, while shorter-term emissions (like from trees or soil) can use nature-based solutions. By closing loopholes in offset accounting, the bill aims to help California hit its 2045 carbon neutrality goals.

Still in its early stages, SB 285 had its first hearing on April 2 2025, making it a key climate policy to watch.

Key Compliance Challenges for SB 253 & SB 261 Reporting

Adapting to California’s regulations can be challenging for businesses. Key difficulties include:

Scope 3 emissions reporting, phased in beginning 2027, remains resource-intensive as it requires tracking across the supply chain.
Companies reporting under multiple standards must align disclosures, which can be a challenging and resource-heavy task.
Companies must prepare for independent third-party assurance, beginning with limited assurance in 2026 and transitioning to reasonable assurance in 2030.
California’s laws demand certain disclosures regardless of their material impact on a company’s financials, adding complexity to the reporting process.

CARB has acknowledged ‘good faith efforts’ in the early years, which means initial reports can rely on best available data and explain omissions. However, companies should not delay in strengthening their systems.

How California’s Climate Laws Are Setting the National ESG Standard

California’s climate disclosure laws have become the de facto standard for U.S. companies, especially as the U.S. Securities and Exchange Commission’s (SEC) climate rule remains in limbo.

The SEC adopted its climate-related disclosure rule in early 2024 but later suspended implementation pending ongoing litigation. In 2025, the Commission formally withdrew its defense of the rule, leaving its future uncertain. As a result, there is currently no active federal ESG reporting requirement for climate risk or GHG emissions disclosures.

In this regulatory gap, California’s laws are driving nationwide practice. Companies preparing for California compliance will be better positioned if the SEC revives its rule or other states adopt similar mandates.

Global Impact: California Climate Disclosure Laws vs. International Frameworks

The International Sustainability Standards Board (ISSB) emphasizes comprehensive disclosures, including governance, strategy, risk management, and metrics. California’s SB 261 checklist follows this structure but allows qualitative scenario analysis and omission with explanation, offering more flexibility than ISSB.

The European Union has its own rules, such as the Corporate Sustainability Reporting Directive (CSRD). California’s regulations might lead the EU to strengthen its requirements to stay competitive, as both regions aim to meet climate goals. Discover more about CSRD here.

California Climate Disclosure Laws vs. CSRD: 5 Key Differences

California mandates reporting of all Scope 1, 2, and 3 emissions, irrespective of materiality, while other frameworks like the CSRD require materiality-based disclosures.
California’s laws do not consider materiality for emissions, while the CSRD uses a double materiality approach.
These climate laws require fewer governance and strategy disclosures compared to the ISSB.
The California state mandates comprehensive value chain emissions reporting (Scope 3), a requirement not fully mirrored in other frameworks.
These regulations are mandatory for eligible companies, while the ISSB standards can be implemented voluntarily.

How Cority Helps You Comply with California Climate Disclosure Laws

With decades of experience in environmental, health, safety, and sustainability management, Cority provides the technology and expertise organizations need to stay ahead of evolving disclosure mandates like California’s SB 253 and SB 261.

Our integrated solutions give you a centralized, auditable system for emissions and climate data management. Built for accuracy and scalability, it enables you to collect, calculate, and verify Scope 1, 2, and 3 emissions data with accuracy as well as supports alignment with global frameworks such as TCFD, ISSB, and CDP.

In addition to software, Cority offers deep Advisory Services to help your organization interpret regulatory requirements, benchmark against industry standards, and prepare climate risk and GHG disclosures with confidence.

Cority’s end-to-end platform is already supporting global organizations in managing their environmental performance, from data collection and validation to assurance-ready reporting. Discover Cority’s Sustainability and Environmental solutions. Chat with an expert to explore how we can support your organization meet California’s new climate reporting requirements and build a stronger, more sustainable future.