Covered Entities

Both public and private business entities who have total annual revenues over $1 billion USD (in the prior fiscal year) that do business in California. The revenue threshold accounts for revenue earned for the entire entity, not just the revenue earned in California.

Doing Business in California

CARB follows the Revenue and Tax Code § 23101 which defines “doing business” as actively engaging in any transaction for the purpose of financial or pecuniary gain or profit. An entity is doing business in California if the entity is doing business (as defined) and any of the following conditions are met:

• The entity is organized or commercially domiciled in this state
• Sales in California exceed the inflation adjusted threshold of $735,019 (2024)

Revenue Threshold

The bill defines revenue under the California Revenue and Taxation Cost (RTC) § 25120(f)(2) definition. Revenue is the gross amounts realized on the sale or exchange of property, performance of services, or the use of property in a transaction that produces business income.

California SB 253 requires covered entities to report Scope 1, 2, and 3 GHG emissions to the California Air Resources Board (CARB). The reporting business must cover the entity’s emissions globally, not just those emitted within California.

Companies must prepare reports in accordance with the GHG Protocol Corporate Accounting and Reporting Standard (or a successor standard). Scope 3 reports should follow the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

Scope emissions are categorized by the following definitions:

Scope 1 Emissions: Direct emissions from sources the company owns or controls.

• Company vehicles
• On-site combustion

Scope 2 Emissions: Indirect emissions from purchased energy.

• Electricity
• Heating and cooling
• Steam

Scope 3 Emissions: Indirect emissions resulting from business activities, not included in Scope 2.

• Business travel
• Purchased goods
• Emissions from production of raw materials
• Waste

Companies are required to report their GHG emissions on an annual basis. CARB has proposed Scope 1 and 2 reports to be due August 10, 2026*. Scope 3 reports are expected to be due in 2027, though an expected date has not been set.

• If the reporting entity’s fiscal year ends between January 1 and February 1, 2026, the entity will report data from the fiscal year ending in 2026.
• If the reporting entity’s fiscal year ends between February 2 and December 31, 2026, the entity will report data from the fiscal year ending in 2025.
• Each entity will have at least 6 months after their fiscal year ends to submit their report.

Entities that were not collecting data at the time the Enforcement Notice (Dec 2024) was issued, the entity will not need to submit a report in 2026. These entities must send CARB a letterhead stating they were not collecting data at the time.

*These due dates are pending finalization by CARB.

Third-party data verification requires covered entities to hire a third-party expert who will independently review and verify the company’s GHG emission data disclosure.

Under SB 253, assurance is not required for 2026 reports. Limited assurance will be required in the future. By 2030, CARB will require data assurance at the “reasonable assurance” level for Scope 1 and 2, and at a “limited assurance” level for Scope 3. These requirements are implemented at CARB’s discretion, depending on market conditions.

SB 253 violations will result in administrative penalties of up to $500,000 per reporting year. CARB will not assess penalties for companies who demonstrate a good-faith effort for Scope 3 emissions reports until 2030.

CONTACT US HERE to learn more and get started with compliance.

SB 253 compliance can be confusing and hard to navigate. Bringing on a consultant like Green Econome simplifies the entire process while ensuring accurate reporting. Our certified Carbon Auditing Professionals streamline the complex reporting requirements of climate disclosures, from end-to-end carbon accounting to preparing assurance-ready GHG emissions reports.

SB 253 deadlines are rapidly approaching. Retrieving historical GHG emissions data will take time, especially when coordinating with your team.

Waiting until the last minute risks missing compliance windows resulting in fines and enforcement penalties. Green Econome takes every measure to ensure complete and accurate data collection. The sooner you reach out, the sooner you will reach compliance.