Author’s Note: On November 18, 2025, the Ninth Circuit Court of Appeals granted an injunction pending appeal, temporarily stopping enforcement of SB 261 ahead of the January 1, 2026 reporting start date. A hearing is scheduled for January 9, 2026. While SB 253 remains in effect, the limited assurance requirement has been removed for first year reporting. We will continue to monitor changes to these regulations and their implications for the private markets.
California has just set a new bar for climate transparency with SB 253 and SB 261 and thousands of companies will soon be on the hook. But what do these laws really mean for businesses and investors?
In this episode of Sustainable Intelligence, we are joined by Jessie Miller, Senior Advisory Manager at Novata, to unpack the details. We explore who’s in scope, the timelines and requirements coming in 2026, the practical costs to plan for, and why climate disclosure is evolving beyond a compliance exercise into a strategic advantage. Jessie also shares Novata’s four-step approach to help companies prepare, highlighting how smart disclosure can reveal both risks and opportunities that drive long-term value.
About Sustainable Intelligence
Novata’s Sustainable Intelligence podcast brings honest, forward-thinking conversations about sustainability in the private markets. From carbon accounting to turning data into impact, each episode explores how investors and business leaders are tackling real challenges, meeting rising regulations, and building long-term value. Join us for expert insights, practical strategies, and authentic dialogue that empower action and progress in the evolving sustainability landscape. Listen to more episodes on Spotify or Apple Podcasts.
Conversation with Jessie Miller (Transcript)
Ella Williamson: Welcome to Sustainable Intelligence, where we discuss all things sustainability for the private markets. I’m Ella Williamson and I’m thrilled to be your host. Today we’re joined by Jessie Miller, a Senior Manager on Novata’s advisory team. Jessie has been helping companies and investors navigate ESG strategy and regulatory alignment for over a decade.
She focuses on guiding clients through emerging requirements, including California’s new climate disclosure laws. We’ll unpack what these laws mean in practice, who’s in scope, the timelines companies need to plan for, and how to approach compliance in a way that’s both efficient and value adding. We’ll also explore the bigger picture of how climate disclosure is evolving beyond reporting and into a more strategic decision making process.
So Jessie, great to have you on today. If I could ask you to start by walking us through the new California Climate Disclosure Laws and what they actually mean in practice, that would be great.
Jessie Miller: Thank you, Ella. Really excited to be here today. Yeah, let’s talk California. It’s a really interesting time for these climate disclosure laws. So back in 2023, California passed two laws aiming to improve transparency and standardization of climate-related disclosures. These are called SB 253 and SB 261. So we’ll commonly refer to them with those numbers typically, but just so we know what we’re talking about here, SB 253 is titled the Climate Corporate Data Accountability Act, and it requires companies to disclose their GHG emissions which includes Scope 1, 2, and 3, but we’ll get into that in a little bit. And then we have SB 261, which is the Climate-Related Financial Risk Act, and that requires companies to disclose climate-related risks and the measures they are putting in place to reduce and adapt to those risks.
So, we have these two laws and then we have another acronym called CARB that stands for the California Air Resources Board. And CARB is now tasked with actually developing the regulations and rules for how those requirements actually are enforced. So it’s really interesting to think about the whole legislative process within the US and the state of California. So 253 and 261 were rules that were passed and signed by the governor, but then you have this whole other entity CARB that is actually responsible for making the actual rules for companies to abide and disclose according to those legislations. So CARB is now currently holding a bunch of public workshops, talking to stakeholders, and they’re getting feedback. And all of this is happening before reporting is mandated in early 2026.
So, what do you need to know now based off these two regulations? So if you are a company, you need to know if you’re in scope and what you need to start to do to prepare for your disclosures here. And if you are an investor, it’s important to know if any of your assets or portfolio companies are in scope for either of these regulations. And now is the perfect time to start preparing and getting your disclosures in order.
Ella: Thanks, Jessie and I think that’s a really important point you made about whether you were an investor or a company who’s directly affected, now’s the time to get your house in order. So in terms of that, who exactly is impacted and in scope for these regulations?
Jessie: Yes, great question. And I guess before we get into any of these details, it’s currently August 29th. Everything we’re talking about now is true as of today’s date. But if you’re listening to this in the future, things might change. So definitely please refer to the most updated guidance. But it is important to note that CARB is still figuring out a lot of these specific rules.
So the law applies to US companies that are doing business in California and meet specific revenue thresholds. Like I said, “doing business in California” is still under debate by CARB and the revenue thresholds are a bit more set in stone, though they are still figuring out how exactly revenue is defined. So for SB 253 companies with revenues in excess of $1 billion, all USD, will need to disclose Scopes 1, 2, and 3 emissions. And for SB 261, companies with revenues over $500 million will need to disclose their climate-related financial risks and their corresponding plans. Like I said, the definition of doing business in California is still being clarified by CARB. That might end up being whether you’re legally headquartered in California or you have sales above a certain number or a percentage of your global revenue. So that will be figured out hopefully in the coming months. There’s also a possibility that CARB releases a full list of companies that are in scope based off existing databases they have.
We always say consult your legal advisors, the ones who are best suited to tell you whether or not you’re in scope for any kind of regulation. But there is enough information out there right now where you can get a good sense of whether or not you’ll be in scope. And in terms of magnitude and the number of companies impacted, CARB has put out estimates that they think around 4,000 or so companies will fall into scope for the two rules.
So it’s really interesting to think about how many companies will be tasked with complying and putting their disclosures together, and just the level of data and reporting that will be available now based off these regulations.
Ella: Brilliant, and it’s great for you to give us that estimate of how many companies will be impacted because that is quite a number. For those companies that are in scope, how will they actually need to comply and are there any deadlines that they should keep top of mind right now?
Jessie: Yeah, great question. So for 261, that’s the climate risk law, companies will need to release a climate risk report by January 1st, 2026. So that’s coming up really soon. Basically we now know from CARB that they will have a public docket that as a company you’ll be able to drop a link to your public report that has your climate risks in it into that public docket. So the docket will open on December 1st, and then you’ll basically have until January 1st to upload that report. And again, that is a climate risk report that’s detailing the climate risk that you’ve identified for your company and then the corresponding actions that your company is taking to mitigate those risks.
But for 253, a little bit different here. For 2026, they’re requiring that you disclose Scopes 1 and 2 emissions, and those will be due June 30th, 2026. And, don’t worry, Scope 3 is not being left out, but that is not required until 2027 just based off the more difficulties that companies often find in calculating their Scope 3emissions.
So that’s why we’re starting with Scopes 1 and 2. Important note there for SB 253, they’re also requiring limited assurance in 2026, and this will be an annual exercise. So every year to comply with 253, you’ll have to calculate your carbon emissions and then report those into CARB. For SB 261, your climate risk, that will be biennial, so every other year, so a little bit lighter on the requirements there.
And so I mentioned 261 is all about climate risks, and I think it’s worth unpacking a little bit like what that actually looks like for companies. So CARB specifies in their framework that you can align to either TCFD, IFRS, or any other report that’s been developed in accordance with a government entity.
So it’s pretty broad there. We’re seeing most companies go toward aligning with TCFD, and we won’t get into the full depths of TCFD in this conversation now ’cause there’s a lot there to unpack, but you can think about it across just four pillars of disclosure. So they’re governance, strategy, risk management, and metrics and targets.
If you have never done anything related to TCFD reporting before, now’s the time to really start thinking about what you’ll need to disclose in order to produce a TCFD-aligned report. And that’s what you’ll be submitting into CARB’s public docket.
Beyond the deadlines, there’s also some other little administrative bits to keep in mind. So there is a proposed program fee structure that CARB is still finalizing. We don’t know exact numbers, but there will be a fee potentially around $1,400 to $4,000 US that companies are required to pay as part of the regulation. So there is that kind of programmatic fee structure plus any costs their company will incur for doing the actual reporting and compiling all the data as well as the limited assurance fees for Scopes 1 and 2 emissions. So it’s important to start budgeting now and thinking about where those cost centers are within your company. And then lastly, I’ll add in here, we’re still waiting for CARB to release a few different templates. That’s supposed to be coming in late September. So once we have those templates, that will also provide companies with a bit more structure and guidance on what these disclosures will look like. And hopefully over the next few months we’ll also get more information on specific definitions like doing business in, total revenue, and other like corporate relationship details that CARB is still waiting to disclose.
Ella: Just giving an overview of deadlines, what’s required, what you need to align with, and the potential costs that may come into play is really great to get people ahead. So if we can step back for a moment, with regards to these particular regulations, what do you think it means for the bigger picture of sustainability?
Jessie: So I feel like right now we’re really stuck as a sustainability practice on the exercise of carbon accounting. And don’t get me wrong, calculating your carbon footprint is a really important practice. There are so many companies, like Novata, that are built around this, and it is the main exercise for so many companies. But carbon accounting is really, it’s looking backward and estimating your GHG emissions for a certain time period. But it’s not doing anything to actually drive improvements or reduce risk or plan for the future as a company. It’s looking backward rather than looking forward. And I think where we’re at now, it’s really important for companies to be thinking about where they go from here based on their most material climate risks and opportunities instead of just every year calculating your carbon emissions. And I think this is what’s so compelling about the California regulations. They cover both carbon accounting and forward-looking climate risks and transition plans. And I think doing both of these types of disclosures and reporting in tandem is what can actually help companies reduce their risks and move forward as part of the green transition or to a lower carbon economy.
Ella: Yeah. Jessie, that was brilliant and I love the way your voice just lightened up when I asked that question. So I think probably the best thing is to stick on this theme. So given how complex these laws are, and thank you so much for going over that side of things, how would you therefore recommend companies approach this compliance with the long-term future-looking lens in mind to drive both efficient and value-adding activities to their business?
Jessie: So for our clients that are starting to prepare for California, we’ve developed a really straightforward four-step process that helps you comply with regulatory requirements, leverage Novata’s technology, but also create value for your company. At a high level, there are four steps to how we structure engagements around preparing and disclosing for the California regulations.
We start with completing a GHG inventory for your company, which you would do leveraging Novata’s Carbon Navigator. And then we also, after that we assess your readiness for TCFD-aligned reporting, basically where we see what disclosures and data and inputs your company has available, and then map that against the TCFD requirements so that we understand what your gaps are and how to fill those. And then, the next natural step is to fill those gaps to ensure you have strong TCFD alignment so you can comply with 261. So that might include a climate materiality assessment, a risk assessment, or transitional and physical scenario analysis. And then at the end, that’s where we actually help prepare your public disclosure requirements.
So we’ve designed this four-step process to give you the outputs you need to comply with 253 and 261, but also to provide you with actionable insights on the climate risk that are actually going to impact your operations. So for example, one output from the climate risk assessment might be a list of facilities you have that are in low lying areas and are actually at risk for flooding due to climate events. And with that information, you can then prepare your company for potential flooding. You can strengthen your disaster preparedness plan. You can develop a business continuity plan. Things like that actually will help your business if something is to happen in the future.
That’s kind of a high level overview of how we work with companies on California regulations. There’s a lot of discussion about what exactly companies need to do to have in place for 261 and 253, especially for that 261 January 1st deadline. And I think the main message here that CARB has made super clear is that they’re expecting best efforts. They know that not all companies have access to all this data and all the inputs that you need for something as complex as a quantitative scenario analysis. So they’re really just expecting companies to put their best foot forward and that best efforts will look different by company.
Novata is definitely prepared to meet companies where they’re at in their sustainability journey and look at the disclosures you have already made, the data you already have available, and then build on that to create your plan for your TCFD-aligned disclosure for 261 as well as 253 later in the year. And, I think for a lot of our clients they have some data available. For example, a lot of our clients have been calculating and disclosing carbon emissions for their investors for a few years, and that’s a great starting point. And that’s really the main message people need to know is this is meant to be a starting point. It is a gradual buildup and expansion of your climate risk and carbon emissions disclosures. It’s not an all or nothing, get a hundred percent done this first year approach. So we’ll meet you where you are and CARB is happy with that approach as well.
Ella: Thanks, Jessie, and wherever companies are on their journey, it’s about shaping their strategy to fit their needs. Now, you’ve spoken a lot about the reporting side of things and obviously needing to collect the data.
If companies want to start thinking about the future and how they can actually use that data to create value and drive action for their business—you gave the flood risk example—how should they start doing that, and how should they build that into their strategy initially?
Jessie: I think the best starting point once you have buy-in across the company and you’re ready to really dig into this work is a climate risk assessment. It’s aligned with California’s requirements, but it also is helpful for your business. And through this climate risk assessment, you’re identifying the most material, physical, and transition climate-related risks and opportunities based off your company’s operations, your supply chain, your geographic locations, and your stakeholders.
So it’s really a comprehensive assessment of your risks and what that looks like in today’s world, based off your operations. And the findings from this assessment are super actionable and you can use them to inform prioritization and narrow in on the most significant climate risks and opportunities. You can’t do everything. So it’s important to know what is the most material and most likely risks for your business, and then come up with a plan to address those risks.
And I think we often talk about risks, but there’s also the opportunities aspect and thinking about how, based off your business model, what are the opportunities to create value and identify new areas of business, new efficiency measures you can enable based off the green transition and other more strategic opportunities that are, that we’re going to see in the future? So it’s not all about risks. There’s also a lot of opportunities there. And I think this is really the most crucial element that companies need to remember.
It’s not just about disclosures and reporting your emissions. You actually really need to think strategically, what are you going to do about your climate risks and opportunities? And I think that’s where we’re seeing investors and other stakeholders really begin to realize that they need to understand that in order to invest in a business or purchase goods from a business, they need to know that the supply chain of their customer is not going to be disrupted by extreme weather events or you won’t have the proper refrigeration for your products based off rising cooling costs, for example. There’s a lot of real-world examples here that impact your business, especially for supply chains that are distributed across the US. There’s a lot of different climate risks that we need to be aware of right now.
So when you think about these various risks, there are a lot of metrics that you need to be tracking for your operations for climate risk. So from where we’re at now, GHG emissions is really center stage. That’s the main metric that we see companies and investors tracking. But as you start moving towards transition planning and managing your climate risk, there’ll be other sustainability metrics to track. So there’s a lot of other operational metrics that we often see our clients starting to collect, like water consumption or waste generation. And I think it’s going to be really interesting to see how companies really manage climate risk and what the data means that’s corresponding to those risks.
Ella: Lots of food for thought there, Jessie. So thank you so much. What we tend to finish these episodes on is a quick fire round. So whatever comes to mind. Number one, what’s one sustainability trend you’re most excited to see gain traction right now and over the next few months?
Jessie: I’m excited that we’re moving away from it being a trend, right? There was a lot of backlash in the ESG space, things feel a little quieter right now, but I actually think there’s this return and realization that ESG and sustainability topics actually have an impact on your bottom line, and you’re able to monetize and understand the financial impact of sustainability data. So it’s not a nice to have, but it’s actually a tool to understand and improve your financial performance.
Ella: Love that. What’s a common misconception about climate reporting or regulation that you’d love to set straight for our listeners?
Jessie: Data and disclosures are just the starting point. I think a lot of people think of them as the end point, but what really matters to your business and your stakeholders is how you’re actually using sustainability data to identify and mitigate climate risks and create value for your business. And we should really just be viewing climate reporting and regulations as a tool to make those data-informed business decisions.
Ella: And finally, what’s a great resource, it could be a book, podcast, or report, that you’d recommend to anyone working in sustainability?
Jessie: I am a big fan of independent journalism. I think it’s really important to have alternative news sources that aren’t mainstream media and to hear from different voices. There is a journalist named Emily Atkin. She has an incredible podcast and Substack series called Heated, and I think it’s a must-listen for sustainability and climate news.
I’ve been following it for years now. But there it’s full of news and other interesting stories that you won’t find in traditional big media. And it’s a very honest, straightforward tone about the climate realities and risks that we’re facing, and I think it’s a really great resource for anyone interested in the climate and sustainability space.
Ella: I’ll have to give that a listen. Jessie, thank you so much for joining today. Thank you so much for all of your insights and details about the regulations themselves, but also your views on why it’s so positive for sustainability. My key takeaways are that we’ve been stuck in an exercise of carbon accounting for a long time, and these new laws will actually open up an opportunity for businesses to really start thinking about the future and planning for the future.
Think about tech and advisory in terms of enabling you to improve your processes as you do this, creating both efficiency gains and value gains for your business. Starting with a climate risk assessment seems like a very sensible place to start so you know what is material to your business, and your four step guide I think is very sound in terms of how to actually go about tackling these.
And then finally, ultimately, these laws are all about getting ahead of climate risks that could impact your business in the near or long-term future and ensuring that you can identify these to create long-term value for your business going forward.
Until next time, let’s keep building sustainable intelligence together. Find out more at novata.com.
