What California’s SB253 Means for Your Supply Chain
If your company does business in California and generates more than $1 billion in annual revenue, you now have a legal obligation to report your greenhouse gas emissions — and the first deadline is August 10, 2026.
That is not a distant compliance horizon. For many companies, data collection, validation, and reporting infrastructure need to be in place right now.
California’s Climate Corporate Data Accountability Act — Senate Bill 253, or SB253 — is one of the most significant corporate sustainability disclosure laws enacted in the United States. It is not a voluntary ESG framework or a reporting best practice. It is state law, backed by the California Air Resources Board (CARB), and it applies to a wide range of US companies that operate or sell in California.
This post explains what SB253 requires, who it covers, what the deadlines are, and what “doing business in California” actually means in practice.
What SB253 Requires
SB253 requires covered companies to publicly disclose their greenhouse gas (GHG) emissions on an annual basis, reported in accordance with the GHG Protocol — the internationally recognized standard for corporate emissions accounting.
Emissions are categorized into three scopes, each representing a different layer of a company’s carbon footprint:
- Scope 1: Direct emissions from sources owned or controlled by the company. This includes fuel combustion in owned vehicles and equipment, on-site manufacturing processes, and facility heating systems.
- Scope 2: Indirect emissions from purchased electricity, steam, heating, or cooling. If your warehouse buys electricity from the grid, those emissions are Scope 2.
- Scope 3: All other indirect emissions across the value chain. This includes purchased goods and services, transportation and distribution by third parties, business travel, employee commuting, and end-of-life product treatment. For most manufacturers and distributors, Scope 3 represents 70 to 90 percent of total emissions.
SB253 requires Scope 1 and Scope 2 disclosures first, with Scope 3 following one year later.
The Deadlines You Need to Know
CARB adopted its initial regulation in February 2026, establishing the following schedule:
- August 10, 2026: First Scope 1 and Scope 2 disclosures due. Companies report on their most recently completed fiscal year.
- 2027: Scope 3 disclosures begin, covering fiscal year 2026 data.
- 2027–2029: Limited third-party assurance required for Scope 1 and Scope 2 data.
- 2030 onward: Reasonable assurance required for Scope 1 and Scope 2; CARB may require limited assurance for Scope 3.
For 2026, CARB has indicated it will exercise enforcement discretion for good-faith first-year submissions. No third-party assurance is required for the initial reporting cycle. That leniency will not last.
One important nuance: the specific fiscal year you report depends on when your fiscal year ends. Companies whose fiscal year ends between January 1 and February 1, 2026 report data from that fiscal year. Companies whose fiscal year ends between February 2 and December 31, 2026 report prior fiscal year data. Confirm this with your legal and finance teams.
Who Does This Apply To?
SB253 applies to any US-based company with annual revenues exceeding $1 billion that “does business in California.”
That phrase carries more weight than many companies initially assume. Doing business in California does not require a California headquarters or even a California office. It includes:
- Selling products or services to California customers
- Operating distribution centers, warehouses, or logistics nodes in the state
- Employing people in California
- Maintaining any registered entity or operational presence in the state
The revenue threshold of $1 billion applies to the parent company, not individual subsidiaries. A division of a larger parent may be covered even if that business unit alone does not cross the threshold.
Estimates suggest this captures over 5,000 US companies. If you are in consumer goods, retail, manufacturing, distribution, technology, or logistics and your parent organization has revenues at that level, the assumption should be that you are covered unless your legal team confirms otherwise.
Scope 3 Is Coming — and Your Supply Chain Is the Focus
The Scope 3 requirement, beginning in 2027, is where the supply chain implications become substantial.
For most manufacturers and distributors, 70 to 90 percent of total emissions sit in Scope 3 — concentrated in purchased goods and services, transportation and distribution, and upstream supplier activity. This means the covered company must gather emissions data from its supply chain in order to report.
CARB has indicated a safe harbor for Scope 3: companies will not face administrative penalties for misstatements about Scope 3 emissions if the disclosure was made with a reasonable basis and in good faith. CARB is also still finalizing the Scope 3 rulemaking approach, with three options under consideration:
- Broad coverage across all 15 GHG Protocol Scope 3 categories
- A sectoral phase-in prioritizing transportation and industrial sectors
- A category-based phase-in starting with the most commonly reported categories: business travel, purchased goods and services, fuel- and energy-related activities, employee commuting, and waste generated in operations
Whatever approach CARB finalizes, the direction is clear: companies will need emissions data from their suppliers. That pressure flows down the supply chain — including to companies that are not themselves covered by SB253.
What Companies Need to Do Now
For the August 2026 deadline, the work is Scope 1 and Scope 2. Here is what needs to be in place:
1. Know your Scope 1 data sources
Scope 1 covers direct emissions from your owned operations. For fleet-heavy companies, this means fuel consumption data from owned or leased vehicles, forklifts, and equipment. For facilities, this includes stationary combustion (fuel burned on-site — boilers, furnaces, generators), mobile combustion (company-owned vehicles — cars, trucks, ships, aircraft), process emissions (emissions from industrial processes such as cement, glass, chemicals), and fugitive emissions (leaks from equipment — refrigerants, methane, etc.).
The data typically lives in fuel card systems, telematics platforms, utility billing, and maintenance records.
2. Establish your Scope 2 baseline
Scope 2 requires pulling electricity, steam, heating and cooling consumption across all facilities. For multi-site operations, this means aggregating data from property managers, landlords, and utility providers across locations. If you are in leased facilities where utilities are embedded in the lease, you may need to negotiate direct access to meter data.
3. Apply GHG Protocol emission factors
Activity data — gallons of diesel, kilowatt-hours of electricity, therms or cubic feet of natural gas used — must be converted to CO₂ equivalents (CO₂e) using published emission factors. SB253 reporting must follow the GHG Protocol, which provides standardized calculation methodologies. This step is where many companies without a prior emissions program will need outside support.
4. Build the reporting infrastructure
The disclosure must be publicly available. CARB will maintain a reporting registry. The data needs to be structured, documented, and defensible. Even with the first-year enforcement discretion, reports submitted without a clear methodology and documented data sources will be difficult to build on in subsequent years when assurance requirements kick in.
5. Start the Scope 3 conversation now
Even though Scope 3 is not due until 2027, the data collection process is complex and time-consuming. There are 15 categories of Scope 3. The companies that are ahead of this deadline are already engaging their highest-impact suppliers. For fleet and transportation-heavy operations, this includes working with carriers and 3PLs to gather vehicle emissions data. That takes time — start early.
What This Means for Supply Chain Leaders
SB253 is not just a compliance exercise for the sustainability team. For supply chain leaders, it has direct operational implications.
Fleet emissions data — historically buried in fuel card systems and maintenance logs — now needs to be structured for formal reporting. Transportation and distribution emissions, which sit in Scope 3, will require your carriers and logistics partners to provide data they may not currently collect in a reportable format.
Celine King, Founder and CEO of GreenIRR makes it clear, “the companies that will navigate SB253 with the least disruption are the ones who already have primary, vehicle-level data flowing across their freight networks. The disclosure requirement doesn’t create a new problem – it just makes the cost of not having visibility impossible to ignore any longer.”
The data infrastructure you build for SB253 compliance is also the foundation for operational improvement. Companies that know their fleet and transportation emissions by lane, carrier, and equipment type are in a position to make targeted decisions that reduce both their carbon footprint and their fuel costs. The compliance obligation and the operational opportunity are the same investment.
What gets measured gets managed. The companies that treat SB253 as a data infrastructure problem — not just a reporting problem — will be better positioned for every requirement that follows.
The Bottom Line
SB253 is the most significant GHG reporting mandate to apply to US companies at the state level, and it is already in effect. If your organization meets the revenue threshold and does business in California, the August 10, 2026 deadline is not aspirational — it is a legal requirement.
The first-year enforcement discretion for good-faith submissions gives some runway, but it does not eliminate the obligation to file. Organizations that are closest to ready are the ones that have already been building measurement infrastructure — whether for EcoVadis, CSRD supply chain obligations, or voluntary carbon reporting.
If you are not sure where your organization stands, that is the right place to start.
Phillip Glass is Head of Sustainability, Americas at SPARQ360. He works with manufacturers, distributors, and logistics providers across North America on emissions measurement, ESG program development, and SB253 readiness. Questions about where to start? Reach Phillip at sparq360.com/contact.
Related Reading
- ESG & Sustainability in Supply Chain — the full guide to what compliance actually requires.
- SPARQ360’s 3-Tier ESG Framework — how to move from compliance baseline to competitive advantage.
- Supply Chain Optimization Guide — LEAN, resilience, and the cost-quality-service balance.
