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09/11/2025
California Compliance Readiness Assessment
California’s upcoming climate disclosure laws will apply to any company with over $500 million in annual revenue that conducts business in California. Is your organization prepared?
On Nov. 18, 2025, the Ninth Circuit Court of Appeals issued a preliminary injunction pausing enforcement of California SB-261. A hearing is scheduled for Jan. 9, 2026, at which time the court will determine the future of California’s Climate Disclosure Laws. Until then, the original Jan. 1, 2026, compliance deadline for SB-261 is not enforceable. However, because neither SB-253 nor SB-261 has been repealed, and the outcome of the litigation remains uncertain, companies should consider continuing their compliance preparations in the near term.
With California’s new mandatory climate and financial risk reporting taking effect in 2026, time is running out to prepare your organization.
CohnReznick’s California Compliance Readiness Assessment(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window) is a five-minute assessment that helps determine your company’s preparedness and identifies critical next steps to make sure you are in compliance with the approaching sustainability disclosure requirements – before you face the cost of up to $500,000 for non-compliance.
Our tool helps you:
- Determine whether your organization is required to report under California’s climate disclosure laws
- Assess whether you are ready to report or have gaps in your compliance
- Recommend next steps including support from CohnReznick’s Sustainability Advisory team
- Provide additional insights and resources to keep you informed on the evolving regulatory landscape
Are you in compliance?
California’s sustainability laws are not optional. See how your organization stacks up in its sustainability strategy.
California climate law overview
California has enacted a trio of landmark climate laws – SB-253, SB-261, and AB-1305 – that significantly expand corporate climate disclosure requirements for businesses operating in the state. These laws are poised to influence national and global sustainability reporting practices.
SB-253 – Climate Corporate Data Accountability Act
This law mandates annual public disclosure of greenhouse gas (GHG) emissions for companies with over $1 billion in annual revenue doing business in California. Reporting begins in 2026 for Scope 1 and 2 emissions, and in 2027 for Scope 3. The disclosures must follow the Greenhouse Gas Protocol, with assurance requirements likely to begin in 2027.
SB-261 – Climate-Related Financial Risk Act
Targeting companies with over $500 million in annual revenue, SB-261 requires biennial reporting of climate-related financial risks and the strategies adopted to mitigate them. Reports must align with the Task Force on Climate-related Financial Disclosures (TCFD) framework and be published in 2026.
AB-1305 – Voluntary Carbon Market Disclosures Act
Effective Jan. 1, 2024, this law requires transparency around voluntary carbon offsets and emissions reduction claims. It applies to entities making such claims or engaging in related activities in California. Although a proposed amendment (AB-2331) aimed to delay implementation to July 2025, it did not pass.
SB-253 – Climate Corporate Data Accountability Act
This law mandates annual public disclosure of greenhouse gas (GHG) emissions for companies with over $1 billion in annual revenue doing business in California. Reporting begins in 2026 for Scope 1 and 2 emissions, and in 2027 for Scope 3. The disclosures must follow the Greenhouse Gas Protocol, with assurance requirements likely to begin in 2027.
Why it matters
With California’s climate disclosure laws on the horizon, companies with operations in California should carefully evaluate their sustainability readiness to reduce risk and avoid penalties. Non-compliance could lead to fines up to $500,000 per year. But beyond penalties, it’s about reputational risk and missing out on investor confidence.
| 2026 | 2027 | 2028 | 2029 | 2030 | |
SB 261 (annual revenue ≥ $500 million) | Biennial Climate-related Financial Risks Report | Biennial Climate-related Financial Risks Report | Biennial Climate-related Financial Risks Report | |||
SB 253 (annual revenue ≥ $1 billion) | Scope 1 & 2 (Limited Assurance) | Scope 3 | Scope 1 & 2 (Reasonable Assurance) Scope 3 (Limited Assurance)* |
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.