CARB published a preliminary list of more than 4,000 companies that may be required to comply with one or both climate laws. CARB emphasized that the list is preliminary and based on data from March 2022. Companies are responsible for compliance even if not explicitly listed.
*On November 18, 2025, the Ninth Circuit Court of Appeals issued an injunction blocking the enforcement of SB 261, pending oral arguments scheduled for January 9, 2026 and subsequent ruling. For more details see CARB’s enforcement advisory.
Will the California laws impact Canadian companies?
Yes, these laws may apply to Canadian companies directly or indirectly. Here’s how:
Direct Impact
These laws apply to any company doing business in California with the prescribed revenue thresholds, regardless of where their headquarters are. An entity is considered “doing business in California” if:
- The entity is actively engaging in any transaction for the purpose of financial gain or profit in California; and
- Meets any of the following conditions during any part of a taxable year:
- The entity is legally established in California
- Sales in California exceed US$735,019 or 25% of the entity’s total sales
For more detail, including exemptions, see CARB’s draft regulation text and FAQ #5. The criteria are subject to change until the regulations are finalized. Visit CARB’s website for the latest developments.
Indirect Impact
A Canadian company may be indirectly impacted by SB 253 if it is part of the supply chain of an entity that must comply with SB 253. Such companies may be asked to provide emissions data related to Scope 3 emissions – these include indirect emissions from upstream and downstream activities such as purchased goods, transportation and waste.
What Should CPAs Do?
CPAs play a pivotal role in helping their organizations or clients navigate these requirements, whether the laws apply directly or indirectly.
For organizations directly impacted, CPAs should lead the charge on compliance:
- Under SB 261, CPAs should develop climate-related financial risk disclosures using one of the accepted reporting frameworks.
- Under SB 253, they need to prepare GHG emissions disclosures starting with Scopes 1, 2, and eventually Scope 3 using the GHG Protocol. These disclosures must undergo third party assurance.
For organizations indirectly affected, CPAs still have a critical role:
- They should identify customers subject to SB 253 who may request Scope 3 emissions data and establish systems to collect, calculate, and report relevant emissions data accurately and consistently.
Cross-functional collaboration is essential for effective GHG emissions reporting. CPAs should work closely with various teams in the organization, including operations, finance and legal.
Conclusion
California’s climate disclosure laws may directly or indirectly impact Canadian companies and CPAs should assess applicability and guide organizations in complying with the laws. Early action will help ensure compliance and position organisations as proactive leaders in climate accountability.
