California Climate Disclosure Deadline Is 5 Months Away. Here's What CPAs Need to Do Now.

California just finalized the rules for climate disclosure - and the first deadline is five months away.

Last week, the California Air Resources Board (CARB) approved regulations implementing S.B. 253 and S.B. 261, the state's two climate disclosure laws. Companies with more than $1 billion in revenue doing business in California will have to report greenhouse gas (GHG) emissions annually starting this year. Companies with at least $500 million in revenue will have to file climate risk reports every other year.

The first S.B. 253 deadline is Aug. 10, 2026. That's five months from now. If you have corporate clients doing business in California, they need to start preparing yesterday.

Who Has to Report

S.B. 253 applies to companies with more than $1 billion in annual revenue that "do business" in California. That's a broad definition - it doesn't mean headquartered in California. It means any company with meaningful revenue, operations, or customers in the state.

S.B. 261 applies to companies with at least $500 million in revenue. The climate risk reporting requirement under S.B. 261 is currently voluntary, per a court order issued last November. But voluntary reporting is happening - more than 120 companies have already submitted climate risk reports.

For CPAs with publicly traded clients, this isn't new territory. Many large companies already disclose climate data under SEC guidance (before the SEC withdrew its 2024 climate rule) or voluntary frameworks like TCFD.

But for private companies and mid-market clients, this is the first mandatory climate disclosure regime in the U.S. And it's not optional if your client does business in California.

What Companies Have to Report

S.B. 253 requires companies to disclose three categories of GHG emissions:

• Scope 1: Direct emissions from company-owned sources (vehicles, facilities, equipment)

• Scope 2: Indirect emissions from purchased electricity, steam, heating, cooling

• Scope 3: All other indirect emissions in the value chain (suppliers, customers, transportation, waste)

For 2026 reporting (due Aug. 10, 2026), companies only have to disclose Scope 1 and Scope 2 emissions. Scope 3 reporting starts in 2027.

That's a big relief, because Scope 3 is where the complexity explodes. Scope 1 and 2 are relatively straightforward - you measure what you burn and what you buy. Scope 3 requires tracking emissions from suppliers, customers, logistics providers, and the entire value chain. Most companies don't have that data yet.

What CPAs Need to Do

If you have clients subject to S.B. 253 or S.B. 261, here's what you need to tell them now:

1. Start gathering Scope 1 and Scope 2 data. That means utility bills, fuel purchases, fleet vehicle mileage, facility energy use, and purchased electricity records for the reporting period. If your client doesn't already track this, they need to start today.

2. Hire a third-party verifier. S.B. 253 requires third-party assurance of GHG emissions disclosures. That means an independent auditor or verifier has to sign off on the data before it's filed. Your client can't just self-report. They need to engage a verifier now - the good ones are already booked.

3. Prepare for Scope 3 in 2027. Even though Scope 3 reporting doesn't start until next year, companies should begin building the infrastructure now. Scope 3 data is hard to get - it requires supplier engagement, value chain mapping, and carbon accounting software. Waiting until 2027 is too late.

4. Check if S.B. 261 climate risk reporting applies. Even though it's currently voluntary, many companies are filing anyway to get ahead of future enforcement. The reports require disclosure of climate-related financial risks under frameworks like TCFD. If your client is already doing ESG reporting, they may be able to adapt existing disclosures. If not, they need help.

What About the SEC Climate Rule?

The SEC approved climate disclosure rules in March 2024, then withdrew them in March 2025 after legal challenges. For CPAs with publicly traded clients, that meant one year of "will we or won't we" confusion.

California is moving forward regardless. So is New York - the New York State Senate passed similar legislation last month requiring companies with more than $1 billion in revenue to disclose GHG emissions annually. The bill now moves to the New York State Assembly.

For large companies doing business in both states, this creates a patchwork compliance burden. Different deadlines, different reporting frameworks, different verification standards. Some companies may choose to adopt a single global disclosure framework (like GRI or TCFD) and file the same report to both states. Others will have to prepare separate state-specific disclosures.

Why This Matters

California and New York together represent a huge chunk of the U.S. economy. If you're a large company, you probably do business in both states. And if you do, you're subject to mandatory climate disclosure even if the federal SEC rule is dead.

For CPAs, this creates a new service line. Climate disclosure assurance, carbon accounting, Scope 3 value chain analysis - these are all emerging areas where clients need help and don't know where to turn.

The firms that build this capability now will win the work. The ones that wait will lose clients to ESG consultants and Big Four assurance practices.

First deadline: Aug. 10, 2026. Five months. If your clients aren't preparing yet, they're already behind.