Input Stories

California recently approved regulations to require large companies that do business in the state to report their greenhouse gas emissions—but state manufacturers are pushing back (ESG Dive).

What’s going on: Last week, the California Air Resources Board voted to approve regulations to implement two state laws—Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, the Climate-Related Financial Risk Act.

• The first, SB 253, mandates that firms “doing business” in California and having more than $1 billion in annual revenue report their Scope 1 and Scope 2 emissions to the state, with companies “expected to report” by Aug. 10, 2026.
• SB 261 requires companies with more than $500 million in annual revenue to disclose their climate risks publicly. That law has been blocked in court, so compliance is voluntary. A federal appeals court heard oral arguments on SB 261 in January.
• The CARB regulations apply to public and private companies based outside the state if their annual sales within California exceed a state-set threshold (currently $735,019).

Why it’s important: The requirements in the regulations are unclear, burdensome to manufacturers and unfeasible under the proposed timeline, the California Manufacturers & Technology Association, an NAM state affiliate, told the regulator last month.

• “CARB’s proposal to require Scope 1 and Scope 2 emissions reporting by August 10, 2026, raises significant implementation concerns,” CMTA said. “Manufacturers, particularly those with complex operations, multiple facilities or limited internal data systems, will need sufficient time to collect, validate and harmonize emissions data across business units.”
• And while manufacturers appreciate that CARB has paused enforcement of SB 261 in light of the court order, “the statute remains enjoined, which may create confusion,” the group continued.
• Other manufacturer concerns include a lack of clarity on the way in which fees for emissions would be calculated and the fact that “SB 253 and SB 261 add substantial new layers of cost and administrative burden [for manufacturers] without clear alignment to existing programs.”

What should be done: To mitigate the potential damage to manufacturers from the regulations, CMTA asked CARB to:

• Provide additional flexibility for first-year emissions reporting;
• Provide a defined regulatory framework for the way manufacturers should report the required emissions information;
• Clarify how “doing business in California” will be applied to manufacturers with limited sales or distribution activity there; and
• Include a safe harbor for reasonable emissions estimates when a company makes an effort to obtain accurate data and is transparent about its estimates.

The NAM says: “[California] has moved to implement these duplicative disclosure laws even though the Securities and Exchange Commission extensively regulates public company disclosures,” noted NAM Managing Vice President of Policy Charles Crain in a message to the Department of Justice in September.

• “Additionally, California regulations often become a model for other states, expanding compliance burdens and increasing the patchwork of uncertainty.”
• “Without consistent and uniform rules of the road, manufacturers are left to navigate a shifting landscape of mandates that increase costs, compliance risks and inefficiencies that jeopardize the sector’s ability to invest, grow and lead.”