After three years of changing guidance, public workshops, and legal challenges (which still hang over the rules). Yesterday, at a public hearing, the California Air Resources Board (CARB) unanimously passed the implementing rule for SB 253 (emissions reporting) and SB 261 (climate risk reporting) for 2026. 

In what was a very lengthy hearing, CARB focused on confirming three main aspects of the rule for 2026:

CARB plans to initiate another rulemaking process in 2027 to address Scope 1 and 2 emissions, as well as Scope 3 emissions. 

There were three main issues that repeatedly came up among the dozens of in-person and web-based comments: 

One of the main revelations of the meeting was the exemption of insurance companies from SB 253 and SB 261 (Climate emissions and risks, respectively). Under the original rule, insurance companies were only exempt from climate risk reporting (SB 261). 

The architect of SB 253 (emissions reporting), Senator Scott Weiner, said, “the legislation's intent to the insurance industry is crystal clear. It was excluded from SB 261, but not from SB 253. California law is that the insurance industry is subject to SB 253’s carbon disclosure requirement, so I do not believe the board has the authority to remove an industry that the legislature included.” 

CARB replied that they not only have the authority, but the duty to make this judgment. 

Ultimately, the volume of comments necessitated some ‘on-the-fly’ resolutions. For example, CARB discussed whether the disclosures to the California Department of Insurance meet the SB 253 requirements and agreed to propose future regulatory changes if needed.

Stakeholders raised concerns that the August 10, 2026, reporting deadline could create a bottleneck for data collection and third-party assurance. They urged CARB to consider a December 31 or a rolling deadline aligned to fiscal years. CARB staff defended the August 10 date as administratively necessary. They argued it gives reporters at least 6 months to comply, and they emphasized the enforcement discretion for good-faith submissions and voluntary assurance in year one. 

While there is still an injunction blocking implementation of climate risk reporting (Chamber of Commerce v. Sanchez), this week’s vote is the official start of climate emissions reporting (SB 253). 

Now that CARB has approved the Resolution, they will respond to public comments, submit the final regulatory package to the Office of Administrative Law, and then implement the fees and the first-year GHG reporting deadline for SB 253.

While California finalized its climate reporting rulemaking, two other states have introduced similar climate disclosure laws. We shared New York’s reintroduced climate reporting rule a couple of weeks back, when it passed the State Senate. That one now sits in the State Assembly. 

Just across the Hudson in New Jersey, the Garden State may be the next to adopt a climate-related disclosure rule. The state’s emissions reporting rule (S-679) was reintroduced in January and has been steadily progressing through the state legislature.

The New Jersey bill aligns with California’s policy, requiring companies doing business in the state with more than $1 billion in revenue to report their emissions annually. During its passage through the legislature, Scope 3 emissions reporting was removed from the bill. If it passes, covered entities will be required to report their Scope 1 and 2 emissions to the state (not publicly) three years after the rule is adopted (currently 2029). The year after (2030), Scope 1 and 2 reporting will be publicly available and will require limited assurance. Then, 8 years after adoption (2034), reasonable assurance will be required. 

The EU Council, made up of Europe’s 27 member states, voted this week to approve the cuts to sustainability regulations under the Omnibus I Simplification Package. This is the final hurdle for the Omnibus I, meaning the significant cuts to the Corporate Sustainability Due Diligence Directive (CS3D) and Corporate Sustainability Reporting Directive (CSRD) are now locked in. 

Cyprus Minister for European Affairs, Marilena Raouna, said, “With today’s decision, we are delivering on our commitment for a European Union which is more competitive.” The Omnibus will now be put into Europe’s official journal and will come into force 20 days later. After which, member states will have one year to transpose the updated rules.

The Omnibus finalization follows a week in which Europe’s institutions questioned the extent of the reductions, and the EU Commission pledged to be more transparent in its urgent rulemaking processes after the EU Ombudswoman found the Commission did not follow the proper rulemaking protocol.

The beleaguered financial net zero groups had a rare piece of good news this week: the Net Zero Asset Managers group resumed operations exactly one year after suspending them. The suspension followed the departure of multiple key signatories, including BlackRock and JPMorgan Asset Management. 

The relaunch included more than 250 asset management signatories (down from 325 in 2024) to the initiative's updated commitment. The updated and simplified Commitment, developed in partnership with the industry over six months during the group's suspension, recalibrates the group's goal from reducing emissions in line with a 1.5°C warming trajectory to well below 2.0°C and streamlines the number of commitment actions from 9 to 7. 

The resumption of NZAM’s duties has been broadly applauded both by asset managers and environmental groups. 50 asset managers representing $3.7 trillion in assets released an open letter saying the new commitment “presents an opportunity for asset managers to reaffirm their commitment to supporting investing aligned with the global goal of net zero emissions.” Sierra Club’s Sustainable Finance Director, Ben Cushing, said the relaunch “is an important signal that many firms are not abandoning basic climate commitments,” but conceded that “membership is not the same as action.” However, a group of asset owners claimed it was “unfortunate” to see so few US asset managers on the list of signatories.

The courts have quickly become the main battleground for climate action in the US. After the repeal of the Endangerment Finding was quickly litigated last week and is expected to end up in the Supreme Court. Three additional significant climate cases were in the news this week:

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