California's first SB 253 reports are due November 10, 2026 - impacting roughly 2,600 in scope companies - and the assurance clock starts the year after. SB 261 enforcement is on hold while the Ninth Circuit weighs an appeal, but could come into force quickly, depending on the outcome of that appeal. This guide covers who has to report for each, what's actually due, and how to evaluate the platforms that support it.
What this article covers
- SB 253 is binding, and the first reports covering scopes 1 and 2 are due November 10, 2026, from companies with more than $1 billion in global revenue that do business in California.
- SB 261 enforcement is paused pending a Ninth Circuit decision, and third-party assurance is not required for either law in 2026, though limited assurance on scopes 1 and 2 begins in 2027.
- Evaluate platforms on assurance readiness first, then scope 3 depth in the five categories the California Air Resources Board (CARB) has proposed, then whether the tool produces California's specific reporting output rather than generic ESG disclosure.
- With the deadline approaching, implementation speed is a real selection criterion, and the same emissions data should carry into CDP, ISSB, and CSRD without a second project.
- Watershed covers both laws from one dataset, with 150 built-in error checks, data lineage on every calculation, and an optional Guaranteed Assurance program for SB 253.
Which companies must comply with SB 253 and SB 261
SB 253 and SB 261 are California's two climate reporting laws, and between them they cover several thousand companies that do business in the state. Whether you are in scope comes down to three tests: the entity is US-formed, it clears a revenue threshold, and it does business in California.
SB 253 and SB 261 scope summary
Revenue here refers to gross receipts as defined in California's Revenue and Taxation Code, which makes it verifiable against your Franchise Tax Board filings rather than a matter of interpretation. California’s “doing business” test can also consider transactions for financial gain, commercial domicile, property and payroll—not sales alone. You qualify if you are organized or domiciled in the state, or if your California sales exceed roughly $735,000.
Which companies are exempt, and how consolidated filing works
Nonprofits, government entities, California Independent System Operators, and companies whose only California activity is teleworking employees all fall outside both laws. If you do qualify, a parent company can file a single consolidated report covering subsidiaries it owns or controls at 50% or more, although each subsidiary still owes its own CARB fee.
One caution: CARB published a preliminary list of covered entities in September 2025, but it was built to estimate program costs and had clear omissions, so confirm your own obligation whether or not you appear on it. Our guide to California disclosures walks through scoping in more detail.
What are the deadlines for SB 253 and SB 261
SB 253 and SB 261 milestones timetable
When scope 3 and assurance requirements start
Scope 3 arrives a year after your first filing, and CARB has proposed limiting the opening cycle to five categories: purchased goods and services, fuel and energy-related activities, waste generated in operations, business travel, and employee commuting, with the rest voluntary for now. CARB has also proposed three methodology rules that shape what your software must produce: disclosure of measurement uncertainty, the share of scope 3 emissions calculated from primary data, and rebaselining of prior years when cumulative changes move reported emissions by more than 5%. Our SB 253 requirements breakdown covers the details.
Why the SB 261 deadline is still open
The Ninth Circuit issued an injunction in November 2025 and heard oral argument on January 9, 2026, so SB 261 has no enforceable due date and CARB will set a new one once the litigation concludes. When it does, reports will align to the four TCFD or IFRS S2 pillars on a comply-or-explain basis, with quantitative scenario analysis and emissions metrics optional in the first cycle and no assurance required. Therefore, it’s important to have a solution that helps you prepare for both SB 253 and SB 261.
What to look for in a California climate reporting compliance solution
- Assurance readiness. Limited assurance lands in 2027 and reasonable assurance in 2030. Ask for a sample audit trail, not a description of one. Look for data lineage on every calculation, version control, and documented error checking. Acceptable standards include ISSA 5000, ISO 14064-3, AICPA AT-C 205 and 210, and ISAE 3000 and 3410.
- Scope 3 depth in the five proposed categories. Scope 3 coverage across the five proposed categories. Category 1 is where most programs fall short. Ask how the platform collects supplier data, fills data gaps, and reports the primary-data percentage CARB requires companies to disclose.
- CARB-specific output. General ESG reporting is not the same as a CARB filing. Confirm the platform produces California's template, tracks measurement uncertainty and biogenic emissions separately, and can report on a fiscal year rather than a calendar year, since California requires fiscal-year data and many platforms default to calendar.
- Time to first report. With deadline approaching, implementation length is a selection criterion, not a footnote.
- Policy monitoring. Scope 3 rules, assurance timing, and the SB 261 deadline are all unsettled. Ask how quickly the vendor shipped changes after CARB's June 2026 postponement.
- Reuse across frameworks. The same emissions data should feed CDP, ISSB, and CSRD without a second implementation.
Top SB 253 and SB 261 compliance software
Watershed
The enterprise sustainability platform, covering scopes 1, 2, and 3 measurement alongside SB 261 climate risk reporting in one system.
Best for: Companies who need audit-ready emissions and a climate risk report from the same data.
Persefoni
Carbon accounting software covering SB 253 emissions reporting, with a separate service for SB 261 risk reporting.
Best for: Financial services firms and programs that want a lightweight route into SB 253 reporting and PCAF support for financed emissions.
Sweep
Combined ESG and carbon data platform with active coverage of California disclosure requirements.
Best for: Teams that want configurable workflows and are willing to invest in setup.
Workiva
Disclosure management and assured reporting platform, strong on financial reporting controls and audit workflow.
Best for: Companies that want California filings inside the same controlled environment as financial reporting.
Novisto
ESG data management and reporting platform covering multiple disclosure frameworks.
Best for: Companies managing disclosure across several frameworks at once.
Greenplaces
Carbon accounting software paired with hands-on services, aimed at smaller companies.
Best for: Filers who want data ingestion and hands-on support bundled with the software.
SB 253 and SB 261 software comparison table
Why choose Watershed for SB 253 and SB 261
Watershed is the enterprise sustainability platform, and it covers SB 253 emissions reporting and SB 261 climate risk reporting from one dataset. Companies with more than $1 billion in global revenue use Watershed to file scopes 1 and 2 by November 10, 2026, then carry the same data into scope 3 and limited assurance.
How Watershed prepares companies for SB 253 assurance
Watershed applies 150 built-in error checks and retains data lineage on every calculation, so any reported figure traces back to its source document. All measurements done on Watershed, when audited, have passed. The optional Guaranteed Assurance program adds expert support through the assurance process, and waives up to $250,000 in fees the following year if you do not pass.
How Watershed handles SB 261 climate risk reporting
Watershed produces AI-accelerated first drafts aligned to the four TCFD and IFRS S2 pillars, with peer benchmarking against your sector. Because emissions and risk share one platform, your SB 253 figures feed the SB 261 narrative directly.
How Watershed supports CARB's first-year relief
CARB's first-year discretion depends on documenting a good-faith effort, so Watershed retains the working record behind each calculation. What you file in November 2026 and what an auditor reviews in 2027 come from the same place.
What Watershed does when California's rules change
Watershed's in-house policy team tracks CARB rulemaking and updates reporting templates in the product, so your team is not rebuilding the filing workflow each time guidance shifts.
How Watershed data carries into other frameworks
Watershed customers reuse the same scope 1, 2, and 3 data for CDP, ISSB, and CSRD reporting, without a second implementation.
Get ready for SB 253 and SB 261
Learn more about the Watershed solution for California disclosures, or book a demo to see how Watershed handles SB 253 and SB 261 together.
