California SB 253 and SB 261: getting your energy data ready

California's two climate disclosure laws, SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act), are now in force, and the first reports are due in 2026. Together they reach far beyond California. Any company that does business in the state and clears the revenue threshold is in scope, including companies headquartered outside California, and that includes many Canadian firms with US operations.

The regulatory noise around these laws has been constant, with deadline extensions and court challenges. That has tempted some teams to wait. The problem is that the reporting itself depends on emissions data that takes months to assemble, and the assurance requirement raises the bar further. Getting the underlying utility and energy data ready is the work that cannot be deferred.

What each law asks for

SB 253 requires companies with total annual revenue above 1 billion dollars that do business in California to disclose Scope 1, 2 and 3 greenhouse gas emissions, with third-party assurance. SB 261 sets a lower bar, applying to companies with revenue above 500 million dollars, and requires a biennial report on climate-related financial risk and the measures taken to reduce it. CARB has estimated that roughly 4,200 entities fall under one or both laws.

The 2026 timeline, after the extensions

For SB 253, Scope 1 and Scope 2 emissions are reported first, with Scope 3 following the year after. CARB moved the first-year reporting deadline from August to 10 November 2026. SB 261's first climate risk report carried a statutory date of 1 January 2026, though CARB has said it will not enforce that date while a court challenge proceeds and will set an alternate date later.

Assurance phases in. Scope 1 and 2 figures move to limited assurance from 2027 and reasonable assurance by 2030. CARB can levy penalties of up to 500,000 dollars per year, though it has signaled that a good faith effort will be enough to avoid penalties in the first reporting year.

Where teams get stuck: the data, not the framework

The methodology is settled: CARB points to the GHG Protocol. What slows companies down is producing complete Scope 1 and Scope 2 numbers that an assurance provider will accept. Scope 2 comes almost entirely from purchased electricity, steam, heating and cooling, which means it comes from utility bills and interval data. Scope 1 comes from on-site fuel combustion, most of it visible in natural gas and other fuel invoices.

For a company at the billion-dollar threshold, that data is scattered. Facilities sit under different utilities, leases and property managers, each with its own bill format and portal. Assembling twelve consistent months across every account, then keeping the trail back to each source document, is where the schedule slips.

The volume is easy to underestimate. A national retailer or industrial operator may hold thousands of meters, and each one produces at least twelve bills a year plus, in many cases, interval data at fifteen-minute or hourly resolution. Keying that by hand is not feasible at the pace assurance requires, and manual entry introduces the transcription errors an assurer is trained to catch. Automating the collection and extraction is what makes the timeline realistic rather than aspirational.

A readiness sequence that works

1. Build a complete list of every facility and utility account that touches California operations and the wider corporate boundary.
2. Pull twelve months of electricity, gas and other fuel data for each account, with the source bill or interval file attached.
3. Calculate Scope 2 both ways, location-based and market-based, since the disclosure expects both.
4. Document how you estimate any missing period so the method is ready for an assurer.
5. Reconcile against the prior year to surface gaps before the filing window.

Getting ready for Scope 3 in 2027

Scope 1 and Scope 2 are the 2026 problem. Scope 3 is the 2027 problem, and it is much larger. For most companies the value chain dwarfs their own operations, so the Scope 3 inventory takes longer to build and depends on data from suppliers, tenants and other counterparties who control their own meters. Teams that leave Scope 3 until after the first filing find they have to start the hardest collection work from a standing start. The better sequence is to stand up the Scope 1 and 2 pipeline in a way that extends to counterparty data, rather than building two separate systems a year apart.

Assurance means your data has to survive a review

The assurance requirement is what separates these laws from a voluntary questionnaire. An assurer does not take a reported number on trust; they trace it. For Scope 2 that means sampling electricity and other purchased-energy bills and checking that the reported consumption matches. For Scope 1 it means the same for fuel invoices and on-site combustion records. If the reporting team cannot produce the source document behind a figure, the assurer raises a finding, and findings delay sign-off. Building the audit trail into the data from the start, rather than reconstructing it under deadline, is the single biggest determinant of a smooth review.

The Canadian angle

Canadian companies often assume these are US-only rules. They are not. A Canadian parent with more than a billion dollars in revenue and meaningful California activity can be caught by SB 253, and its emissions boundary will include Canadian sites. A follow-on bill, SB 219, adjusted the implementation timeline and gave CARB flexibility over the exact reporting dates, which is part of why the deadlines have moved, but it did not change who is in scope.

There is a practical reason to build this once and build it well. The emissions data that satisfies California also feeds Canada's climate disclosure standards, voluntary CDP responses and lender questionnaires, because they all rest on the same underlying utility and fuel figures calculated with the GHG Protocol. Companies that maintain a separate spreadsheet for each audience duplicate the effort and multiply the chance of inconsistency, where a lender sees one number and a regulator another. A single, well-documented source removes that risk.

How MartinAI fits

MartinAI removes the manual collection and cleaning of utility and energy data that these filings depend on. It ingests bills and interval data across any commodity and any utility, extracts consumption and cost, and derives the electricity and fuel figures that feed Scope 1 and Scope 2, with each value tied to its source document for review. Teams get twelve consistent months per account without hand-keying portals, and the same dataset serves California, Canadian and voluntary disclosures. MartinAI prepares the data; it does not file your report and is not a substitute for legal or accounting advice on your obligations.