California’s climate agenda continues to steam ahead, in particular SB 253, SB 261, and the new CARB climate‑transparency rules.
On February 26, 2026, CARB approved regulations to implement the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). SB 253 requires U.S.-based entities doing business in California with over $1 billion in annual revenue to report Scope 1 and Scope 2 GHG emissions annually, starting with a deadline of August 10, 2026. Companies must begin reporting indirect Scope 3 emissions (supply chain, employee commuting, etc.) in 2027. SB 261 requires U.S.-based entities with over $500 million in annual revenue to prepare a biennial report on climate-related financial risks and mitigation strategies. The regulations will impact thousands of public and private companies who do business in California. They will be facing hundreds of thousands of dollars per reporting cycle (consultants, auditors, data systems) to comply.
These laws don’t just hit “big corporations.” They force large companies doing business in California to build costly, complex reporting systems and then push those demands down their supply chains—onto local manufacturers, farms, logistics firms, and service providers who lack in‑house ESG teams and spare capital. Compliance dollars that could fund jobs, wage growth, and investment instead get redirected to consultants, auditors, and legal defense. Over time, firms rationally respond by limiting their California footprint, shifting purchasing out of state, or shelving new projects here.
Scope 3 reporting is particularly troubling. Scope 3 has nothing to do with the emissions produced by a company. Instead, it refers to emissions attributable to suppliers, customers, and other third parties. This will force large companies to push data‑collection and verification demands down onto suppliers, including local small and medium‑sized businesses, increasing their operating costs. California’s agriculture industry will be particularly affected by the reporting requirements.
Even if you support ambitious climate goals, it should concern you that the marginal “win” from yet another layer of reporting is speculative, while the costs to competitiveness and opportunity in California are very real.