On March 23, 2026, the California Air Resources Board (“CARB”) held a public workshop to preview and take feedback on its upcoming rulemaking to develop further regulations implementing the California Climate Corporate Data Accountability Act (“SB 253”). The workshop focused on the agency’s proposals for reporting Scope 3 greenhouse gas (“GHG”) emissions, which included proposals for how such emissions might be calculated and what entities will be required to report come 2027. CARB’s proposals reflect an interest in providing flexibility to the regulated community, but feedback from reporting entities is crucial to ensuring the final regulations are balanced and reasonable. Comments on the proposal are due April 13, 2026.
A Step-by-Step Framework for Emissions Reporting
SB 253 requires U.S. companies with over $1 billion in annual revenue doing business in California to disclose their Scope 1, 2, and 3 GHG emissions. CARB approved an initial set of draft regulations implementing SB 253 and the California Climate-Related Financial Risk Reporting Act (“SB 261”) in late February 2026. Those draft regulations set forth key terms that define the scope of reporting obligations, including “doing business in California,” “revenue,” “parent,” and “subsidiary” and set an August 10, 2026 deadline for initial Scope 1 and 2 GHG emissions reports. CARB’s workshop focused on a number of proposals aimed at providing greater certainty for upcoming emissions reporting deadlines and provided a four-step framework for emissions reporting.
First, companies would set organizational boundaries to help determine the scope of operations included within reporting. Second, companies would classify these operations into Scope 1, 2, or 3 GHG emissions. Third, companies will then calculate emissions for each category, with Scope 1 and 2 GHG emissions calculations due in August 2026 and Scope 3 GHG emissions due beginning in 2027. Fourth, beginning in 2027, companies must obtain limited assurance for Scope 1 and 2 GHG emissions.
The format for emissions reporting has been subject to much controversy, as CARB’s reporting guidelines are unclear about exactly what needs to be reported and how. To try and resolve this uncertainty, CARB will be proposing a reporting template that all reporting entities must use beginning in 2027.
More (Un)Certainty for Scope 3 GHG Emissions Reporting
With Scope 3 GHG emissions reporting on the horizon, CARB is beginning to flesh out the specifics of how such emissions will be calculated and reported. CARB sets forth a number of proposals that would define how companies calculate Scope 3 GHG emissions.
Organizational Boundary-Setting
Organizational boundaries define the extent and scope of the entities, assets, and operations that will be included in each scope of a company’s emissions reporting. CARB proposes that companies would be able to select either an equity share or control approach. Under an equity share approach, emissions are reported in proportion to ownership stake in an operation. Under the control approach, companies would report emissions based on either financial or operational control over an operation. Companies would be required to document and explain their selection of organizational boundaries for emissions reporting purposes.
Accounting Methods
After organizational boundaries are set and emissions divided into Scopes 1, 2, and 3, companies will be tasked with quantifying emissions in each category. Calculation of Scope 3 GHG emissions is notoriously difficult, as they include upstream and downstream emissions from activities and operations over which a company has no control and often, little information or means of obtaining that information. CARB is proposing a number of accounting methods to calculate these emissions:
Emissions Factors
Integral to GHG emissions accounting is identifying the proper emissions factor, or value that quantifies the amount of GHG emissions released per unit of activity. CARB is proposing to allow companies to use a variety of defined sources for emissions factors for Scope 3 GHG emissions, including various U.S. Environmental Protection Agency databases and the Intergovernmental Panel on Climate Change’s Emissions Factor Database.
Reporting Deadlines for Scope 3 Emissions
Though SB 253 requires that companies begin reporting Scope 3 GHG emissions in 2027, CARB has flexibility in determining how to implement this requirement. CARB’s workshop set forth three proposals that the agency is considering for upcoming reporting obligations.
Option 1: Broad Applicability
Under this option, all reporting entities would report on emission from all Scope 3 categories. However, companies would have the discretion to not report categories of emissions that they deem de minimis so long as they provide an appropriate explanation.
Option 2: Sectoral Phase-In
Under this option, Scope 3 reporting would initially only be required from the transportation and industrial sectors, with a focus on transportation, technology and energy, cement production, and other manufacturing activities that CARB states are responsible for the largest share of statewide emissions. Reporting from other sectors would be phased in at a later date.
Option 3: Category Phase-In
Under the final option, initial Scope 3 reporting would require reporting of only those categories that are easiest for companies to calculate, including business travel, purchased goods and services, fuel and energy, employee commuting, and waste generation. Emissions reporting for other categories that are more difficult to calculate, such as upstream and downstream transportation emissions and use of sold products, would initially be voluntary and required at a later date.
CARB is seeking comment on which approach it should adopt. Companies that will be subject to SB 253 reporting obligations should consider submitting a public comment to ensure CARB has accurate information regarding how each option would impact industry.
Upcoming Reporting Obligations and Deadlines
Although enforcement of SB 253’s companion law, SB 261, has been stayed due to ongoing litigation in the Ninth Circuit, initial reports under SB 253 are due August 10, 2026. Starting in 2027, companies must also provide assurance at a limited assurance level for their Scope 1 and 2 GHG emissions, with CARB proposing to allow a limited set of assurance standards. Scope 3 reports will also be due starting in 2027.
CARB is accepting public comments on its proposal through April 13, 2026, including on a number of discrete issues relating to reporting and accounting methods, assurance standards, and the economic burden of the regulations. Companies required to report under SB 253 should consider submitting a comment to ensure CARB has a robust understanding of the issues at play in finalizing its proposal.
We will continue to track developments related to California’s climate reporting laws.
