California’s SB 261: Elevating Corporate Climate Transparency

In 2023, California passed two landmark bills—SB 253 and SB 261—that require major businesses operating in the state to make bold strides toward climate accountability.

• SB 253 mandates annual disclosure of Scope 1 (direct), Scope 2 (indirect from energy), and Scope 3 (value chain) greenhouse gas emissions for companies with over $1 billion in global revenue . Scope 1 and 2 reporting begins in 2026 (based on 2025 data), while Scope 3 kicks in with the 2027 report.
• SB 261, the Climate‑Related Financial Risk Act, requires companies with over $500 million in revenue doing business in California to produce biannual disclosures on material climate-related financial risks and the strategies they’re implementing to mitigate and adapt. The first of these risk reports is due January 1, 2026, with recurring reports every two years after that. Companies must align with reporting frameworks like TCFD (Task Force on Climate-Related Financial Disclosures) or IFRS S2, covering governance, strategy, risk management, and metrics/targets.

Non-compliance carries penalties: up to $500,000/year for emissions (SB 253), and up to $50,000/year for financial risk disclosure (SB 261). There’s a built-in safe harbor for Scope 3: if disclosures are made in good faith with a reasonable basis, companies may avoid penalties even for errors.

Meet Verdafero: Your Ally for Emissions Reporting

Verdafero is a sustainability tech and consulting firm offering innovative solutions to streamline emissions reporting, especially in light of these new California mandates:

• Our patented cloud‑based platform, Verdafero InSights, securely monitors and analyzes utilities—including electricity, natural gas, water, waste, and fuel—to generate clear Scope 1, 2, & 3 emissions reports.
• Our platform provides real-time dashboards, audit-ready reports, and actionable insights into consumption patterns, efficiency opportunities, and emissions benchmarking.
• Users enjoy automated data collection—no more spreadsheets—plus customizable reporting schedules and alerts for sustainability achievements.
• We also offer consulting services, helping businesses with audits, ENERGY STAR® benchmarking, project management, and sustainability strategy—bridging the gap between data and action.

Why This Is a Must for Businesses in California

With the first of SB 253 and SB 261 reports due soon (2026), affected companies must:

1. Establish internal processes and data collection systems now—especially for Scope 1/2 emissions.
2. Monitor developments from CARB (California Air Resources Board), which is still finalizing regulations and guidance through late 2025.
3. Consider tools like Verdafero to streamline reporting, ensure accuracy, and reduce the administrative burden.
4. Start planning for climate-risk disclosures, following frameworks like TCFD or IFRS S2 to build credibility and resilience.

In summary, California’s SB 261 demands disclosures of climate-related financial risks soon, while SB 253 compels companies to report GHG emissions. Tools like Verdafero are poised to help businesses respond efficiently, capturing utility data, producing clean Scope 1, 2 & 3 reporting, and setting the stage for broader sustainability compliance.