Skip to Main Content

ESG & Sustainability Regulatory Update — September 2026

Published on September 18, 2026 Mia Huang, ESG Analyst
Share

What changed across CSRD's revised ESRS, EFRAG's ESRS-40a proposal for non-EU groups, and California's SB 253 — and what sustainability teams should do next.

What does it mean?

The text is reduced and final. The European Parliament and Council have no ability to change text or the datapoints. Total datapoints are down more than 70%, which includes 61% cut of mandatory ('shall') data points together with the removal of every voluntary datapoint.

  • Voluntary adoption in FY26 with 8 reliefs xfor first wave reporters. Wave 1 reporting entities can:
    • Apply ESRS 2023 as amended by the "Quick Fix" (Delegated Regulation (EU) 2025/1416) — the lowest-change option, and the sensible one for entities that will fall out of scope after FY2026;
    • Early-adopt the revised ESRS in full;
    • Apply ESRS 2023 + Quick Fix + eight named reliefs taken from the revised standards.
      • The new top-down approach to conduct the double materiality assessment (DMA)
      • The new undue cost and effort relief for performing the DMA, including limitations on value chain information
      • Reliefs relating to acquisitions or disposals of subsidiaries during the reporting period
      • Relief for non-significant activities when calculating metrics
      • Relief for partial reporting scope of the value chain in metric calculations
      • Relief for joint operations without operational control in metric calculations
      • Relief allowing EU Taxonomy disclosures in a separate appendix to the sustainability statement
      • Option to provide an executive summary communicating key messages on material impacts, risks and opportunities
  • The revised ESRS are directly applicable across the EU on entry into force. But who must report, from when, and with what enforcement and penalties still flows through national transposition of Omnibus I (Directive (EU) 2026/470 — in force 18 March 2026, transposition deadline 19 March 2027).

Now what?

Check if you are in scope. Run this against the Omnibus I permanent thresholds (1,000 employees and €450m net turnover from FY2027) and against your Member State's transposition choices, including any transitional options offered nationally to entities dropping below the new thresholds.

Decide your FY2026 route — ESRS 2023 as amended by the Quick Fix; full early adoption of ESRS 2026; or ESRS 2023 as amended by the Quick Fix plus the eight reliefs — and document the decision. Note that the Quick Fix is the base layer for both non-early-adoption routes, and that it was a Wave 1 measure; entities other than Wave 1 should treat the revised ESRS as the baseline from the start.

Familiarise yourself with the reporting requirements. Starting with the presentational flexibility, the fair presentation framing, and the 8 reliefs.

Undertake or update your double materiality assessment. ESRS does not prescribe a methodology, so the approach remains yours to choose. The revised standards add a top-down approach to identify relevant IROs for material topics by starting with sustainability matters that are significant at group level and drill down into sub-topics and sub-sub-topics. In comparison, a bottom-up approach begins with the full list of sustainability matters in the ESRS 1 application requirements and works systematically through each one, scoring it for impact and financial materiality, then aggregates upwards to arrive at the final list of material topics

Conduct a gap analysis against current reporting using the 2026 Draft List of Datapoints. Identifying data collection gaps now gives you more than a full reporting cycle to close them, which is worth having: standing up new data flows and the controls around them usually takes longer than expected, and gaps found late tend to be resolved less well. Consider also submitting fatal-flaw feedback via EFRAG's survey by 23 October 2026.

Stakeholder engagement. Identify the data and controls needed to report to the same level of rigour as financial information, and engage finance, IT, procurement and internal audit early. Start value chain engagement early. The undue-cost-or-effort relief adjusts the level of granularity you need to seek from the value chain rather than removing the expectation, so a well-documented view of what you sought, what you obtained and why remains a solid foundation for fair presentation.

Talk to your assurance provider. Limited assurance remains the ceiling under CSRD; the previously planned escalation to reasonable assurance was removed by Omnibus I. A readiness engagement now will surface process, evidence and documentation gaps ahead of the first mandatory year.

Plan for interoperability and avoid double work. The revised ESRS improve alignment with IFRS S1/S2 and the GHG Protocol. If you also report under ISSB-based jurisdictional standards, CSRD, and California, map the overlaps once rather than three times — but note where they genuinely diverge (see the CARB item below on assurance and GHG Protocol vintages).

Monitor the scrutiny period and confirm the entry-into-force date when it is published in the Official Journal.

References

ESRS for third-country undertaking (ESRS-40a)

What has happened

On 23 July 2026, EFRAG published the ESRS-40a Exposure Draft — the European Sustainability Reporting Standards for certain non-EU undertakings under Article 40a of the Accounting Directive — and opened a 100-day public consultation closing 31 October 2026.

The project was previously known as N-ESRS or ESRS-TC; it was renamed to ESRS for third-country undertaking in June 2026. Technical development was paused during the ESRS simplification process and now resumed since EFRAG's simplified ESRS delivery..

Scope: Third-country undertakings with net turnover generated in the EU > €450 million in each of the last two consecutive financial years; and that have at least an EU subsidiary (or an EU branch) with net turnover > €200 million in the preceding financial year.

Timeline: First sustainability statements are expected to cover the financial year 2028, published in 2029. EFRAG expects to deliver final technical advice to the Commission in January 2027; the Commission is then expected to run its own consultation before adopting the standard as a delegated act.

What does it mean?

The third-country parent group in 40a scope, no EU undertaking in 19a/29a scope. The parent group holds the responsibility to provide the sustainability report. The EU subsidiary or branch meeting the thresholds is mandated to publish and make accessible a sustainability report at the level of its third-country parent's group.

The third-country parent group in 40a scope while the EU undertaking also in 19a/29a scope. Two choices present:

  • Split reporting. A 40a report at parent level (impact materiality only, no Taxonomy at parent level, FY2028) plus a separate full-ESRS report from each in-scope EU undertaking (double materiality, Taxonomy, FY2027).
  • Consolidated full ESRS at parent level. The parent reports on a consolidated basis under the full ESRS, and any subject EU subsidiary falling inside that reporting boundary is exempt from reporting separately.
  • ESRS-40a is built directly on the revised ESRS, and shares its objective: reduce the reporting burden on in-scope entities while keeping the fundamental information streamlined. Against that baseline, the exposure draft introduces the following differences and reliefs:
    • Impacts only. For each material topic and sub-topic identified, an entity reports the impacts and omits the associated risks, opportunities, resilience and dependencies — so the materiality assessment is single. EFRAG has noted that financial information may still be required where it provides context needed to understand an impact
    • Three reporting options for a group in scope under Article 40a
    • Material impacts are reported at the global level for all material topics;
    • Only report climate impacts on global level while restricting other topics in EU-related impacts only (EU-related impacts include customer-based impacts and location-based impacts)
    • Voluntary application of full revised ESRS, which would require a double materiality assessment

Taxonomy reporting is not required at parent level under ESRS-40a. It remains an EU-undertaking-level obligation.

If the third-country undertaking is a financial holding undertaking whose subsidiary undertakings' business models and operations are independent of one another, the subsidiaries and the branches may decide not to publish and make accessible the sustainability report

Now what

Test the scope for both third-party country parent and EU subsidiary level. For a third-country parent group, two criteria have to be met simultaneously. Then run the separate 19a/29a analysis on the EU undertakings to determine which reporting architecture to follow.

Decide the reporting architecture. If the EU subsidiary meets the 19a/29a threshold while the parent group outside of the EU falls under the Article 40a, one consolidated full ESRS report on the parent group level compared to two standalone reports would require significantly less time and resource in establishing the preparation process from scratch at subsidiary level; reduce the assurance costs.

Consider the dry run. ESRS is a heavy lift on its own, and working out which impacts are EU-related adds a second unfamiliar exercise on top of designing the process itself — so testing the mechanics before they become mandatory will be time well spent. Engaging stakeholders and securing board buy-in early as a group-wide exercise reaching into non-EU operations is difficult to run on goodwill alone.

Respond to the consultation by 31 October 2026. This is the stage at which an entity can exert the most influence. The Commission will consult again after receiving EFRAG's advice in January 2027, ahead of adopting the delegated act around mid-2027, but the text will be considerably more fixed by then. The online questionnaire is the primary channel; technical comments and recommendations are also welcome.

Flag interoperability overlaps. If you report under an ISSB-based jurisdictional standard, EFRAG is actively asking how to avoid duplication .

Watch for the cost-benefit analysis and the ESRS-40a datapoint list.

References

CARB has delayed SB 253's deadline to November 10th 2026

What has happened

The California Air Resources Board withdrew the final regulatory package to allow for limited further clarifying changes, hence, CARB extended this year's SB 253 Scope 1 and 2 reporting deadline, from 10 August to 10 November 2026.

On 27 July 2026, CARB released the Modified Regulations for a 15-day comment period that closed on 11 August 2026. CARB will now finalise the package and resubmit it to the Office of Administrative Law (OAL).

What does it mean?

Changes confirmed in the Modified Regulations:

  • Scope 1 & 2 only for 2026. Reports due in 2026 do not need to satisfy GHG Scope 3 emission disclosure.
  • Fee timing shifts. CARB's written fee-determination notice moves from 10 September to 10 December 2026, with payment due within 60 calendar days.
  • "Doing business" clarified — tied to Revenue and Taxation Code s.23101(b), assessed at the individual-entity level. A parent is not swept in merely because a subsidiary is covered.
  • Revenue clarified — intercompany transactions within the same combined reporting group are excluded; revenue assessed at individual-entity level.
  • Parent-level consolidation permitted for both reports and fee payments for qualifying subsidiaries.
  • Wholesale-electricity carve-out for entities whose only California activity is wholesale electricity transactions in interstate commerce.

Changes in pre-proposal stage for 2027 framework to be included in later 2026 draft regulation followed by a 45-day comment period:

  • Scope 3 phase-in limited to five categories from 2027: Cat 1 (purchased goods and services), Cat 3 (fuel and energy-related activities), Cat 5 (waste generated in operations), Cat 6 (business travel), Cat 7 (employee commuting). The other ten remain voluntary with no committed timeline.
  • Limited assurance on Scope 1 and 2 from 2027, escalating to reasonable assurance by 2030.
  • Insurance companies brought into scope for 2027 — the 2026 exemption does not carry forward, as CDI reporting includes neither Scope 3 nor assurance.
  • 10 November proposed as the permanent annual deadline for Scope 1, 2 and 3.
  • Uncertainty and missing-data disclosure, methodology-change disclosure, and base-year recalculation. The base year is the entity's first reporting year; where the cumulative effect of all structural and methodological changes exceeds 5% of base-year total emissions, all affected prior years must be recalculated and the updated figures included in the next annual report with an explanation of what drove the change

Now what

Confirm your reporting year first. Report data for FY ending in 2026 if your fiscal year ends between Jan 1 to Feb 1 in 2026; report data for FY ending in 2025 if your fiscal year ends after Feb 1 2026.

Check Scope 1 and 2 data availability for the reporting year. The extension moves the deadline, not the reporting year, so use the time to validate rather than to restart. Entities with a later fiscal year end may voluntarily submit more recent data if they prefer.

Start working on Scope 3 categories now. Scope the five proposed categories — Cat 1 (purchased goods and services), Cat 3 (fuel and energy-related activities), Cat 5 (waste generated in operations), Cat 6 (business travel), Cat 7 (employee commuting). Category 1 alone is a supplier data-mapping exercise that will not compress into a single reporting cycle. Work with stakeholders to identify data collection gaps and stand up processes, so collection begins in time for the FY being reported in 2027.

Determine reporting templates. No mandatory universal template. For the first report you may submit an existing annual emissions report, information previously reported under another voluntary or regulatory programme, or data entered using CARB's optional template (linked in CARB guidance here published on September 1st).

A voluntary 2026 report intake platform is developed by CARB to help streamline fee implementation and this year's reporting. The platform can be accessed here.

Assurance is not yet required for the 2026 report. Limited assurance on Scope 1 and 2 is required from 2027 and reasonable assurance by 2030.

Keep an eye on GHG protocol updates. SB 253 requires conformance with the GHG Protocol Corporate Standard, Scope 2 Guidance and Scope 3 Standard. CARB has confirmed the regulation will not dynamically update to reflect GHG Protocol (GHGP) developments — incorporating updated GHGP standards will require CARB to take further action. Expect a period where the GHGP current standard and the California requirement diverge.

Estimate your 2026 fee and get it budgeted.

  • The CARB fee is a flat annual charge per in-scope entity, not per corporate group — CARB estimates roughly $2,000–$7,000 each, fixed once the final entity count is known, with a parent able to pay on a consolidated basis and SB 261 fees payable annually even though that report is biennial.
  • Separately, budget your own compliance costs — staff time, consultants, carbon accounting tools, supplier data collection and assurance fees — which CARB puts at roughly $135,000–$152,000 per entity per year once Scope 3 and assurance are included, though commenters argue this is understated given the inflation due to increasing needs with limited providers.
  • Fee-determination notice moves to 10 December 2026 with payment due within 60 days, likely landing in early 2027.
  • Track SB 261 separately. The injunction pauses but does not invalidate it; obligations could resume quickly. Maintain a ready posture, and consider preparing (or voluntarily publishing) a TCFD- or IFRS S2-aligned report.

References

Make ESG a competitive advantage

Explore the sustainability management software trusted by the world's most ambitious ESG teams.

Book a demo

Revised ESRS has been formally adopted by European Commission

What has happened?

Revised ESRS has been officially adopted by the European Commission on 3 July and is now going through a 2 to 4 months of no-objection scrutiny window by the European Parliament and European Council. Once it is entered into force, which is expected between September to November in 2026, the mandatory application will start from FY2027 with voluntary adoption by (former) Wave 1 reporting entities starting from FY 2026.

On 28 August 2026, the EFRAG Secretariat released the 2026 Draft List of ESRS Datapoints for the revised standards, together with an Explanatory Note. Stakeholders can flag fatal flaws in the methodology via EFRAG's online survey until 23 October 2026; the final list is expected by end-2026. A draft XBRL taxonomy aligned to the new list will be published separately for consultation.

What does it mean?

The text is reduced and final. The European Parliament and Council have no ability to change text or the datapoints. Total datapoints are down more than 70%, which includes 61% cut of mandatory ('shall') data points together with the removal of every voluntary datapoint.

  • Voluntary adoption in FY26 with 8 reliefs for first wave reporters. Wave 1 reporting entities can:
    • Apply ESRS 2023 as amended by the "Quick Fix" (Delegated Regulation (EU) 2025/1416) — the lowest-change option, and the sensible one for entities that will fall out of scope after FY2026;
    • Early-adopt the revised ESRS in full;
    • Apply ESRS 2023 + Quick Fix + eight named reliefs taken from the revised standards.
      • The new top-down approach to conduct the double materiality assessment (DMA)
      • The new undue cost and effort relief for performing the DMA, including limitations on value chain information
      • Reliefs relating to acquisitions or disposals of subsidiaries during the reporting period
      • Relief for non-significant activities when calculating metrics
      • Relief for partial reporting scope of the value chain in metric calculations
      • Relief for joint operations without operational control in metric calculations
      • Relief allowing EU Taxonomy disclosures in a separate appendix to the sustainability statement
      • Option to provide an executive summary communicating key messages on material impacts, risks and opportunities
  • The revised ESRS are directly applicable across the EU on entry into force. But who must report, from when, and with what enforcement and penalties still flows through national transposition of Omnibus I (Directive (EU) 2026/470 — in force 18 March 2026, transposition deadline 19 March 2027).

Now what?

Check if you are in scope. Run this against the Omnibus I permanent thresholds (1,000 employees and €450m net turnover from FY2027) and against your Member State's transposition choices, including any transitional options offered nationally to entities dropping below the new thresholds.

Decide your FY2026 route — ESRS 2023 as amended by the Quick Fix; full early adoption of ESRS 2026; or ESRS 2023 as amended by the Quick Fix plus the eight reliefs — and document the decision. Note that the Quick Fix is the base layer for both non-early-adoption routes, and that it was a Wave 1 measure; entities other than Wave 1 should treat the revised ESRS as the baseline from the start.

Familiarise yourself with the reporting requirements. Starting with the presentational flexibility, the fair presentation framing, and the 8 reliefs.

Undertake or update your double materiality assessment. ESRS does not prescribe a methodology, so the approach remains yours to choose. The revised standards add a top-down approach to identify relevant IROs for material topics by starting with sustainability matters that are significant at group level and drill down into sub-topics and sub-sub-topics. In comparison, a bottom-up approach begins with the full list of sustainability matters in the ESRS 1 application requirements and works systematically through each one, scoring it for impact and financial materiality, then aggregates upwards to arrive at the final list of material topics

Conduct a gap analysis against current reporting using the 2026 Draft List of Datapoints. Identifying data collection gaps now gives you more than a full reporting cycle to close them, which is worth having: standing up new data flows and the controls around them usually takes longer than expected, and gaps found late tend to be resolved less well. Consider also submitting fatal-flaw feedback via EFRAG's survey by 23 October 2026.

Stakeholder engagement. Identify the data and controls needed to report to the same level of rigour as financial information, and engage finance, IT, procurement and internal audit early. Start value chain engagement early. The undue-cost-or-effort relief adjusts the level of granularity you need to seek from the value chain rather than removing the expectation, so a well-documented view of what you sought, what you obtained and why remains a solid foundation for fair presentation.

Talk to your assurance provider. Limited assurance remains the ceiling under CSRD; the previously planned escalation to reasonable assurance was removed by Omnibus I. A readiness engagement now will surface process, evidence and documentation gaps ahead of the first mandatory year.

Plan for interoperability and avoid double work. The revised ESRS improve alignment with IFRS S1/S2 and the GHG Protocol. If you also report under ISSB-based jurisdictional standards, CSRD, and California, map the overlaps once rather than three times — but note where they genuinely diverge (see the CARB item below on assurance and GHG Protocol vintages).

Monitor the scrutiny period and confirm the entry-into-force date when it is published in the Official Journal.

References

ESRS for third-country undertaking (ESRS-40a)

What has happened

On 23 July 2026, EFRAG published the ESRS-40a Exposure Draft — the European Sustainability Reporting Standards for certain non-EU undertakings under Article 40a of the Accounting Directive — and opened a 100-day public consultation closing 31 October 2026.

The project was previously known as N-ESRS or ESRS-TC; it was renamed to ESRS for third-country undertaking in June 2026. Technical development was paused during the ESRS simplification process and now resumed since EFRAG's simplified ESRS delivery..

Scope: Third-country undertakings with net turnover generated in the EU > €450 million in each of the last two consecutive financial years; and that have at least an EU subsidiary (or an EU branch) with net turnover > €200 million in the preceding financial year.

Timeline: First sustainability statements are expected to cover the financial year 2028, published in 2029. EFRAG expects to deliver final technical advice to the Commission in January 2027; the Commission is then expected to run its own consultation before adopting the standard as a delegated act.

What does it mean?

The third-country parent group in 40a scope, no EU undertaking in 19a/29a scope. The parent group holds the responsibility to provide the sustainability report. The EU subsidiary or branch meeting the thresholds is mandated to publish and make accessible a sustainability report at the level of its third-country parent's group.

The third-country parent group in 40a scope while the EU undertaking also in 19a/29a scope. Two choices present:

  • Split reporting. A 40a report at parent level (impact materiality only, no Taxonomy at parent level, FY2028) plus a separate full-ESRS report from each in-scope EU undertaking (double materiality, Taxonomy, FY2027).
  • Consolidated full ESRS at parent level. The parent reports on a consolidated basis under the full ESRS, and any subject EU subsidiary falling inside that reporting boundary is exempt from reporting separately.
  • ESRS-40a is built directly on the revised ESRS, and shares its objective: reduce the reporting burden on in-scope entities while keeping the fundamental information streamlined. Against that baseline, the exposure draft introduces the following differences and reliefs:
    • Impacts only. For each material topic and sub-topic identified, an entity reports the impacts and omits the associated risks, opportunities, resilience and dependencies — so the materiality assessment is single. EFRAG has noted that financial information may still be required where it provides context needed to understand an impact
    • Three reporting options for a group in scope under Article 40a
    • Material impacts are reported at the global level for all material topics;
    • Only report climate impacts on global level while restricting other topics in EU-related impacts only (EU-related impacts include customer-based impacts and location-based impacts)
    • Voluntary application of full revised ESRS, which would require a double materiality assessment

Taxonomy reporting is not required at parent level under ESRS-40a. It remains an EU-undertaking-level obligation.

If the third-country undertaking is a financial holding undertaking whose subsidiary undertakings' business models and operations are independent of one another, the subsidiaries and the branches may decide not to publish and make accessible the sustainability report

Now what

Test the scope for both third-party country parent and EU subsidiary level. For a third-country parent group, two criteria have to be met simultaneously. Then run the separate 19a/29a analysis on the EU undertakings to determine which reporting architecture to follow.

Decide the reporting architecture. If the EU subsidiary meets the 19a/29a threshold while the parent group outside of the EU falls under the Article 40a, one consolidated full ESRS report on the parent group level compared to two standalone reports would require significantly less time and resource in establishing the preparation process from scratch at subsidiary level; reduce the assurance costs.

Consider the dry run. ESRS is a heavy lift on its own, and working out which impacts are EU-related adds a second unfamiliar exercise on top of designing the process itself — so testing the mechanics before they become mandatory will be time well spent. Engaging stakeholders and securing board buy-in early as a group-wide exercise reaching into non-EU operations is difficult to run on goodwill alone.

Respond to the consultation by 31 October 2026. This is the stage at which an entity can exert the most influence. The Commission will consult again after receiving EFRAG's advice in January 2027, ahead of adopting the delegated act around mid-2027, but the text will be considerably more fixed by then. The online questionnaire is the primary channel; technical comments and recommendations are also welcome.

Flag interoperability overlaps. If you report under an ISSB-based jurisdictional standard, EFRAG is actively asking how to avoid duplication .

Watch for the cost-benefit analysis and the ESRS-40a datapoint list.

References

CARB has delayed SB 253's deadline to November 10th 2026

What has happened

The California Air Resources Board withdrew the final regulatory package to allow for limited further clarifying changes, hence, CARB extended this year's SB 253 Scope 1 and 2 reporting deadline, from 10 August to 10 November 2026.

On 27 July 2026, CARB released the Modified Regulations for a 15-day comment period that closed on 11 August 2026. CARB will now finalise the package and resubmit it to the Office of Administrative Law (OAL).

What does it mean?

Changes confirmed in the Modified Regulations:

  • Scope 1 & 2 only for 2026. Reports due in 2026 do not need to satisfy GHG Scope 3 emission disclosure.
  • Fee timing shifts. CARB's written fee-determination notice moves from 10 September to 10 December 2026, with payment due within 60 calendar days.
  • "Doing business" clarified — tied to Revenue and Taxation Code s.23101(b), assessed at the individual-entity level. A parent is not swept in merely because a subsidiary is covered.
  • Revenue clarified — intercompany transactions within the same combined reporting group are excluded; revenue assessed at individual-entity level.
  • Parent-level consolidation permitted for both reports and fee payments for qualifying subsidiaries.
  • Wholesale-electricity carve-out for entities whose only California activity is wholesale electricity transactions in interstate commerce.

Changes in pre-proposal stage for 2027 framework to be included in later 2026 draft regulation followed by a 45-day comment period:

  • Scope 3 phase-in limited to five categories from 2027: Cat 1 (purchased goods and services), Cat 3 (fuel and energy-related activities), Cat 5 (waste generated in operations), Cat 6 (business travel), Cat 7 (employee commuting). The other ten remain voluntary with no committed timeline.
  • Limited assurance on Scope 1 and 2 from 2027, escalating to reasonable assurance by 2030.
  • Insurance companies brought into scope for 2027 — the 2026 exemption does not carry forward, as CDI reporting includes neither Scope 3 nor assurance.
  • 10 November proposed as the permanent annual deadline for Scope 1, 2 and 3.
  • Uncertainty and missing-data disclosure, methodology-change disclosure, and base-year recalculation. The base year is the entity's first reporting year; where the cumulative effect of all structural and methodological changes exceeds 5% of base-year total emissions, all affected prior years must be recalculated and the updated figures included in the next annual report with an explanation of what drove the change

Now what

Confirm your reporting year first. Report data for FY ending in 2026 if your fiscal year ends between Jan 1 to Feb 1 in 2026; report data for FY ending in 2025 if your fiscal year ends after Feb 1 2026.

Check Scope 1 and 2 data availability for the reporting year. The extension moves the deadline, not the reporting year, so use the time to validate rather than to restart. Entities with a later fiscal year end may voluntarily submit more recent data if they prefer.

Start working on Scope 3 categories now. Scope the five proposed categories — Cat 1 (purchased goods and services), Cat 3 (fuel and energy-related activities), Cat 5 (waste generated in operations), Cat 6 (business travel), Cat 7 (employee commuting). Category 1 alone is a supplier data-mapping exercise that will not compress into a single reporting cycle. Work with stakeholders to identify data collection gaps and stand up processes, so collection begins in time for the FY being reported in 2027.

Determine reporting templates. No mandatory universal template. For the first report you may submit an existing annual emissions report, information previously reported under another voluntary or regulatory programme, or data entered using CARB's optional template (linked in CARB guidance here published on September 1st).

A voluntary 2026 report intake platform is developed by CARB to help streamline fee implementation and this year's reporting. The platform can be accessed here.

Assurance is not yet required for the 2026 report. Limited assurance on Scope 1 and 2 is required from 2027 and reasonable assurance by 2030.

Keep an eye on GHG protocol updates. SB 253 requires conformance with the GHG Protocol Corporate Standard, Scope 2 Guidance and Scope 3 Standard. CARB has confirmed the regulation will not dynamically update to reflect GHG Protocol (GHGP) developments — incorporating updated GHGP standards will require CARB to take further action. Expect a period where the GHGP current standard and the California requirement diverge.

Estimate your 2026 fee and get it budgeted.

  • The CARB fee is a flat annual charge per in-scope entity, not per corporate group — CARB estimates roughly $2,000–$7,000 each, fixed once the final entity count is known, with a parent able to pay on a consolidated basis and SB 261 fees payable annually even though that report is biennial.
  • Separately, budget your own compliance costs — staff time, consultants, carbon accounting tools, supplier data collection and assurance fees — which CARB puts at roughly $135,000–$152,000 per entity per year once Scope 3 and assurance are included, though commenters argue this is understated given the inflation due to increasing needs with limited providers.
  • Fee-determination notice moves to 10 December 2026 with payment due within 60 days, likely landing in early 2027.
  • Track SB 261 separately. The injunction pauses but does not invalidate it; obligations could resume quickly. Maintain a ready posture, and consider preparing (or voluntarily publishing) a TCFD- or IFRS S2-aligned report.

References