The Short Version: Two Laws, Two Thresholds, One Urgent Timeline
California passed two climate disclosure bills in 2023 that are now moving into enforcement territory. If you manufacture food or consumer goods and sell into California — which you almost certainly do — you need to know your obligations.
- SB 253 (Climate Corporate Data Accountability Act) — requires disclosure of Scope 1, 2, and 3 emissions for companies with $1B+ in annual revenue doing business in CA. Effective 2026 for Scope 1/2, 2027 for Scope 3.
- SB 261 (Climate-Related Financial Risk Act) — requires biennial reporting on climate-related financial risks for companies with $500M+ in annual revenue. First reports due January 1, 2026.
Wait — you're a mid-market supplier, probably $10M–$100M. Why does this matter?
Why $1B Laws Matter to $20M Companies
Two reasons.
First, Scope 3 flows downhill. When a $5B food company has to report its Scope 3 emissions, those emissions include the emissions from everything it buys — including your products. Your customer's compliance burden becomes your data provision burden. They'll ask you to fill out supplier questionnaires, SAQs, and emissions surveys. If you have your own numbers ready, you're a preferred supplier. If you don't, you're friction.
Second, California's threshold is likely to move. SB 253 started at $1B. The legislative history and sponsor statements suggest the intent is to cover progressively smaller companies over subsequent years. Companies in the $100M–$500M range are already being targeted by industry advocacy groups pushing for expanded scope. Getting your baseline data now, before it's required, is dramatically cheaper than scrambling under a deadline.
What SB 261 Requires Right Now
For companies over $500M, climate-related financial risk reports must disclose:
- Climate-related risks to your business (physical risks: drought, floods, heat; transition risks: carbon pricing, stranded assets, regulatory shifts)
- How those risks affect your supply chain, operations, and financial position
- What you're doing about them
This is not an emissions number — it's a narrative risk assessment. Think of it as a 10-K addendum focused on climate. The SEC's parallel climate disclosure rule (currently in litigation but directionally the same) uses very similar language.
How to Prepare Your Scope 3 Data
Whether you're directly covered now or you're getting ahead of customer requests, the same data underpins everything:
- Map your spend categories — energy purchases, freight and logistics, raw materials, packaging
- Apply emission factors — GHG Protocol Scope 3 Category 1 (purchased goods), Category 4 (upstream transport), Category 3 (fuel & energy)
- Document your methodology — regulators and large buyers want to know how you calculated, not just what the number is
- Establish a baseline year — 2019 is the most common; if you have QuickBooks data going back that far, you're in good shape
The spend-based methodology (vs. physical quantity or economic input-output) is the most practical approach for most mid-market companies. It uses your existing financial data rather than requiring engineering-level emissions tracking at each facility.
Timelines You Cannot Miss
SB 261 reports were due January 1, 2026 for applicable companies. SB 253 Scope 1/2 reporting begins in 2026. Scope 3 reporting under SB 253 begins in 2027 — but you need 2026 baseline data to file 2027 reports. The practical implication: you need your 2026 data infrastructure in place now, not next year.
California's Air Resources Board (CARB) will enforce penalties of up to $500,000 per year for non-compliance. Third-party verification will be required for Scope 3 data.
Start with your QuickBooks export. Emissa categorizes your transaction data into Scope 3 categories automatically, giving you a defensible baseline you can hand to an auditor or include in a regulatory filing.