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 extended its Scope 1 and 2 reporting deadlines from August 10 to November 10, 2026. Scope 3 reports are expected to be due in 2027, though an official 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 VCA Green 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. VCA Green takes every measure to ensure complete and accurate data collection. The sooner you reach out, the sooner you will reach compliance.

Property Size

Buildings over 20,000 Sq. Ft.

Specifics on building type are still pending finalization.

Annual benchmarking reporting requires 12 calendar months of whole-building energy, and building use data. For example, in 2025, building owners must report 12 months of 2024 data.

June 1, annually. While official regulations have not been published, this policy is expected to be heard by Santa Monica City Council in July 2026. Benchmarking reports must be submitted on an annual basis using the previous year’s data via ENERGY STAR® Portfolio Manager®. This is the EPA’s benchmarking tool that is used for compliance reporting in most ordinances across the country.

Building Performance Standards (BPS) are often considered Phase II of these building energy use ordinances. After reporting your benchmarking data, many ordinances require you to make changes to the building’s operations or equipment to lower energy use over time.

Santa Monica CHEBO has proposed requiring covered properties to meet building performance targets that become increasingly stringent. Buildings will also be able to submit and maintain a Building Performance Action Plan (BPAP).

BPS Due Date

CHEBO BPS deadlines have yet to be finalized. Proposed regulation suggests buildings will need to comply on the following schedule:

June 1, 2031 (every 5 years thereafter) – Buildings over 50,000 Sq. Ft.

June 1, 2036 (every 5 years thereafter) – Buildings over 25,000 Sq. Ft.

All covered buildings will need to achieve a final performance target of net zero emissions by 2050.

Third-party data verification requires owners/managers of covered buildings to hire a third-party expert who will independently review and verify the building’s benchmarking data.

Data verification under Santa Monica’s proposed CHEBO policy will be required for years before BPS deadlines (2031, 2036, 2041, 2046, 2050).

Santa Monica CHEBO non-compliance penalties have yet to be addressed.

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

Although policy has yet to be enacted, now is the time to prepare. Santa Monica CHEBO compliance can be confusing and hard to navigate. Bringing on a consultant like VCA Green streamlines the entire process while ensuring accurate reporting. We also offer free consultations with our benchmarking clients to review the reports and identify inefficiencies to improve.

Ordinances such as Santa Monica CHEBO are already in effect across the country, and deadlines are rapidly approaching. Retrieving historical building data will take time, especially when coordinating with property managers and utilities.

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