Here’s an excerpt from this Cooley Alert penned by Beth Sasfai and Michael Mencher:
“Open questions for companies
Despite the flurry of guidance documents, significant uncertainties remain for companies potentially subject to the California climate reporting statutes.
Covered entities
While the publication of a preliminary covered entities list provided some insights, consequential questions remain for companies hoping to determine whether they are covered by the climate reporting statutes. Although CARB has provided some suggestions in its workshops, firm guidance regarding parent-subsidiary relationships, measurement of revenue and the doing-business in California test, these and other key topics have not been covered in detail or subject to any definitive statements. CARB also has not provided definitive statements on the measurement dates for revenue tests (e.g., should companies use fiscal year 2024 or 2025, and how this applies to companies with non-December 31 fiscal years).
SB 253 deadline
CARB had suggested a June 2026 deadline for SB 253 reports in the August workshop, but with regulations delayed several months, it is possible that this deadline will be extended an equivalent amount of time (i.e., into Q3 or Q4 2026). Although companies will likely have many months to work on SB 253 reports following the publication of regulations, companies are anxious to resolve gating items, such as determining if they meet the scoping tests and determining the periods required to be covered by emissions reports.
SB 261 deadline
CARB has also not indicated how the rulemaking delay may impact SB 261. The deadline for initial SB 261 reports (January 1, 2026) is set in the statute, unlike SB 253, which only provides that initial reports are due in 2026. Also, unlike SB 253, the statutory text of SB 261 does not explicitly contemplate that CARB must publish implementing regulations. As a result, it appears likely that the January 1 deadline for SB 261 remains in place, and that companies should not expect any formal regulations prior to this deadline, forcing companies potentially subject to SB 261 to proceed based on substantive guesswork.
Given that CARB has repeatedly emphasized flexibility and a good faith standard for year one reporting, the lack of regulations will also undoubtedly motivate some companies to take a lighter approach to SB 261 disclosures. With CARB having indicated that scenario analysis and emissions disclosure are not required for SB 261, many companies are primarily focusing their SB 261 disclosure preparations on high-level qualitative disclosure describing their current, often very minimal, climate activities and assessments. For companies in less climate-exposed industries, we expect these disclosures often will be limited to descriptions of general enterprise risk management processes lacking substantive dedicated climate risk governance, identification and mitigation processes.”
Authored by
Broc Romanek