California climate disclosure laws: CARB announces Scope 3 phase in, rescinds exemption for insurers and codifies 2026 enforcement discretion

On July 21st, the California Air Resources Board ("CARB") held a public workshop providing updates on the Climate Corporate Data Accountability Act ("SB 253") (the "Workshop"). The Workshop focused on CARB's forthcoming proposed regulation for SB 253 reporting requirements starting in 2027 (the "2027 Regulation"). The 2027 Regulation is expected to be made public in the fall of 2026 and will be subject to a 45-day public comment period.

Separately, on July 27th, CARB issued a notice and proposed changes to the California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation implementing SB 253 and the Climate-Related Financial Risk Act ("SB 261") (the "2026 Regulation").¹ CARB previously announced that the initial reporting deadline for Scope 1 and Scope 2 greenhouse gas ("GHG") emissions under SB 253 had been delayed from August 10 to November 10, 2026; the new deadline is now codified in the draft 2026 Regulation. The revised, draft 2026 Regulation is currently subject to a 15-day public comment period until August 11th. Once the comment period ends, the California Office of Administrative Law must approve the 2026 Regulation before it becomes binding.

SB 253's companion law, SB 261, remains on hold pending litigation. SB 253 is also being challenged in the same litigation; however, SB 253 remains in effect.

Key takeaways

• Scope 3 Phase-In by Category. To phase in Scope 3 reporting, CARB is proposing that the 2027 Regulation will require reporting starting in 2027 on only five of the fifteen GHG Protocol Scope 3 categories. The five categories that entities will be required to report on are: Category 1 (Purchased Goods and Services), Category 3 (Fuel and Energy Related Activities), Category 5 (Waste Generated During Operations), Category 6 (Business Travel), and Category 7 (Employee Commuting). For each required category, entities must disclose relevant activities, quantification and accounting methodologies, data types used, total emissions expressed in metric tons of CO2 equivalent, any excluded emissions, the percentage of emissions calculated using primary data, and the quantification method used for the emissions calculated with primary data.
  
  It's unclear at this time what CARB will require on Scope 3 reporting after 2027; presumably sometime after 2027 reporting on additional Scope 3 categories will be required. CARB is currently seeking feedback on whether it should encourage or require the prioritization of specific measurement approaches, emission factors, and quantification methods with respect to Scope 3 GHG emissions. CARB noted in the Workshop that it had received public feedback noting that methane emissions are often underestimated when reporting relies on general emission factors instead of primary data and that the GHG Protocol recommends primary data over secondary data. CARB previously reported that it would not require primary data for Scope 3 GHG emissions.
• Biogenic Emissions. Starting in 2027, entities must report biogenic CO2 emissions from the combustion, consumption or biodegradation of biomass and biomethane.
• Quantification Methodologies. Starting in 2027, entities must disclose the GHG quantification methods used for the calculation of emissions, including the consolidation approach for organizational boundaries, Global Warming Potential values and assessment report vintage, emission factor sources for all calculations with key attributes, and quantification method (e.g., direct measurement or calculation-based method), including any process-specific tools or models used.
• Measurement Uncertainty. Starting in 2027, entities must assess the uncertainty associated with the quantification methodologies used to calculate GHG emissions, including a quantitative or qualitative estimation of uncertainty.
• Missing Data and Substitutions. Starting in 2027, entities must identify missing data elements or parameters and document any substitute data sources or estimation methods used to quantify emissions in place of the missing data, including the basis for selecting the approach and any assumptions.
• Emissions Reductions and Removals. Starting in 2027, entities may report voluntary investments (e.g., carbon credits, offsets), management activities (e.g., land management practices resulting in biological GHG sequestration) or other activities that result in fossil or biogenic emissions reductions or removals. These voluntary investments and management or other activities must be reported separately from Scope 1, 2, and/or 3 emissions.
• 5% Change Trigger. Structural or methodological changes (e.g., due to corporate restructuring or accounting changes) that cumulatively alter base-year emissions by more than 5% would trigger recalculation of affected prior-year data. The updated emissions data for those years would be required to be included in the next annual GHG emissions report along with a description of the changes that led to the recalculation.
• Scope 2 GHG Emissions Reporting. Starting in 2027, entities must disclose Scope 2 GHG emissions by source type and constituent gas. Scope 2 inventories and emissions must be calculated and reported using both market-based and location-based methods. Where emission factors are not available for a given region or energy source, entities must document that omission in their inventory.
• Rescission of Insurance Industry Exemption. CARB announced at the Workshop that it is rescinding its exemption of the insurance industry under SB 253. CARB states that it "found that [California Department of Insurance ("CDI")] reporting may not satisfy the requirements of SB 253 in future years (starting with 2027), as it does not include Scope 3 or assurance requirements." CARB indicated that for the first reporting deadline in 2026, the insurance industry remains exempt; however, that will change for the 2027 deadline (i.e., November 10, 2027). For the 2027 deadline, insurance companies in scope of SB 253 (e.g., that meet the revenue threshold) will have to report their Scope 1, 2, and 3 GHG emissions. CARB stated at the Workshop that "insurance entities may submit the same report to satisfy both CDI and SB 253 requirements, provided it meets reporting requirements under CARB's regulation implementing SB 253. If a CDI report does not address all CARB requirements, reporting entities must supplement their report with the remaining required information."
• Assurance. For the first reporting deadline of 2026, CARB is not requiring any assurance for the initial Scope 1 and 2 disclosures, but if companies already have such assurance they can submit it. Beginning with reports submitted in 2027, entities must obtain a limited assurance engagement (including a written report from an independent third party provider) for its Scope 1 and 2 GHG emissions, including biogenic emissions.² A reasonable assurance engagement may substitute for limited assurance.
• Codification of the 2026 Enforcement Discretion. CARB added to the 2026 Regulation a provision on its enforcement discretion for the first 2026 deadline; stakeholders had been urging CARB to codify the enforcement discretion. The 2026 Regulation now states that, in lieu of the Scope 1 and 2 GHG emissions data for the prior fiscal year that is required to be submitted (and measured and reported in conformance with the GHG Protocol), an entity may submit: 

(1) Scope 1 and Scope 2 emissions from the reporting entity's prior fiscal year that can be determined from information the entity already possesses or was already collecting on or before December 5, 2024 (which provision does not require measurement and reporting in conformance with the GHG Protocol) or

(2) A statement on the entity's company letterhead indicating that the entity is not submitting a report because the entity "did not possess Scope 1 or Scope 2 emissions information and was not collecting information on or before December 5, 2024."

CARB announced at the Workshop that by September 2026 it will issue guidance materials for the initial Scope 1 and 2 GHG emissions reports due on November 10, 2026, which materials will include "a voluntary online intake platform for fee contact information and GHG emissions reporting, a guidance document, and an instructional video."

The slides from the Workshop can be found here.

CARB is holding six sector-specific listening sessions in August and September 2026 where CARB will gather feedback on the proposed SB 253 requirements. Stakeholders can register for the sessions here.

This article is part of a series on the California climate disclosure laws. For more information, see our previous articles: 'California climate disclosure laws: CARB delays SB 253 reporting deadline to November 10,' 'California climate disclosure laws: CARB approves greenhouse gas reporting and climate financial risk disclosure regulation,' 'California climate disclosure laws: Ninth Circuit hears oral argument; no ruling yet,' 'California Climate Disclosure Laws: CARB issues draft regulations,' 'California Climate Disclosure Laws: Ninth Circuit temporarily halts SB 261 and CARB provides new guidance', 'California Climate Disclosure Laws: CARB delays regulations, releases Scope 1 and 2 template, and list of covered entities,' 'California Climate Disclosure Laws: CARB releases draft guidance on SB 261,' 'California Climate Disclosure Laws: CARB Refines Applicability, Deadlines, and Scope,' 'California Climate Disclosure Laws: CARB Affirms Reporting Deadlines, but Delays Regulations that Would Clarify Applicability,' and 'California Bills to Require Greenhouse Gas Emissions Reporting From Companies Doing Business in the State.'

_{1 SB 253 and SB 261 were amended and consolidated into Senate Bill 219: Greenhouse gases: climate corporate accountability: climate-related financial risk, amending the California Health and Safety Code §§ 38532 and 38533.
2 The limited assurance engagement must be conducted in full conformance with one of the following standards: (1) AA1000 Assurance Standard (AA1000AS v3); (2) American Institute of Certified Public Accountants (AICPA AT-C Section 210); (3) International Standard on Assurance Engagements (ISAE) 3410 applied in conjunction with ISAE 3000 (Revised), for engagements commencing prior to December 15, 2026; (4) International Standard on Sustainability Assurance (ISSA) 5000 for engagements commencing on or after December 15, 2026; or (5) International Organization for Standardization (ISO) 14064-3:2019 (with additional accreditation requirements).}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2026 White & Case LLP}