SB 253 Penalties
What Are the Actual SB 253 Non-Compliance Penalties?
California SB 253 — the Climate Corporate Data Accountability Act, signed into law in October 2023 — establishes specific civil penalties for covered companies that fail to report their greenhouse gas emissions. The California Air Resources Board (CARB) is the enforcement agency.
Enforcement begins in 2026 — and CARB has teeth
The first disclosure deadline for Scope 1 and 2 emissions is January 1, 2026 (for FY2025 data). CARB has authority to issue fines immediately upon non-compliance. There is no grace period for covered companies above the $1B revenue threshold.
| Violation |
Minimum Penalty |
Maximum Penalty |
Notes |
| Failure to report Scope 1 & 2 emissions |
$50,000/year |
$500,000/year |
Per covered entity, per reporting period |
| Failure to report Scope 3 emissions |
$50,000/day |
$50,000/day |
Starting FY2026 report (due 2027). Daily penalties accrue. |
| Material misstatement in emissions report |
$500,000/year |
$500,000/year |
Maximum penalty applies for inaccurate or misleading disclosure |
| Failure to obtain third-party assurance |
$50,000/year |
$500,000/year |
Limited assurance required for Scope 1 & 2; reasonable assurance forthcoming |
These penalties are in addition to any reputational damage, investor pressure, and potential securities exposure from material omissions in required disclosures. For companies with EU operations, CSRD penalties add another layer of risk.
Coverage
Is Your Company Covered by SB 253?
SB 253 covers any entity that "does business in California" and has total annual revenues exceeding $1 billion. This definition is deliberately broad.
"Doing business in California" under the California Revenue and Taxation Code includes:
- Having employees working in California (including remote workers)
- Having customers or sales volume in California
- Owning or renting property in the state
- Having a California-registered subsidiary, even if the parent is headquartered elsewhere
Private companies are included. Unlike SEC climate rules (which only apply to public companies), SB 253 explicitly covers private companies above the revenue threshold. If you're a large private company with any California nexus, you're likely covered.
SB 261 covers a lower revenue threshold
Even if you're under $1B and not covered by SB 253, California SB 261 (the Climate-Related Financial Risk Act) covers companies with $500M+ revenue. SB 261 requires a biennial climate-related financial risk report — a TCFD-style disclosure. Penalties for non-compliance mirror SB 253.
Full Risk Picture
SB 253 Is Only One Layer of Risk
Companies operating in multiple jurisdictions face stacked penalty exposure. Here's how the regulatory landscape layers for a typical mid-market US company with California presence and EU operations:
| Regulation |
Who It Covers |
Penalty Range |
First Deadline |
| California SB 253 |
Companies doing business in CA with >$1B revenue |
$50K–$500K/yr |
Jan 2026 (FY2025) |
| California SB 261 |
Companies doing business in CA with >$500M revenue |
$50K–$500K/yr |
Jan 2026 |
| SEC Climate Disclosure |
Public companies — large accelerated filers first |
$10K–$500K/violation |
FY2025 10-K (2026) |
| EU CSRD |
Large EU companies + non-EU with €150M+ EU revenue |
2–10% of annual turnover |
FY2024 (large EU); FY2025 (others) |
The risks compound
A large US company with $5B revenue, California operations, and EU subsidiaries could face: $500K SB 253 penalty + $500K SB 261 penalty + SEC enforcement action + CSRD member-state fines. The combined exposure can reach into the tens of millions.
FAQ
Frequently Asked Questions
What are the penalties for SB 253 non-compliance?
California SB 253 imposes civil penalties of $50,000–$500,000 per year per covered company for failure to disclose Scope 1 and 2 GHG emissions. For Scope 3 non-disclosure (starting FY2026 reports), penalties of up to $50,000 per day can apply. The California Air Resources Board (CARB) is the enforcement agency.
Which companies are covered by SB 253?
SB 253 covers any company doing business in California with total annual revenues over $1 billion — including private companies and US subsidiaries of foreign companies. "Doing business in California" includes having employees, customers, property, or a registered entity in the state. The $1B threshold applies to total global revenue, not just California revenue.
When does SB 253 enforcement start?
The first reporting deadline is January 1, 2026 — covered companies must disclose FY2025 Scope 1 and 2 emissions. Scope 3 disclosure is required starting January 1, 2027 (FY2026 data). CARB can begin assessing penalties immediately after the filing deadline passes for non-compliant companies.
Can a company be fined under both SB 253 and SEC rules?
Yes. SB 253 is a California state law enforced by CARB. The SEC climate disclosure rule is a federal requirement enforced by the SEC. They operate independently — a public company with California operations can face enforcement from both regulators simultaneously for the same underlying non-compliance.
What are the CSRD penalties for EU non-compliance?
CSRD penalties are set by EU member states and vary by country. Germany caps fines at €10 million or 5% of annual turnover. France penalties can reach €30 million. For non-EU companies with EU operations exceeding €150M revenue and a large EU subsidiary, CSRD via European Sustainability Reporting Standards (ESRS) applies starting FY2028 with similar penalty regimes.
How does CarbonPilot help companies comply with SB 253?
CarbonPilot automates the entire GHG inventory process — collecting Scope 1, 2, and 3 data, calculating emissions using EPA 2024 emission factors and GHG Protocol methodology, and generating the compliance-ready reports CARB requires. Starting at $99/month, CarbonPilot costs a fraction of the minimum SB 253 penalty and eliminates the manual spreadsheet work that leads to filing errors and non-compliance.