SB 253: who must comply, what to disclose, and by

California’s SB 253, the Climate Corporate Data Accountability Act, turns greenhouse gas reporting into a legal requirement for large companies doing business in the state. The law applies beyond California-based companies, includes both public and private entities, and reaches value chain emissions through Scope 3 reporting. A robust carbon footprint reporting process gives companies a practical foundation for meeting the requirement.

The practical challenge is not only understanding the threshold. Companies must determine which U.S. entity is in scope, define the reporting boundary, collect data across facilities and suppliers, apply the GHG Protocol consistently, and preserve an audit trail that can support future assurance.

This article explains who must comply, what the law requires, how the current implementation timeline works, what assurance means in practice, and how companies can build a reusable emissions data process.

What SB 253 requires

SB 253 requires covered U.S. business entities with annual revenues above $1 billion that do business in California to publicly disclose greenhouse gas emissions for the prior fiscal year. Reporting is based on the GHG Protocol Corporate Standard and covers three emissions scopes.

Scope 1

Scope 1 includes direct emissions from sources owned or controlled by the company. Examples include fuel burned in company-owned boilers, furnaces, generators and vehicles, as well as process emissions and fugitive emissions where applicable.

Scope 2

Scope 2 covers indirect emissions from purchased electricity, steam, heat and cooling. Companies should determine which locations and energy contracts are included, document the relevant factors, and preserve the information needed for both location-based and market-based calculations when applicable.

Scope 3

Scope 3 includes other indirect emissions across the value chain. The GHG Protocol identifies 15 categories, including purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation, waste, business travel, employee commuting, downstream transportation, use of sold products and end-of-life treatment.

Scope 3 is usually the most difficult part of the inventory because it depends on suppliers, procurement records, logistics data, product information and estimation methods. Companies should define boundaries and calculation methods before requesting information from hundreds or thousands of suppliers. Our guide to Scope 3 carbon footprint software explains how companies can organise these inputs without losing visibility into assumptions and data quality.

Reports must use the methodology required by the law and the CARB implementation process. Companies should not treat SB 253 as an opportunity to create a proprietary emissions framework that cannot be reconciled with the GHG Protocol.

Who must comply with SB 253

The core threshold is more than $1 billion in annual revenue and doing business in California. The company does not need to be headquartered in California or incorporated under California law.

SB 253 covers U.S. business entities formed under the laws of California, another U.S. state, the District of Columbia or an act of Congress. A company incorporated in Delaware, headquartered in Texas and selling products or services in California can therefore be in scope if it exceeds the revenue threshold.

The law applies to public and private companies. It is also important to distinguish SB 253 from SB 261. SB 261 concerns climate-related financial risk reporting and uses a different revenue threshold. This article focuses on the greenhouse gas reporting obligations under SB 253.

CARB’s program materials identify certain exemptions, including tax-exempt nonprofits and charities, government entities and certain insurance businesses. Companies should review the official CARB SB 253 program information and confirm their entity structure before relying on an exemption.

For groups, the scope review should consider revenue, ownership, consolidation, U.S. entities, California activity and the reporting boundary. The company that signs a customer contract in California may not be the only entity that needs to be considered.

SB 253 reporting timeline

SB 253 is phased. The reporting cycle depends on the fiscal year and the rules adopted by CARB.

CARB’s initial regulation covers the first-year administrative framework and Scope 1 and Scope 2 reporting. The first cycle is not a reason to postpone Scope 3 preparation. Supplier outreach, boundary decisions and data quality work usually take longer than the final reporting form.

CARB’s 2026 implementation materials also indicate that the Scope 1 and Scope 2 template and limited assurance are not required for the initial 2026 cycle. Companies should distinguish this first-cycle position from the longer-term assurance requirements being developed for subsequent reporting.

Assurance requirements

Assurance is a central part of the SB 253 operating model, even where the first reporting cycle has limited or deferred requirements. The company will need a defensible explanation of its inventory, sources, boundaries, calculation methods and management controls.

Limited assurance is a review designed to determine whether the assurer has identified evidence suggesting a material misstatement. It is narrower than a financial statement audit, but it still requires reliable data, documented methods and a controlled review process.

Reasonable assurance is a higher level of assurance that requires more extensive testing and a positive conclusion about the reliability of the reported information. The timing and detailed implementation of future assurance requirements remain subject to CARB rulemaking.

Companies should prepare for assurance by linking each material figure to:

• The original source, such as utility records, invoices, fuel data, procurement records or supplier submissions.
• The reporting entity, facility, period and organizational boundary.
• The emission factor, conversion and calculation method used.
• The person responsible for preparing and approving the data.
• Any assumptions, estimates, exclusions or changes from the previous period.

Penalties and business risk

SB 253 requires CARB to adopt administrative penalties for failure to report, and CARB’s implementation process includes enforcement provisions. The exact penalty schedule and enforcement mechanics should be checked against the current regulation rather than treated as a fixed one-time fine.

The financial exposure is only one part of the risk. A missing or unreliable disclosure can create problems with customers, lenders, insurers, investors and procurement teams. It can also expose inconsistencies between public climate claims, customer questionnaires, CDP submissions, financial reporting and regulatory data.

For that reason, compliance should not be reduced to submitting a number before the deadline. The objective is a repeatable inventory that the company can explain, update and reuse.

SB 253 and CSRD

SB 253 and the EU’s CSRD are different laws, but the operational requirements overlap in important ways. Both require structured emissions data, value chain engagement, annual reporting and a level of traceability that makes unsupported estimates difficult to defend.

The main difference is scope. CSRD sits within a broader sustainability reporting system that includes double materiality, governance, workforce, business conduct and other topics. SB 253 focuses on greenhouse gas emissions and requires companies to report Scope 1, Scope 2 and Scope 3 information under the California program.

Companies with European parent companies, subsidiaries or customers may already have CSRD data workflows. They should map those workflows to SB 253 instead of creating a parallel inventory. Companies without CSRD exposure can still use the European experience as a practical roadmap, especially for supplier data gaps, boundary decisions, emission factors and assurance readiness.

If your organization is managing both frameworks, the CSRD resource hub provides additional context on the European reporting model.

How to prepare for SB 253

1. Confirm the reporting boundary

Identify the U.S. entity or entities doing business in California, confirm revenue using the applicable definition, review consolidation and document the facilities and operations covered by the inventory.

2. Map Scope 1 and Scope 2 sources

List every facility, vehicle fleet, fuel source, process source, utility account and purchased energy contract. Record who owns the data, how often it is collected and what evidence is available. Automated data collection can help connect operational sources while keeping the reporting structure consistent.

3. Build the Scope 3 supplier workflow

Map procurement categories, capital goods, logistics, waste, business travel, employee commuting and product-related categories. Identify where supplier-specific data exists and where the company must use activity-based or spend-based estimates. A structured supplier engagement workflow helps prioritise material suppliers and track requests, responses and evidence.

4. Document methodology and controls

Document emission factors, organizational boundaries, estimation rules, market-based and location-based Scope 2 treatment, approval roles and change control. Consistency matters more than creating a complex process that no team can maintain.

5. Reuse data across frameworks

The same activity data may be needed for CDP, customer questionnaires, lender requests, CSRD, internal carbon pricing and reduction plans. Organize the source data once and map it to each output with a multi-framework reporting workflow instead of creating a separate inventory for every request.

How Dcycle supports SB 253 compliance

Dcycle supports companies that need to manage a multi-entity, multi-scope emissions inventory across facilities, subsidiaries, business units and suppliers. The platform connects activity data with the methodology and evidence required to explain the reported result. It is designed for teams that need a repeatable carbon accounting software workflow rather than a one-off calculation.

Centralized activity data

Dcycle centralizes data from utility accounts, fuels, facilities, fleets and operational systems. Teams can organize the inventory by entity, location, period and source, while keeping the underlying evidence connected to each calculation through automated data collection.

Scope 3 coverage

For Scope 3, the platform supports the 15 GHG Protocol categories and helps teams combine activity-based and spend-based calculation paths. This makes it easier to identify where supplier-specific data is available, where estimates are being used and which categories need additional work before the first Scope 3 filing.

Assurance-ready traceability

Each data point can retain its source, methodology, assumption, calculation logic, reviewer and approval. That documentation gives assurance providers a clearer path through the inventory and helps internal teams resolve questions before they become late-stage findings.

Multi-framework reuse

Companies facing SB 253 alongside CSRD, CDP, ISSB or customer requirements should not collect the same information repeatedly. Dcycle maps a common emissions data layer to different reporting outputs, allowing a change in one framework to be handled through mapping and review rather than a new collection project.

Conclusion

SB 253 is a California law, but its operational reach extends across U.S. companies, global supply chains and corporate reporting teams. Companies above the $1 billion threshold that do business in California need to confirm their reporting entity, build a Scope 1 and Scope 2 inventory, and prepare for Scope 3 before the 2027 cycle.

The strongest preparation is not a last-minute spreadsheet. It is a controlled data process with clear boundaries, documented methods, supplier engagement, evidence and a repeatable review workflow. Companies that already report under CSRD can reuse much of their existing infrastructure. Others should start with the same principle: collect the source data once and make it usable for every relevant output.

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