California Takes Next Step in Corporate GHG Emissions Reporting Rulemaking

The California Air Resources Board held a public workshop yesterday afternoon focused on the California Corporate Greenhouse Gas Reporting Program established under the Corporate Climate Data Accountability Act. That Act, which is codified as California Health & Safety Code Section 38532, is more commonly referred to as SB 253. The workshop was the latest installment in CARB’s ongoing stakeholder engagement in furtherance of California’s corporate climate disclosure laws and related rulemaking and guidance. At the workshop, CARB staff covered proposed concepts for Scope 1, 2 and 3 greenhouse gas emissions reporting, accounting methodologies and assurance, as further discussed in this post.

SB 253 requires US-based entities doing business in California with more than $1 billion in annual revenue to publicly disclose their Scope 1, 2 and 3 GHG emissions. For the initial reporting period, companies are required to disclose their Scope 1 and 2 GHG emissions by August 10, 2026. Scope 3 GHG emissions will additionally be required to be disclosed beginning with reports filed in 2027. 

On February 26, the CARB Board approved an initial regulation addressing, among other things,  SB 253 scoping concepts, program fees and the 2026 reporting deadline. Our most recent SB 253 post discussing that regulation, which also includes links to some of our earlier posts, is here.

The focus of the March 23 workshop was CARB's proposed concepts for the topics discussed below. The current rulemaking relates to reporting in 2027 and beyond. It does not apply to 2026 reporting. 

GHG Emissions Organizational Boundaries

CARB presented two approaches for setting organizational boundaries for reporting GHG emissions. Reporting entities would be able to use either approach.

• Equity share approach: A company accounts for GHG emissions based on its ownership interest in an operation.
• Control approach: A company accounts for 100% of the emissions from operations over which it exercises financial control (the ability to direct financial and operating policies of the operation to gain economic benefits) or operational control (the authority to introduce and implement operating policies for the operation). 

CARB staff proposes requiring disclosures that include information about entities’ organizational boundary selection.

CARB is soliciting feedback on whether additional boundary-setting approaches should be considered and how entities should explain their boundary selection choices.

Scope 1 and 2 Reporting 

CARB will develop standardized templates for reporting in 2027 and subsequent years as part of the current rulemaking. CARB published a draft template for reporting Scope 1 and 2 GHG emissions in October 2025, as discussed in this Ropes & Gray post. That template is not required to be used this year, as discussed in this Ropes & Gray post.

At the workshop, CARB indicated that it plans to publish updated templates for public comment this summer.

CARB is soliciting input on what additional information should be considered when it is developing final reporting templates for Scope 1 and 2 reporting. CARB indicated that it has received feedback on topics including emissions intensity per dollar of revenue, organizational boundary flexibility and flexibility to report using different global warming potential (GWP) values.

CARB also indicated that forthcoming updates will address the 2026 reporting intake process, including the reporting format, submission process and when the CARB portal will open for submissions. CARB also plans to publish guidance addressing extension requests, but it indicated that the guidance will apply to limited situations.

Scope 3 Reporting: Three Proposed Regulatory Options

As indicated above, starting in 2027, SB 253 requires reporting entities to report Scope 3 emissions. 

CARB proposed three regulatory options for Scope 3 reporting, which covers upstream and downstream value chain emissions across the 15 emissions categories. 

Option 1 — Broad applicability. Reporting entities would be required to report on all 15 Scope 3 categories beginning in 2027, with flexibility to exclude categories considered de minimis with appropriate explanation. CARB is seeking feedback on what specific thresholds, definitions or decision frameworks should govern de minimis determinations, and how reporting flexibility should be weighed against alignment with current mandatory and voluntary practices and other international standards. 

Option 2 — Sectoral phase-in. Scope 3 reporting would initially be required only from the transportation and industrial sectors in 2027, which is consistent with California's Climate Scoping Plan by prioritizing sectors responsible for the largest share of statewide emissions and facing the greatest transition risk. The initial focus would cover transportation, technology and energy, cement production and other manufacturing activities. CARB is seeking feedback on the factors to consider in prioritizing sectors.

Option 3 — Category phase-in. Scope 3 reporting would begin with the most widely reported categories across sectors — specifically Categories 6 (Business travel), 1 (Purchased goods and services), 3 (Fuel and energy-related activities), 7 (Employee commuting) and 5 (Waste generated in operations) — and expand over time to less-reported categories, with voluntary reporting permitted for the remaining categories. CARB's workshop materials cite survey data indicating these five categories are currently reported by 37% to 47% of surveyed companies across industries.

GHG Accounting Methods

For Scope 3 estimation in particular, CARB is soliciting feedback on four accounting methodologies. It proposes allowing flexibility to use any of these methods, based on a reporting entity’s data availability, resources and reporting objectives.

• Spend-based: based on the monetary value of purchased goods/services, multiplying the financial value of purchased goods or services by an emission factor that represents average emissions per unit of currency spent;
• Activity-based: based on physical measures of activity, calculating Scope 3 emissions using metrics such as kilograms of materials purchased, kilometers traveled or units produced, multiplied by relevant emission factors;
• Supplier-specific: based on primary emissions or activity of suppliers, calculates Scope 3 emissions using primary emissions or activity data collected directly from suppliers, typically at a product or process level (e.g., cradle-to-gate emissions); and
• Hybrid: a combination of the foregoing, such as if data quality varies among Scope 3 emissions.

CARB is proposing that reporting entities disclose the accounting method(s) used. 

CARB noted multiple times at the workshop that it is not proposing to require supplier-provided data.

CARB is seeking input on which accounting methods companies currently use and whether additional methods should be permitted. 

CARB observed at the workshop that emission factors are a key input across all of the foregoing reporting methods. CARB identified a suite of publicly available emission factors data sets for potential use, including EPA's Emissions & Generation Resource Integrated Database (eGRID), the IPCC Emissions Factor Database (EFDB), EPA's Emissions Factors Hub and the US Environmentally-Extended Input-Output (USEEIO) models. CARB is seeking input on the criteria emission factors should meet to qualify for use in SB 253 reporting, how reporters should document their choice of emission factor (including proprietary models) and how reporters should handle and disclose year-over-year changes in emission factors.

Assurance

CARB presented its proposed framework for limited assurance of Scope 1 and 2 emissions starting with 2027. 

CARB proposes allowing any of the following assurance standards to be used: 

• AA1000 Assurance Standard (AA1000AS v3);
• AICPA AT-C Section 210 (limited review engagement) or AT-C Section 205 (reasonable assurance examination engagement);
• ISAE 3000 (Revised) and ISAE 3410 (until December 2026);
• ISSA 5000 (effective December 2026); or
• ISO 14064-3:2019 (with provider qualifications under ISO 14065/14066).

CARB noted that these standards are accepted in various jurisdictions around the world and that its intent is to allow a range of standards to be used to reduce assurance cost and burden. Consistent with this intent, CARB also noted that inclusion of the AICPA standard is intended to allow domestic CPA firms that already provide financial audit services to California reporting entities to perform GHG assurance engagements, avoiding the need for companies to engage a separate provider solely for SB 253 compliance. 

CARB is soliciting input on whether additional assurance standards should be recognized, along with practical data on assurance provider capacity, cost ranges for limited assurance and the factors driving assurance costs across entity size, sector and assurance level. 

Economic Analysis: Estimated Compliance Costs

CARB presented a Standardized Regulatory Impact Assessment (SRIA) overview. A SRIA is required under the California Administrative Procedure Act for any regulation with an estimated economic impact exceeding $50 million in any 12-month period following adoption. 

CARB's working estimates for ongoing annual compliance costs per entity are as indicated in the table below. CARB’s estimates are derived from data from the US Securities and Exchange Commission’s climate disclosure rulemaking process. 

Factoring in first-year implementation costs, which are expected to be higher than ongoing costs due to the need to establish data collection procedures and protocols, CARB's estimated average annual costs per entity across its three options presented (averaged over a three-year implementation period) range from $135,083 (Option 3) to $152,352 (Option 1). 

CARB staff indicated that existing cost estimates may be conservative given the "early adopters" effect and growing expertise and capacity within the reporting services sector. 

Next Steps 

CARB is soliciting stakeholder feedback on the pre-rulemaking concepts discussed at the March 23 workshop. The comment window is open for three weeks, through April 13. Comments may be submitted via the public docket established by CARB or by email to [email protected]. Economic alternatives to CARB's proposed regulatory approaches also may be submitted during this period. Comments are not limited to the targeted feedback areas raised by CARB. Later in the rulemaking process, CARB will propose a draft regulation, which also will be subject to a comment period.

At the workshop and in its slides, CARB noted that numerous other jurisdictions have adopted or are in the process of requiring corporate climate disclosure. Regulatory harmonization and interoperability are a big focus and concern of multinationals. For multi-jurisdictional reporters, CARB specifically requests feedback on what elements of other frameworks it should take into account. CARB indicated that its goal is to align with existing requirements and approaches whenever possible.

CARB also is soliciting feedback on its February 2026 rulemaking, giving companies another bite at the apple. At the workshop and in its materials, CARB asked whether there are topics from the initial regulation adopted at the February 2026 Board meeting that need to be revisited, including reporting deadlines for future years, applicability definitions and/or exemptions. The Final Statement of Reasons for that rulemaking will include responses to public comments received at the hearing and during the 45-day public comment period.

Companies will quickly want to decide whether to participate in the comment process, directly or through their trade associations. The regulatory choices CARB makes pertaining to the topics addressed at the workshop will affect the cost, complexity and flexibility of compliance. 

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