The California Air Resources Board (CARB) announced on December 5th that it will not pursue enforcement action in the first year of reporting for California’s SB 253, the “Climate Corporate Data Accountability Act.” The law requires entities doing business in California with total annual revenues over US$1 billion to annually report all Scope 1, Scope 2 and Scope 3 greenhouse gas emissions, as defined in the law.
Although SB 253 requires companies to begin reporting Scope 1 and Scope 2 emissions for the previous fiscal year in 2026, CARB stated in its announcement that it “recognizes that companies may need some lead time to implement new data collection processes” in order to submit full reports of these emissions. Therefore, CARB will exercise its enforcement discretion and will not penalize entities that submit incomplete reports for 2026 so long as they make a “good faith effort” to comply with the law and “retain all data relevant to emissions reporting for the entity’s prior fiscal year.” CARB stated that companies can report Scope 1 and Scope 2 emissions based on data “that can be determined from information the reporting entity already possesses or is already collecting.”
While the risk of enforcement by CARB is now minimized for the first reporting year, companies should still be tracking the CARB rulemaking process and plan to report in 2026. The term “good faith effort” is in the eye of the beholder. We also routinely see circumstances in which state enforcers exercise enforcement discretion, but NGOs, shareholders and plaintiffs’ firms still see opportunity. Unfortunately, compliance in California remains as clear as mud.