What you need to know about CARB’s preliminary compliance list

On 24 September 2025, the California Air Resources Board (CARB) released a preliminary list of companies that may fall under the scope of its climate disclosure laws — SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act).

This step represents a significant milestone in the regulatory rollout, but also raises many questions and uncertainties for companies — particularly those with US operations or global footprints that touch California. Below, we unpack what the list means (and doesn’t mean), what’s still unresolved, and how businesses can prepare.

In this article, Elaine Ye examines the details of this release, and what it means for businesses — both in California and around the world.

The big picture: Why this matters

California is the first US state to mandate corporate climate disclosures and climate-related financial risk reporting at the state level. Many companies have voiced concern about how SB 253 and SB 261 (as well as the interfacing SB 219) will affect their compliance burden, internal capabilities, and public positioning.

For some vital context, it’s important to note that…

• CARB must develop implementation rules by Q1 of 2026, but has not yet done so; thus far, only guidance and FAQs (not formal regulations) have been released — initial rulemaking will be presented in the 2026 Q1 Public Board Hearing
• The last major regulatory update from CARB was in February 2025

With that context, this new list is perhaps the most tangible regulatory “signal” to date — even if it’s not definitive.

Fortunately for those concerned about such impending changes, our Forecaster tool can help our clients…

• Track developments like this, packaging them into concise reports so that
• Assess whether they’re likely in scope, with the support of our experts
• Map between jurisdictional rules, like CARB’s SB 253 & 261, and global frameworks, such as the TCFD or IFRS S2

What the preliminary list does (and doesn’t do)

According to CARB and independent legal analyses, the list identifies roughly 4,160 US-based entities that may be subject to SB 253 and/or SB 261 — and that “may” is important. The list indicates whether SB 261 or both SB 253 and SB 261 appear to be relevant for each entity.

It’s important to acknowledge that CARB created this list to guide its internal rulemaking, rather than it be taken as any form of official register of affected parties. In fact, CARB has explicitly cautioned companies that inclusion on the list does not automatically mean they must report, nor does exclusion necessarily exempt them from liability.

To help refine the list, CARB has launched a voluntary survey / feedback process by which entities can provide corrections, such as asserting they were wrongly included or omitted.

Key limitations and caveats

Despite its importance, the list comes with significant caveats that companies must keep in mind:

1. Data limitations mean the list may be inaccurate and incomplete

The California Secretary of State data used only covers relevant listed businesses up to March 2022, so many more entities that were recently established (or became relevant) may be missing. Additionally, matching across various databases (e.g. name matching, aliasing, mergers, subsidiaries, etc.) is imperfect and cannot be considered “gospel”. Revenue figures used may also lag behind recent performance — especially for entities that were near the threshold for applicability in 2022.

2. Unresolved definition of “doing business in California”

CARB has not yet finalized how it will define “doing business” (i.e. the threshold of California sales, property, or payroll, or other criteria). Early proposals (e.g. from CARB’s August 2025 workshop) considered tying it to California Revenue & Taxation Code § 23101, but that definition has drawn stakeholder concerns about overreach.

3. Uncertain revenue threshold mechanics

SB 261 applies to companies with >USD 500 million in annual global revenue; SB 253 applies to those with >USD 1 billion in revenue. But whether “revenue” is interpreted as gross receipts, net revenue, or some adjusted figure is still under discussion.

4. Exemptions are not yet baked in

CARB has proposed carve-outs (e.g. non-profits, entities whose only California presence is teleworking employees, certain electricity wholesalers, insurance companies) but those are not yet final. Some entities in the list may actually qualify for exemptions once these rules are finalized.

Given these uncertainties, the list should be viewed as a starting point — not a definitive “you must report / don’t report” list.

What do SB 253 and SB 261 actually require?

For businesses on the list, or those that suspect they should be, it’s important to remain aware of what SB 253 and SB 261 will demand, while duly noting that the final regulations may still modify some elements.

SB 253 — Climate Corporate Data Accountability

• Entities with > USD 1 billion in global revenue that “do business in California” will be required to annually disclose their Scope 1, Scope 2, and eventually Scope 3 greenhouse gas emissions
• The first reporting (of 2025 data) for Scope 1 and 2 is expected by 30 June 2026
• Entities must obtain third-party assurance (initially limited assurance) on Scope 1 and 2 — over time, CARB may require reasonable assurance (e.g., by 2030)
• SB 253 contemplates phasing in Scope 3 reporting (potentially starting in 2027) and assurance on Scope 3 later.

SB 261 — Climate-Related Financial Risk Disclosure

• Entities with > USD 500 million in global revenue that “do business in California” must publish biennial climate-related financial risk reports, starting 1 January 2026
• Reports should be publicly available on the company’s website, and between 1 December 2025 and 1 July 2026, entities must post a link to their report via a CARB docket
• Entities may align with recognized frameworks such as TCFD (Task Force on Climate-related Financial Disclosures) or IFRS S2, or any equivalent framework approved by a regulatory authority
• CARB has released a draft checklist outlining minimum requirements (governance, strategy, risk management, metrics/targets) for disclosures

What actions should companies take now?

Given where we stand, companies should think of this as a crucial “prep window”. Even though the rules aren’t yet final, the statutory deadlines aren’t far off the horizon.

Companies looking to stay ahead of requirements should consider the following steps:

1. Review the CARB list

See whether your company (or subsidiaries) appear. If you believe you’re listed erroneously — or omitted despite meeting the thresholds — consider submitting corrections via CARB’s feedback survey.

2. Do your own applicability assessment

Don’t rely solely on the list. Independently evaluate your company’s revenue, structure, and California nexus (sales, property, payroll) against possible definitions of “doing business in California”. This way, you’ll be able to justify any further actions you take, should the assessment confirm applicability.

Document your rationale and assumptions for defensibility.

3. Map out internal data capabilities

Begin assembling your emissions data infrastructure (Scope 1, 2, and potentially 3). It’s important to identify data owners, data sources (energy, procurement, travel, downstream value chain), and gaps, to assure the right data is being collated and shared with the right people.

Engaging early with accounting, operations, procurement, sustainability, and IT teams means company-wide buy-in and better preparedness across the organization.

4. Prototype drafts and scenario planning

Begin drafting early versions of your climate risk disclosures (governance, material risks, scenario analysis, metrics/targets) even ahead of final rules. Use these draft versions to stress-test your data systems and identify gaps well ahead of 2026.

5. Monitor developments closely, with expert insights

Use tools like Sustainability Forecaster to stay abreast of updates and emerging interpretations. Pay particular attention to expert analysis and insights into what any updates might mean for businesses.

As rules are finalized, update your assumptions, approach, and systems accordingly.

The uncertain road ahead

As the oversight and implementation phase proceeds, it’s important to remain aware of several unresolved issues that remain critical to the finalization of CARB’s SB 253 and SB 261:

• Final definitions — CARB must settle its definitions of “doing business in California”, “revenue”, parent-subsidiary relationships, and exemptions.
• Fee structure and regulatory burdens — The phototype list is already being used to estimate the number of entities for CARB’s fee regulation.
• Enforcement stance — CARB has indicated that for the first reporting cycle it may exercise discretion against enforcement if companies act in “good faith”.
• Litigation risks — California’s disclosure regime is facing legal challenges (e.g. from business groups invoking First Amendment or federal preemption claims). While an early bid to block enforcement was denied, the laws remain subject to judicial scrutiny.
• Global vs local tension — Companies operating cross-border may struggle to reconcile California-specific rules with other jurisdictional requirements, such as SEC climate rules and the EU’s CSRD. Bridging these via structured mapping (e.g. TCFD or IFRS S) will be essential.

Climate disclosure is coming — prepare or be left behind

CARB’s publication of a preliminary SB 253 and SB 261 compliance list is an important signal: the climate disclosure regime in California is transitioning from concept to operational stage. Yet the list is neither final nor exhaustive — and inclusion or exclusion does not replace a company’s duty to assess its own obligations.

For companies with US operations or exposure to California, now is the time to lean in: work through your revenue and footprint data, begin building emissions and risk reporting capabilities, engage assurance and legal partners, and stay alert to CARB’s upcoming rulemaking. With deadlines fast approaching, early readiness is no longer optional.