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The California Air Resources Board (CARB) recently unanimously approved final regulations for SB 253 and SB 261. Despite the ongoing Ninth Circuit injunction, the regulatory framework is now officially set.
For companies with over $500 million in revenue, here is what you need to know about the final 2026 rules and why market leaders are moving forward regardless of the stay.
Final 2026 Regulatory Highlights
The approved regulations provide the administrative clarity necessary for long-term planning:
- The Two-Year Revenue Rule: Applicability is now tied to revenue consistency. You are only in scope if you meet the $500M+ threshold for two consecutive fiscal years.
- Clearer "Doing Business" Boundaries: CARB has aligned with the state tax code (RTC 23101) but added critical exemptions for tax-exempt nonprofits and entities whose only California presence is teleworking employees.
- Flat Fee Structure: To cover administrative costs, CARB has adopted a predictable flat administrative fee for all reporting entities, replacing variable fee models.
- EU Equivalency: In a major win for multinational firms, CARB will allow disclosures reported under EU CSRD regulations to satisfy California’s requirements, significantly reducing the redundant reporting burden.
The Injunction: A pause, not a stop
The Ninth Circuit injunction currently prevents CARB from enforcing SB 261 while the appeal proceeds. However, the law has not been struck down. This creates a "voluntary" reporting window; notably, over 120 forward-thinking companies have already submitted reports to the public docket to signal transparency to stakeholders.
Why lead with compliance despite the stay?
If enforcement is paused, why are companies still moving forward with SB 261?
- Market Pressure & Capital Access: Transparency on climate risk is becoming a core market expectation. Institutional investors and lenders use TCFD-aligned disclosures to price risk; failing to disclose can lead to higher capital costs or reduced attractiveness as climate disruptions intensify.
- Strategic Resilience: SB 261 is more than just reporting for reporting’s sake—it’s a future-proofing tool. Identifying physical and transition risks (like supply chain shifts or extreme weather) provides a competitive advantage by embedding climate-readiness directly into your long-term business strategy.
- Operational Efficiency (SB 253): For companies with $1B+ revenue, SB 253 (emissions reporting) is not stayed. Since you’re already quantifying Scope 1 and 2 data for the August 2026 deadline, integrating the SB 261 narrative is an efficient path to a complete financial health profile.
- Regulatory Agility: The Ninth Circuit injunction is a pause, not a repeal. The framework is finalized, and the stay could be lifted at any time. Maintaining a "publish-ready" report ensures you aren't caught flat-footed when enforcement resumes.
Get the Full Roadmap
While the regulatory framework has evolved, the fundamental objective remains focused on long-term resilience. The operational reality of climate risk, from sudden asset damage and business interruption to long-term financial threats, requires proactive management regardless of legal shifts.
Download our Comprehensive Guide to SB 261 Compliance to see the full breakdown of the TCFD pillars, the new 2026 exemptions, and a step-by-step checklist for your first report.
Stop Guessing, Start Disclosing
Navigating climate risk shouldn’t take your leadership team away from their core mission. At Tablecloth, we don’t just provide the platform; we bring the expertise and advisory support needed to keep things moving. From baseline setting to TCFD-aligned narrative drafting, our team can manage the entire SB 261 compliance lifecycle for you.
Note: This post is for informational purposes and does not constitute legal advice.
