Proposed California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation

Summary

SIFMA provided comments to the California Air Resources Board (CARB) regarding implementation of the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act ("SB 261"), each as amended by the Greenhouse gases: climate corporate accountability: climate-related financial risk Act.

Excerpt

Dear Chair Sanchez:

The Securities Industry and Financial Markets Association ("SIFMA") ¹ appreciates the opportunity to provide comments to the California Air Resources Board ("CARB") regarding implementation of the Climate Corporate Data Accountability Act ("SB 253") and the Climate-Related Financial Risk Act ("SB 261"), each as amended by the Greenhouse gases: climate corporate accountability: climate-related financial risk Act ("SB 219").

Many SIFMA members are actively working to comply with new climate disclosure regulations being implemented by regulators worldwide. In addition to these requirements, many firms have already been voluntarily reporting their greenhouse gas ("GHG") emissions and climate-related financial risks, often using international voluntary frameworks such as the TCFD recommendations, the GHG Protocol, SASB standards, World Economic Forum Stakeholder Capitalism Metrics, and GRI standards. SIFMA members also use climate-related information disclosed by others to inform investment and business decisions. Given this experience, SIFMA is well-positioned to offer insights on how CARB regulations under SB 253 and SB 261 can produce reliable disclosures while minimizing the burden on reporting companies. Accordingly, SIFMA has provided the recommendations below to further inform CARB's regulatory approach under SB 253 and SB 261. ²

Recommendations: SIFMA urges CARB to make three targeted revisions to its proposed rules implementing SB 253 and SB 261: (1) adopt a December 31 reporting deadline for all disclosure under SB 253; (2) clarify the definition of "revenue" in the proposed rules to conform with the approach suggested by CARB staff at its November 18, 2025 workshop (the "November Workshop"); and (3) refine the fee administration framework to provide for a single consolidated invoice to parent entities, clarify that CARB will determine which entities are in scope, and establish a robust dispute and reconciliation process. Additionally, we recommend that CARB clarify that it will not use the proposed definitions of "parent" and "subsidiary" to prescribe the organizational boundaries that should be used when preparing a consolidated report. These changes will enhance reliability, administrability, and alignment with established disclosure and assurance practices.

1. SB 253 Reporting Deadline for Scope 1 and Scope 2 Emissions. The reporting deadline should be December 31.

SIFMA urges CARB to set the reporting deadline for disclosure in proposed § 96076(a) at December 31 and retain CARB's proposed definition of "applicable preceding fiscal year" in proposed § 96076(b). An August 10 deadline is incompatible with the time required to produce assured emissions disclosures: SIFMA member survey data indicates that internal data collection and review can for many institutions take in excess of four to five months, and third-party assurance can require up to an additional three to six months, a combined timeline that presses up against and often extends past August 10. A December 31 deadline generally accommodates this process, aligns with established GHG reporting practices, and positions the program for success as Scope 3 requirements phase in.

When CARB proposes Scope 3 reporting requirements, SIFMA also urges CARB to align the timing of Scope 3 emissions disclosure with a December 31 deadline for Scope 1 and Scope 2 emissions disclosure. A single, calendar-based reporting deadline that is consistent across all scopes would provide clarity and certainty for reporting entities, support consistent administration and enforcement by CARB, and reflect the interconnected nature of emissions data collection, internal review, and assurance processes.

To assess the feasibility of an August 10 reporting deadline, SIFMA surveyed its members regarding their current GHG emissions reporting practices. SIFMA's membership includes numerous large, medium and small broker-dealers, investment banks, and asset managers, many of whom have substantial experience in GHG emissions reporting. All 16 respondents currently report Scope 1 and Scope 2 emissions, and 11 currently report at least some Scope 3 emissions. Thirteen respondents obtain assurance over their Scope 1 and Scope 2 reporting, and a smaller number obtain assurance over at least some Scope 3 information. As such, the survey respondents are well positioned to share practical experience regarding the time and processes required for sophisticated institutions to produce reliable GHG emissions disclosures.