California Climate Rule Finalized

Guest blog from Tim Mohin, Global Sustainability Leader, author of the weekly ESG and Climate Newsletter. Author of the book: Changing Business from the Inside Out. Founder and Chairman of the Responsible Business Alliance (formerly the Electronic Industry Citizenship Coalition).

After three years of changing guidance, public workshops, and legal challenges (which still hang over the rules). Yesterday, at a public hearing, the California Air Resources Board (CARB) unanimously passed the implementing rule for SB 253 (emissions reporting) and SB 261 (climate risk reporting) for 2026. 

In what was a very lengthy hearing, CARB focused on confirming three main aspects of the rule for 2026:

• The reporting fee to recover the costs of administering the rules.

• Applicability and exemptions.

• Establishing the first-year reporting deadline for SB 253 (emissions reporting).

CARB plans to initiate another rulemaking process in 2027 to address Scope 1 and 2 emissions, as well as Scope 3 emissions. 

There were three main issues that repeatedly came up among the dozens of in-person and web-based comments: 

1. Exemptions for insurance companies under SB 253 (emissions reporting), 

2. Disclosure timelines, and 

3. The litigation hanging over the rules.

One of the main revelations of the meeting was the exemption of insurance companies from SB 253 and SB 261 (Climate emissions and risks, respectively). Under the original rule, insurance companies were only exempt from climate risk reporting (SB 261). 

The architect of SB 253 (emissions reporting), Senator Scott Weiner, said, “the legislation's intent to the insurance industry is crystal clear. It was excluded from SB 261, but not from SB 253. California law is that the insurance industry is subject to SB 253’s carbon disclosure requirement, so I do not believe the board has the authority to remove an industry that the legislature included.” 

CARB replied that they not only have the authority, but the duty to make this judgment. 

Ultimately, the volume of comments necessitated some ‘on-the-fly’ resolutions. For example, CARB discussed whether the disclosures to the California Department of Insurance meet the SB 253 requirements and agreed to propose future regulatory changes if needed.

CARB's SB 253 Dislcosure Timeline

Stakeholders raised concerns that the August 10, 2026, reporting deadline could create a bottleneck for data collection and third-party assurance. They urged CARB to consider a December 31 or a rolling deadline aligned to fiscal years. CARB staff defended the August 10 date as administratively necessary. They argued it gives reporters at least 6 months to comply, and they emphasized the enforcement discretion for good-faith submissions and voluntary assurance in year one. 

While there is still an injunction blocking implementation of climate risk reporting (Chamber of Commerce v. Sanchez), this week’s vote is the official start of climate emissions reporting (SB 253). 

Now that CARB has approved the Resolution, they will respond to public comments, submit the final regulatory package to the Office of Administrative Law, and then implement the fees and the first-year GHG reporting deadline for SB 253.