U.S. Companies Face Potential GHG Disclosure Obligations in 2026
Summary
California’s GHG disclosure and assurance regime under SB 253 is poised to require many U.S.-formed companies with more than $1bn in annual revenue that do business in California to file greenhouse gas (GHG) emissions reports and obtain third-party assurance. CARB’s current proposal would have first reports (Scope 1 and 2 with limited assurance) covering fiscal year 2025 due by 30 June 2026, with expanded Scope 3 disclosures beginning in 2027 and enhanced assurance requirements phased in by 2030. Key definitional and procedural issues remain under discussion, including the revenue definition, who qualifies as a Reporting Entity, parent-level consolidation rules, fee calculations (currently estimated at about $3,106 per Reporting Entity per year), and final reporting templates and deadlines. CARB has indicated enforcement discretion for the first year for entities showing a good-faith effort.
Key Points
- Initial proposed deadline: publish and file Scope 1 and Scope 2 reports with limited assurance by 30 June 2026 (covering fiscal year 2025).
- Scope 3 disclosures begin in 2027 (covering fiscal year 2026); reasonable assurance for Scopes 1 and 2 and limited assurance for Scope 3 phased in by 2030.
- Reporting Entities = U.S.-formed business entities with total annual revenues > $1bn that do business in California (subject to final definitions and possible exemptions).
- Revenue definition and calculation (gross receipts vs. alternate definition) remain unresolved — companies should calculate both ways now.
- Parent companies may submit consolidated reports for subsidiaries, but subsidiaries counted as Reporting Entities still owe fees (a parent can remit a lump-sum payment).
- CARB proposes limited assurance standards (e.g., ISAE/IAASB, AA1000, ISO 14060 family, AICPA); verifiers must be accredited under existing frameworks.
- Estimated annual fee per Reporting Entity ≈ $3,106 under current CARB assumptions (subject to change).
- CARB will publish proposed rulemaking on 14 Oct 2025 and seek formal comments; board consideration expected 11–12 Dec 2025 — final rules may follow thereafter.
- CARB announced enforcement discretion for the first filing year if companies show a good-faith effort, but this relief is limited to the initial report due in 2026.
Context and Relevance
This regime matters for large U.S. firms and U.S. subsidiaries of foreign parents that have revenues over the threshold and any nexus to California. It effectively creates a near-term statutory reporting and assurance obligation independent of the now-defunct SEC climate rule, with timelines that could compress preparation time. The phased approach (Scopes 1–3 and assurance) aligns with broader global trends toward mandatory climate disclosures and third-party assurance, meaning companies already reporting under frameworks like GHG Protocol, EU or UK rules may be better placed—but should still map current disclosures to SB 253’s requirements and anticipate supplemental disclosures.
Author’s note
Punchy take: If your organisation hits the $1bn revenue threshold and has any business in California, this isn’t just paperwork — it will drive governance, data collection and external assurance costs. Treat this as a prompt to dust off your emissions inventory processes now.
Why should I read this?
Short version: because if you’re a big US company (or a US subsidiary of a foreign group) with any sales or presence in California, you might have to file GHG numbers and buy assurance next year. This summary saves you the slog — it flags deadlines, what to collect (Scope 1/2 now, Scope 3 later), who counts as in-scope, likely fees, and where the rulemaking stands. In plain terms: start scoping, tally revenues both ways, and line up your data and assurance providers.
Next steps for companies
Begin scoping analyses now: calculate revenue under both proposed definitions, map entities against California “doing business” criteria, identify subsidiaries that may be Reporting Entities, inventory data sources for Scope 1/2 (and Scope 3 where relevant), evaluate current assurance arrangements, and budget for fees and verification. Monitor CARB’s rulemaking timeline (notice of proposed rulemaking 14 Oct 2025; board hearing 11–12 Dec 2025) and review CARB’s draft templates when published.
