California’s SB 253 — The First Real Test of Extraterritorial Climate Disclosure

California’s Climate Corporate Data Accountability Act (SB 253) requires companies with more than $1 billion in global revenue that do business in California to disclose Scope 1 and 2 greenhouse gas emissions annually, with a first-year reporting deadline set by the California Air Resources Board (CARB) for August 10, 2026 (Chambers and Partners, 2026; KnowESG, 2026).

The law’s significance lies less in its emissions-accounting mechanics than in its jurisdictional reach. SB 253 applies to any qualifying company that “does business in California,” a threshold that, in practice, captures many companies headquartered elsewhere — including outside the United States — provided they meet the revenue test and have sufficient California operations or sales (Chambers and Partners, 2026). This is a materially broader reach than the SEC’s now-withdrawn federal climate disclosure rule, and it has prompted litigation questioning California’s authority to impose disclosure obligations on companies operating nationally (KnowESG, 2026).

The compliance requirement is also compounding: SB 253 is paired with SB 261 (Climate-Related Financial Risk Act), which requires qualifying companies to prepare biennial climate-risk reports aligned with the Task Force on Climate-related Financial Disclosures framework, though SB 261 enforcement has already been temporarily enjoined by the Ninth Circuit Court of Appeals pending further litigation (KnowESG, 2026). This divergence — one law proceeding to its deadline while a related law is stayed — is itself instructive: it shows regulators and courts treating disclosure mandates (SB 253) and risk-assessment mandates (SB 261) as legally distinct even though they were designed as a package.

Meanwhile, the regulatory environment SB 253 sits within is not converging toward a single global standard. The EU’s Corporate Sustainability Reporting Directive was recently narrowed to apply only to companies with more than 1,000 employees and €450 million in turnover, up from a 250-employee threshold — reducing, not expanding, the pool of EU-reporting companies at the same moment California’s mandate is taking effect (ESG News, 2026).

Multinational companies now face a genuinely fragmented compliance map: an expanding California mandate, a narrowing EU mandate, a stalled federal US rule, and new state-level entrants such as New York’s proposed Climate Corporate Data Accountability Act (Clark Hill PLC, 2026). Organizations with any California nexus — sales, operations, or incorporation — should treat the August 10, 2026 deadline as binding regardless of headquarters location, while tracking the SB 261 litigation separately, since a favorable outcome there would not extend to SB 253’s disclosure requirement.

References

Chambers and Partners. (2026, June 16). Corporate governance 2026 — USA. https://practiceguides.chambers.com/practice-guides/corporate-governance-2026/usa

Clark Hill PLC. (2026). ESG & sustainability in 2026: Twists, turns, and trends. https://www.clarkhill.com/news-events/news/esg-sustainability-in-2026-twists-turns-and-trends/

ESG News. (2026, February 24). EU narrows corporate sustainability due diligence rules after industry pressure. https://esgnews.com/eu-narrows-corporate-sustainability-due-diligence-rules-after-industry-pressure/

KnowESG. (2026, February 26). ESG regulations 2026: Key updates & compliance guide. https://knowesg.com/reporting-standards/esg-regulations-for-2026-your-compliance-decision-guide