BPI Comments on California’s Climate Reporting Initial Regulation

Ladies and Gentlemen:

The Bank Policy Institute^[1] appreciates the opportunity to comment on California Air Resources Board's ("CARB") Proposed California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation, published on December 23, 2025 (the "Proposed Initial Regulation"), which implements California Senate Bill ("SB") 253 (2023) and SB 261 (2023), each as amended by SB 219 (2024) (such bills, as amended, "SB 253" and "SB 261," respectively, and collectively, the "Climate Laws" or "Laws").^[2]

I. Executive Summary

Our members actively evaluate climate-related financial risks and their potential impacts and are developing resources to develop risk management capabilities to identify, measure and mitigate these risks. In the context of general corporate disclosures, many of our members already publish extensive climate-related information, including with respect to certain greenhouse gas ("GHG") emissions and climate risk management.

We appreciate the CARB staff's continued efforts to solicit feedback to help inform, and to provide guidance regarding, CARB's implementation of the Climate Laws, including through the Proposed Initial Regulation, as well as an anticipated subsequent rulemaking to address SB 253 reporting requirements applicable in 2027 and beyond (the "Subsequent Regulation").^[3] Although we recognize that the Proposed Initial Regulation only proposes August 10, 2026 as the first-year reporting deadline under SB 253, with future reporting deadline under SB 253 to be established in the Subsequent Regulation, we continue to be deeply concerned about the annual reporting deadline under SB 253, because of the complexity and challenges associated with GHG emissions reporting, particularly scope 3 emissions, as well as related assurance requirements.

To address this significant concern, certain ambiguities in the Proposed Initial Regulation, as well as the uncertainty related to the first-year reporting timeline under SB 261, and to ensure that meaningful climate-related information is provided to California consumers, investors and members of the public without undue burdens on reporting entities,^[4] we urge CARB to consider the following recommendations in connection with its implementation of the Climate Laws:

• CARB should establish December 31 as the annual deadline for GHG emissions reporting under SB 253, starting with the first-year report due in 2026.
• CARB should provide reporting entities with maximum flexibility with respect to the reporting period covered by reports under SB 253.
• CARB should clarify that the proposed definition of "revenue" incorporates the relevant regulations and interpretations regarding the definition of "gross receipts" under the California Revenue and Taxation Code ("RTC") and that an entity's gross receipts amount as reported in its tax filings with the California Franchise Tax Board ("FTB") is determinative of the entity's revenue for purposes of determining its "revenue" under the Climate Laws.
• CARB should clarify that the proposed definitions of "doing business" and "doing business in California" incorporate the relevant regulations and interpretations regarding the definitions of "doing business " and the relevant prongs of "doing business in this state" under the RTC and an entity's in-state sales amount as reported in its tax filings with the FTB is determinative of the entity's in-state sales for purposes of determining whether the entity is "doing business in California" due to its in-state sales under the Climate Laws.
• CARB should clarify certain aspects of the fee proposal to reduce uncertainty and increase efficiency in the implementation of the fee determination, invoice and payment processes.
• We continue to urge CARB to permit maximum flexibility under the evolving GHG Protocol standards and guidance and avoid prescriptive reporting format in connection with its implementation of the Climate Laws.
• To reduce the uncertainty arising from the pending litigation regarding the Climate Laws and related burdens on reporting entities, we urge CARB to clarify now that it will provide a grace period of 90 days for submitting the initial SB 261 reports should reporting obligations resume under SB 261.

To read the full comment letter, please click here, or click on the download button below.

[1] The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation's leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ nearly 2 million Americans, make nearly half of the nation's small business loans and are an engine for financial innovation and economic growth.

[2] BPI previously submitted a comment letter, dated March 21, 2025, in response to CARB's information solicitation seeking feedback to inform its implementation of the Climate Laws. See BPI, Information Solicitation to Inform Implementation of California Climate Disclosure Legislation: Senate Bills 253 and 261, as amended by SB 219 (Mar. 21, 2025), available at https://bpi.com/wp-content/uploads/2025/03/BPI-CARB-Comment-Letter-March-2025.pdf. BPI also submitted a comment letter, dated September 11, 2025, following CARB's August 2025 public workshop regarding its implementation of the Climate Laws. See BPI, SB 253/261/219 Public Workshop: Regulation Development and Additional Guidance (August 21, 2025), available at https://bpi.com/wp-content/uploads/2025/09/BPI-CARB-Comment-Letter-September-2025.pdf. BPI recognizes that there is ongoing litigation regarding the Climate Laws. BPI is submitting this letter to provide comments on the Proposed Initial Regulation in connection with CARB formal rulemaking process and is not expressing any view on the litigation. In addition, this letter does not take a position on or otherwise waive potential arguments relating to the authority of a state regulator to require reporting of information and payment of a fee in connection with such reporting from a national bank under applicable law, including 12 U.S.C. § 484.

[3] CARB, Staff Report: Initial Statement of Reasons (Dec. 9, 2025), available at https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2025/sb253-261/isor.pdf (the "Staff Report"); CARB, California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Programs: Frequently Asked Questions Related to Regulatory Development and Initial Reports (Nov. 17, 2025), at 2-3 (item 3) available at https://ww2.arb.ca.gov/sites/default/files/classic/FAQs%20Regarding%20California%20Climate%20Disclosure%20Requirements_Nov.pdf (the "FAQs").

[4] We use the term "reporting entities" to generally refer to both "reporting entities" as defined in SB 253 and "covered entities" as defined in SB 261 for purposes of this letter, unless otherwise specified with respect to a particular Climate Law.