California's Climate Reporting Laws: What Travel Managers Need to Know

Introducing two new laws: California Senate Bills 253 & 261

California is setting a new benchmark for corporate climate accountability. With the passage of Senate Bills 253 and 261, businesses of a certain size operating in the state must prepare for a new era of climate transparency. These laws, combined with amendments from SB 219, signal a shift from voluntary sustainability efforts to mandated disclosures.

1. California Climate Corporate Data Accountability Act (Calif. SB 253)

SB 253 mandates both public and private large entities to disclose their greenhouse gas (GHG) emissions. Entities (public or private) with over $1 billion in revenue that “do business”* in California will be required to report annually. This reporting includes:

• Scope 1 and 2 emissions (direct emissions from owned or controlled sources) starting in 2026 based on 2025 financial year data.
• Scope 3 emissions (indirect emissions including from business travel) starting in 2027 financial year data.

Non-compliance can result in fines of up to $50,000 per reporting year. Companies must align with the Greenhouse Gas (GHG) Protocol and report via the California Air Resources Board (CARB) platform.

*Please note that to date there is no explicit definition of “do business in California”. Some guidance refers to the definition stated in the State of California Franchise Tax Board, but this has yet to be confirmed.

2. California Climate-Related Financial Risk Act (Calif. SB 261)

SB 261 requires large businesses (companies with over $500 million in revenue that operate in California) to submit a biennial report outlining their climate-related financial risks and how they are going to reduce and adapt to these. This ensures greater transparency and protects consumers and investors from losses caused by climate-driven disruptions including to supply chains, workforces, and infrastructure.

A climate-related financial report is required every two years that details: 

• Climate-related financial risks (physical risks like damage to assets due to extreme weather and transition risks like market shifts changing supply and demand).
• Steps taken to mitigate and adapt to these risks.

Non-compliance can result in fines of up to $50,000 per reporting year. Framework: Reports must follow the Task Force on Climate-Related Financial Disclosures (TCFD) framework.

Summary

Here's a helpful summary of all that information:

A couple of things to note (SB 219 & Pending Litigation)

Amendments via SB 219: Businesses can consolidate reporting at the parent level and the CARB reporting regulation has been delayed by six months while the deadline for reporting remains the same, shortening the compliance window.

Pending litigation: The U.S. Chamber of Commerce has challenged the laws in federal court, arguing they regulate corporate speech. However, both SB 253 and SB 261 remain in effect while legal proceedings continue.

Why does any of this matter to your business?

California, the world’s fourth-largest economy, is shaping global corporate sustainability standards. These laws will influence capital access, competitive positioning, and consumer perception.

Key takeaways for businesses:

• Non-compliance risks financial penalties and reputational damage.
• Investors are demanding greater climate transparency.
• Access to capital increasingly depends on credible climate data.
• Accurate carbon accounting can uncover cost-saving opportunities, such as reducing high-emission supplier dependencies.

How should I prepare for incoming regulations?

The regulatory landscape is evolving, and businesses must act now to stay ahead. Proactive compliance isn’t just about avoiding fines—it’s a strategic move that builds investor confidence, strengthens competitive positioning, and drives long-term value creation. 

Here are some simple steps to follow to make sure you're leading the way in climate compliance.

1. Seek legal guidance to confirm whether your organization is in scope.
2. Begin collecting auditable emissions data for Scope 3 business travel emissions at least from your 2026 financial year if not before.
3. Establish an assurance process to verify emissions data.
4. Develop a robust financial risk report in line with Task Force on Climate-Related Financial Disclosures requirements.
5. Leverage carbon accounting tools like Thrust Calculator to streamline compliance, calculations, and uncover strategic reduction opportunities to reduce your risk.

This guide is for informational purposes only and does not constitute legal advice. Organizations should seek professional legal advice to ensure compliance with applicable laws and regulations specific to their operations.