With the initial August 10, 2026, reporting deadline approaching, the California Air Resources Board (CARB) hosted its fourth public workshop on March 23, 2026, and focused on implementing the Climate Corporate Data Accountability Act’s (SB 253) greenhouse gas (GHG) emissions disclosure program.
As Bracewell has previously explained,[1] SB 253 requires US companies with total annual revenues in excess of $1 billion that do business in California to annually disclose their Scope 1, 2 and 3 GHG emissions for the prior fiscal year. As detailed further in a recent Bracewell White Paper, ESG for Directors,[2] CARB approved initial regulations for SB 253 in February[3] to further define “doing business” and calculate revenue compared to the threshold, and CARB noted that the initial reporting deadline applies only to Scope 1 and Scope 2 emissions. During the March public workshop, CARB clarified that Scope 1 and 2 templates and limited assurances are not required for initial 2026 reporting. Additionally, CARB explained that it expects to develop an updated reporting template as well as guidance regarding the 2026 reporting intake and extension request processes.[4]
The most recent public workshop was a pre-rulemaking request for feedback on CARB’s proposed GHG reporting frameworks for reporting Scope 1, 2 and 3 emissions and obtaining limited assurances for Scopes 1 and 2 in 2027 and annually thereafter.[5] CARB outlined regulatory options related to (1) organizational boundaries, (2) emission factors, and (3) accounting methods to be used when reporting GHG emissions.[6] CARB emphasized that the rulemaking process remains ongoing and that it continues to seek stakeholder input on these and other key elements of the regulatory framework, including definitions, reporting obligations and possible exemptions.
Proposed Approach for Setting Organizational Boundaries
CARB also discussed how companies set organizational boundaries, or how they determine which emissions are attributable to their direct operations versus the ones that are from indirect emissions, such as those from suppliers, investments or other upstream or downstream sources. This determination influences whether the reported emissions fall under Scope 1, 2, or 3 emissions, but does not impact the overall amount of value chain emissions.
CARB requested feedback on two approaches for setting organizational boundaries for purposes of reporting GHG emissions:
- Equity share approach: Account for emissions based on company’s percentage ownership in an operation. For example, a company with a 10 percent stake in a facility reports 10 percent of that facility’s emissions.
- Control approach: Account for 100 percent of emissions from operations over which it has either financial control (ability to direct the financial and operating policies of the operation to gain economic benefits) or operational control (authority to introduce and implement operating policies for the operation).
While CARB did not provide additional examples for companies setting their organizational boundaries, the USEPA Center for Corporate Climate Leadership provided some examples that may be helpful as companies think about setting organizational boundaries:[7]
- USEPA stated that “[f]or example, under the operational control approach, emissions from operating leases for facilities or vehicles are typically included in scope 1 and scope 2. Under the equity share approach, these emissions would be included in scope 3, category 8 (upstream leased assets).”
- Additionally, USEPA discussed joint ventures. Under the equity share approach, the emissions for a joint venture are split amongst the owners. Under the control approach, the entity with operational or financial control over the facility reports the emissions as Scope 1, while the non-controlling entity includes emissions “in scope 3, category 15 (investments).”
CARB solicited stakeholder input on alternative approaches to setting organizational boundaries.
Proposed Accounting Requirements
CARB also sought feedback on the methods that companies use to quantify their Scope 3 GHG emissions once the organizational boundaries are set. CARB expressed interest in flexibility rather than a specific required accounting approach.[8] In doing so, CARB described four different methods for companies to properly account for Scope 3 emissions that are already widely recognized:
- Spend-based: Calculated by multiplying the monetary value of purchased goods and services by an emissions factor of kgCO2e per unit of currency spent. These emissions factors are often found in public databases. For example, a computer manufacturer could multiply the value of purchased hard drives by an emissions factor to calculate Scope 3 emissions.
- Activity-based: Based on physical measures of activity multiplied by an emissions factor of kgCO2e per unit of activity. For example, a company could multiply the number of miles traveled for business travel by an emissions factor to get Scope 3 emissions.
- Supplier-specific: Based on primary emissions or activity of suppliers. This method requires companies to work with their suppliers to calculate emissions.
- Hybrid: A combination of the above approaches.[9]
CARB noted that some methods may be more accurate than others, but that companies should choose methods based on data availability, resources and reporting objectives. It does not intend to require supplier-specific data. CARB also asked whether stakeholders rely on any other accounting methods; whether CARB should consider them as additional options; and, if so, why.
Proposed Emission Factor Datasets
Regardless of the accounting method chosen, CARB identified emissions factors as a key input. CARB describes emissions factor (EF) as the “[r]epresentative value that quantifies the amount of GHG emissions released per unit of activity.”[10] CARB provided a list of potential EF sources for Scope 3 categories including: EPA’s Emissions & Generation Resource Integrated Database (eGrid); IPCC Emissions Factor Database (EFDB); EPA’s Emission Factors Hub; and the US Environmentally-Extended Input-Output (USEEIO).[11]
Here, CARB requested input on what criteria EFs should meet to be used in this program and how reporters should document and explain their choice of a particular EF as well as any later decision to change EFs.
Scope 3 Emissions: Reporting Options Under Consideration
With respect to Scope 3 emissions reporting starting in 2027, CARB outlined three potential regulatory approaches:
- Broad applicability: This approach requires all regulated entities to report on all categories of Scope 3 emissions.[12] However, CARB indicated that reporters would have flexibility to not report categories that they deem de minimis.
- Sector-based reporting: The second approach limits the initial focus of Scope 3 emissions reporting to specific industry sectors, including transportation, technology and energy; cement production; and other manufacturing.[13]
- Category-based reporting: The final approach limited the initial reporting requirement to specific categories of emissions that affect many regulated entities across sectors, including business travel; purchased goods and services; fuel and energy related activities; employee commuting; and waste generated during operations.[14] CARB explains that this approach begins with the most reported categories and expands to less-reported categories over time.
CARB did not express a preference and specifically solicited stakeholder input on the feasibility and impacts of each option.[15]
Scope 1 and 2 Emissions: Assurance Options Under Consideration
CARB presented a variety of proposed options for fulfilling the requirement for limited third-party assurance for Scope 1 and 2 emissions reporting, including:
- AA1000 Assurance Standard (AA1000AS v3).
- AICPA (AT-C Section 210 (review engagement: limited) or AT-C 205 (examination engagement: reasonable).
- ISAE 3000 (Revised) and ISAE 3410 (until December 2026).
- ISSA 5000 (effective December 2026).
- ISO 14064-3:2019 (ISO 14065 / ISO 14066 – provider qualifications).[16]
CARB noted that many of these standards are already accepted in other jurisdictions.[17] CARB is requesting feedback from both regulated entities and third-party assurance providers on the logistics of providing this service.[18]
CARB Continues to Welcome Public Comment
CARB is accepting public comment on all topics discussed until April 13, which can be submitted on the CARB website. Companies potentially subject to SB 253 should consider engaging in the comment process, particularly with respect to Scope 3 reporting obligations, proposed accounting methods and third-party assurance requirements, all of which may have significant operational and compliance implications.
[1] See https://www.bracewell.com/resources/are-you-on-the-list-carb-releases-list-of-entities-subject-to-climate-disclosure-laws/; https://www.bracewell.com/resources/ninth-circuit-partially-pauses-enforcement-as-carb-attempts-to-clarify-disclosure-laws/; https://www.bracewell.com/resources/carb-issues-proposed-regulations-implementing-sb-253-and-sb-261/.
[2] https://bracewell.ceros.site/esg-for-directors.
[3] CARB, CARB approves climate transparency regulation for entities doing business in California, https://ww2.arb.ca.gov/news/carb-approves-climate-transparency-regulation-entities-doing-business-california
[4] CARB Corporate Greenhouse Gas Reporting Staff Concepts for Public Feedback (“CARB Slide Deck”) at 7.
[5] CARB Slide Deck at 10.
[6] Id. at 11, 15, 16.
[7]“Determining Organizational Boundaries”, USEPA (last updated Feb. 10, 2026) https://www.epa.gov/climateleadership/determine-organizational-boundaries.
[8] Id. at 15.
[9] Id. at 15.
[10] Id. at 16.
[11] Id. at 16.
[12] Id. at 25.
[13] Id. at 26.
[14] Id. at 27.
[15] Id. at 28.
[16] Id. at 29.
[17] Id. at 30.
[18] Id. at 31.
