Status: ✅ SB 253 reporting begins in 2026; SB 261 enforcement paused
For apparel and footwear brands doing business in California, new climate disclosure requirements are taking effect under SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act). Together, these laws set state-level rules for how large brands must report greenhouse gas emissions and climate-related financial risks.
While enforcement of SB 261 is currently paused, SB 253 remains in effect. In-scope brands will be required to begin reporting Scope 1 and Scope 2 emissions starting in 2026, with Scope 3 to follow from 2027. This means fashion companies should start preparing now: building data collection processes across operations and suppliers, as well as drafting initial disclosures in line with the GHG Protocol.
Looking for a Carbon Accounting solution? Find our complete, hands-on guide to Carbon Accounting and the GHG protocol for apparel and footwear brands here.
Now, let’s break down California’s climate laws!
TL;DR
- SB 253 applies to large companies (over $1 billion in annual revenue) doing business in California and requires disclosure of greenhouse gas emissions. Reporting starts in 2026 with Scope 1 and Scope 2 emissions, and expands to Scope 3 emissions from 2027.
- SB 261 applies to companies with over $500 million in revenue and requires disclosure of climate-related financial risks. Enforcement of SB 261 is currently paused and being reviewed.
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Together, these laws are known as California’s Climate Accountability Package.
What Does SB 253 Mean for Fashion Brands?
SB 253 (the Climate Corporate Data Accountability Act) introduces mandatory greenhouse gas (GHG) emissions reporting for large companies doing business in California. For apparel and footwear brands, this marks the start of regulated emissions disclosure at the state level.
SB 253 applies to emissions reporting only (not financial risk) and follows a phased approach, starting with Scope 1 and Scope 2 emissions and expanding to Scope 3 over time.
Which Apparel and Footwear Brands Will Be Affected by SB 253?
A fashion brand will be in scope of SB 253 if all three of the following conditions are met:
- It is a U.S. company (or a U.S. subsidiary): The brand has a legal company registered in the United States. This includes U.S. subsidiaries of international fashion groups. For example, a European fashion group like LVMH operates through U.S.-registered subsidiaries that manage retail and e-commerce in California; those U.S. entities may fall within the scope of SB 253.
- It exceeds $1 billion in annual revenue: The company or subsidiary generates more than $1 billion in total annual revenue for two consecutive fiscal years.
- It does business in California: Under California’s Tax Code, a company is considered to be doing business in California if at least one of the following applies:
- It sells products to customers in California.
- It operates stores, offices, or distribution centers in the state.
- If its California sales exceed the lesser of $500,000 or 25% of total sales.
This means SB 253 does not apply to all fashion brands. It targets large companies that meet specific revenue and California business thresholds.
What Should Fashion Brands Report Under SB 253?
SB 253 requires in-scope brands to measure and disclose their greenhouse gas emissions in line with the GHG Protocol:
- Scope 1 emissions (directly emitted from sources owned or controlled by the brand).
- Scope 2 emissions (indirect emissions from purchased energy).
- Scope 3 emissions (value-chain emissions) will be added in later years.
Emissions data will be submitted each year through a California Air Resources Board (CARB) managed online reporting system. While the final submission format has not yet been confirmed, brands may use CARB’s updated Scope 1 and 2 reporting template as a reference. Brands must retain records supporting their emissions calculations for at least five years.
For fashion brands with complex global supply chains, the Scope 3 requirement is particularly significant, as it will require data collection beyond direct operations, including raw material sourcing, supplier manufacturing, and logistics.
How Can Carbonfact Help Your Brand Comply With SB 253?
Carbonfact is a Carbon Accounting and Reporting platform built for apparel and footwear brands. Here is how our platform supports your brand:
- Carbon accounting: Carbonfact offers a fashion-specific carbon accounting platform. It centralizes Scopes 1, 2, and 3 emissions in one place and is built on GHG Protocol–aligned, activity-based methods, audited by PwC.
- Data cleaning: Carbonfact collects and cleans 2025 data from ERP, PLM, traceability tools, and spreadsheets, making it usable for the first 2026–2027 SB 253 reporting cycles.
- Data gaps filling: 150K+ fashion-and region-specific emission factors ensure accurate results – even when your data is incomplete.
- Scope 3 accuracy: Our platform improves Scope 3.1 accuracy by linking corporate emissions to product‑level LCAs and supplier data, which is critical for fashion brands where supply chain emissions dominate.
- Factories: A powerful platform feature where you can easily manage and update your factories' energy data directly on our platform heat mixes, meters, and utility bills.
- Reporting: Carbonfact generates audit‑ready GHG reports that follow GHG Protocol and can be used directly for SB 253 submissions, as well as CSRD, CDP, and SEC‑style reporting.
What Is the SB 253 Timeline?
In December 2025, the California Air Resources Board (CARB) released draft implementing rules for SB 253. This draft triggered a 45-day public consultation period, running through February 2026, after which CARB is expected to finalize the rules, potentially with revisions based on public feedback.
It is important to understand which requirements are mandatory in 2026 already and which ones start from 2027. Let’s break it down:
2026 Reporting - Transition Year
For apparel and footwear brands, 2026 is the first reporting year under SB 253 and is designed as a transition period.
2026: What Data Should Be Reported?
Brands must report their Scope 1 and Scope 2 greenhouse gas emissions. SB 253 follows a prior fiscal year reporting approach. For the first year of reporting, CARB’s proposed reporting periods are:
- Fiscal years ending between February 2, 2025 and February 1, 2026 -> report emissions for that fiscal year.
- Fiscal years ending after February 1, 2026 -> companies may report emissions data for either fiscal year 2025 or fiscal year 2026, depending on data availability
If a fashion brand develops its own annual report that includes information on Scope 1 and 2 emissions, that report can be submitted to CARB for 2026 reporting.
2026: What Is the Deadline for the First Report?
The first reporting deadline is August 10, 2026.
- Brands are guaranteed at least six months after the end of their fiscal year to submit emissions data.
- Entities with fiscal years ending after February 1, 2026, that choose to report 2026 fiscal year data (e.g. a March 31, 2026 year-end) must still submit by August 10, 2026.
2026: What If a Brand Was Not Collecting Emissions Data?
California Air Resources Board (CARB) has clarified that:
- Brands that were not collecting emissions data and were not planning to collect data at the time the Enforcement Notice was issued are not expected to submit Scope 1 and Scope 2 emissions data in 2026.
- Instead, these brands should submit a statement on the company letter to CARB explaining that:
- No emissions report was submitted.
- And the company was not collecting (or planning to collect) emissions data at the time the Enforcement Notice was issued.
CARB will make these statements available through a public portal.
2026: Is Third-Party Verification Required For Emissions Data?
For the 2026 reporting cycle, no third-party assurance is required, and CARB will not penalize companies that make a genuine, reasonable effort to comply, even if their first SB 253 submission is incomplete or imperfect.
Important: The 2026 submission will establish the baseline for all future SB 253 reporting. Decisions made in year one – such as greenhouse gas boundaries, calculation methodologies, and data documentation – will carry forward into future disclosures. If these foundations are weak, you may need to redo the work later when third-party verification applies.
2027 Reporting – Stricter Requirements
From 2027 onward, reporting requirements are expected to tighten. Limited assurance on Scope 1 and Scope 2 emissions will begin to apply based on 2026 data. This means emissions data will need to be reviewed by an independent third party. Reporting obligations will also expand to include Scope 3 emissions, with further detail to be confirmed as CARB finalizes the regulatory framework.
Add Carbonfact’s Modules Progressively to Meet SB 253
- Start with corporate GHG reporting for SB 253 (Scope 1 and 2 using 2025 data, aligned with the GHG Protocol).
- Add product‑level LCA to refine Scope 3.1 (purchased goods and services) and strengthen SB 253 Scope 3 disclosures from 2027 onward.
SB 253: Penalties for Non-Compliance
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Maximum penalty: Apparel and footwear brands that fail to file required reports or comply with SB 253 may face penalties of up to $500,000 per year.
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Enforcement body: The California Air Resources Board (CARB) oversees compliance.
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Factors considered: CARB looks at historical records, whether the brand made good-faith efforts to comply, and the severity and nature of any reporting failures or inaccuracies.
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Exemption years for Scope 3: SB 253 includes a safe-harbor provision for Scope 3 emissions, meaning brands will not be penalized for Scope 3 misstatements made with a reasonable basis and in good faith through 2030. This protection does not apply to Scope 1 or Scope 2 emissions.
Now, let’s take a look at the SB 261!
What Does SB 261 Mean for Fashion Brands?
SB 261 (the Climate-Related Financial Risk Act) requires large brands to assess and disclose how climate change could impact their financial performance and operations. Unlike SB 253, SB 261 does not focus on emissions data, but on climate-related risks and how companies manage them.
Which Apparel and Footwear Brands Are Affected by SB 261?
Fashion companies with over $500M in annual global revenue operating in California. “Doing business in California” follows the same definition used for SB 253.
What Is the Timeline for SB 261?
SB 261 was adopted in 2023 with an initial reporting deadline of January 1, 2026; however, enforcement is currently paused following a court decision. CARB has confirmed it will not penalize companies for missing the initial deadline while legal challenges are ongoing, and a new reporting timeline will be announced once enforcement resumes.
What Would Fashion Companies Need to Report Under SB 261?
SB 261 requires companies to publish a climate-related financial risk report every two years and make it publicly available.
The report should:
- Identify and assess the company’s exposure to climate-related financial risks.
- Describe the measures taken to mitigate and adapt to those risks.
(Both of these bear similarity to the Corporate Sustainability Reporting Directive’s (CSRD) double materiality assessment.)
The reported risks fall into two main categories: physical and transition.
- Physical risks stem from the direct impacts of climate change, such as extreme weather events, rising sea levels, or wildfires. These risks can disrupt supply chains, damage manufacturing facilities, and increase raw material costs.
- Transition risks, on the other hand, arise from shifts toward a low-carbon economy. These include changes in government regulations, technological advancements, and evolving consumer preferences.
Reports should be aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework or equivalent standards such as ISSB. While TCFD was formally disbanded in 2023, its recommendations were incorporated into the ISSB standards. As a result, fashion brands already reporting under ISSB or International Financial Reporting Standards (IFRS) are largely aligned with SB 261 requirements.
The four key elements of the TCFD framework are:
- Governance – how an organization will structure its business operations in response to climate-related risks.
- Strategy – how climate-related risks will impact a company’s strategy, business operations, and financial planning.
- Risk management – how an organization will identify, assess, and manage climate-related risks.
- Metrics and targets – how an organization will measure climate-related risks and opportunities.
Companies are allowed to publish parent-level reports as well as financial risk disclosures that have already been prepared in accordance with other reporting requirements like the Corporate Sustainability Reporting Directive (CSRD).
Carbonfact - Measure Once Report Everywhere
The issue we frequently hear from brands is that new reporting requirements are highly overwhelming, making it challenging to navigate regulatory hurdles without becoming trapped in endless administrative tasks. That’s where Carbonfact’s philosophy comes in: Measure once - report everywhere.
Carbonfact builds a single, GHG‑Protocol‑aligned Scope 1, 2, and 3 inventory for your brand. Then you can reuse that data everywhere – from SB 253 to CSRD, B Corp, to SBTi – instead of rebuilding new carbon accounts for every regulation.
SB 253 will require annual disclosure of Scope 1–3 emissions, with data submitted via a CARB online system and retained for at least five years. Carbonfact centralizes all Scopes in one platform and automatically produces an audit‑ready GHG inventory that can be used to populate SB 253 reports instead of manually stitching spreadsheets or consultant PDFs every year.
Lidia Lüttin
