California Assembly Passes SB 253 Mandating Scope 3 Emissions Disclosure

California's Assembly passed SB 253 by a 41-20 vote, requiring companies with over $1 billion in revenue doing business in the state to disclose Scope 1, 2 and 3 emissions starting in 2026 and 2027 respectively. The law's full value-chain coverage previews disclosure obligations Indian exporters and subsidiaries operating in California will face alongside EU CSRD requirements.

SB 253 passed California's Assembly 41-20 and advances to the Senate (already approved in May) and then to Governor Newsom. It requires companies with revenues exceeding $1 billion doing business in California to annually report Scope 1, Scope 2 and full Scope 3 emissions, including supply chains, business travel, commuting, procurement, waste and water. Disclosure begins in 2026 for Scope 1 and 2 and 2027 for Scope 3, using Greenhouse Gas Protocol standards, with third-party assurance phasing in from 2026 to 2030.

The law applies to most large U.S. companies operating in the California market, both public and private, unlike the SEC's proposed rules which it surpasses by covering all Scope 3 emissions and private firms. A companion bill, SB 261, would require disclosure of climate-related financial risks and mitigation steps. Indian companies with U.S. subsidiaries, exporters and value-chain suppliers serving California-based corporates may be drawn into Scope 3 reporting demands, particularly where they form part of covered companies' supply chains.

Affected companies should prepare for the 2026 Scope 1 and 2 disclosure deadline and 2027 Scope 3 deadline, aligning measurement with Greenhouse Gas Protocol standards and arranging third-party assurance, which moves from limited to reasonable assurance for Scope 1 and 2 by 2030. Firms should also track the EU's CSRD, cited as a parallel obligation for companies doing business in Europe. Indian suppliers should anticipate emissions-data requests from California-covered customers and monitor SB 261's progress.

Key figure — Revenue threshold: $1 billion; Scope 3 disclosure begins: 2027