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California: SB 253 and SB 261 Compliance Rulemaking Status

On October 7, 2023, California Gov. Gavin Newsom signed Senate Bill 253 (Climate Corporate Data Accountability Act) and Senate Bill 261 (Climate-Related Financial Risk Disclosure Program) into law as part of California’s “Climate Accountability Package.”

These laws impose new climate-related reporting obligations on large companies, including state and federal credit unions doing business in California.

  • SB 253 requires entities with over $1 billion in annual revenue doing business in California to publicly disclose greenhouse gas (GHG) emissions, including Scope 1, 2, and 3 emissions.
  • SB 261 requires entities with over $500 million in annual revenue doing business in California to prepare biennial reports disclosing climate-related financial risks.

You can read the California Credit Union League’s full executive summary of SB 253 and SB 261 here.

Rulemaking Status

As of now, the California Air Resources Board (CARB) has not met the statutory deadline to finalize implementing regulations by July 1, 2025. CARB remains in pre-rulemaking and has not formally initiated the regulatory process.

In a recent interview, CARB Chair Liane Randolph stated: “We’ve already provided guidance to companies that they have to file. We have provided guidance to them that, because we don’t yet have the detailed regulations out, they will have to file based on their best efforts. And that can be the climate disclosure that many of these companies already do. In the meantime, the detailed regulatory work is underway, and we expect to bring it to the board later this year or early next year.”

Key Takeaways from CARB’s Recent FAQ

CARB recently released a Frequently Asked Questions (FAQ) document for SB 253 and SB 261. While the FAQ addresses several implementation issues, it reiterates that many definitions and timelines will be finalized through future public consultation and formal rulemaking.

Initial Reporting Deadlines

SB 253 (GHG Emissions Reporting):

  • Scope 1 and 2 emissions must be reported in 2026 (exact date TBD through rulemaking) for the prior fiscal year.
  • Scope 3 emissions reporting begins in 2027.
  • Limited third-party assurance required in 2026; reasonable assurance required by 2030.

SB 261 (Climate-Related Financial Risk Reports):

  • First reports are due by January 1, 2026.
  • Reports may cover either FY 2023–24 or FY 2024–25.
  • CARB’s public docket for posting report links will remain open through July 1, 2026.

Applicability to Credit Unions

  • SB 253 applies to all companies with $1 billion+ in total annual revenue doing business in California – including state and federal credit unions, even if headquartered in other states.
  • SB 261 applies to all companies with $500 million+ in total annual revenue doing business in California – including state and federal credit unions.

Note that CARB is still refining definitions for:

  • “Doing business in California”.
  • “Total annual revenue”.
  • Treatment of corporate relationships (e.g., subsidiaries and parent companies).

CARB has signaled that:

  • “Doing business in California” may align with the Franchise Tax Board definition under Revenue & Taxation Code § 23101.
  • “Total annual revenue” may be defined using gross receipts under Revenue & Taxation Code § 25120(f)(2).

Compliance Standards and Flexibility

  • Climate risk disclosures may align with frameworks such as Task Force on Climate-related Financial Disclosures (TCFD).
  • CARB has stated it will consider “good faith efforts” to comply, particularly in the early years.
  • Stakeholders may propose exemptions or adjustments during the rulemaking process.
  • CARB is open to feedback on aligning reporting with other jurisdictions to reduce compliance burdens.

Next Steps

  • CARB remains in the pre-rulemaking phase and plans to host additional public engagement sessions during Summer 2025.
  • CARB has committed to developing proposed regulations by the end of the year.

For More Information

For more information, email Lisa Quaranta.

Access the ‘Compliance Hotline’

Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:

Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include:

  • ViClarity
  • CU PolicyPro
  • ComplySight
  • InfoSight
  • CU Store
  • Record Retention Guide
  • GRC Technology Solutions

For more information, email Lisa Quaranta.

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