California’s SB 253 Raises the Bar for Scope 2 Emissions Reporting 

California’s corporate climate reporting requirements are moving into implementation, creating new disclosure obligations for large companies doing business in the state. 

Under SB 253, US-based companies with more than $1 billion in annual revenue that do business in California must report their global Scope 1 and Scope 2 greenhouse gas emissions for the prior fiscal year. The first reports are due to the California Air Resources Board (CARB) on November 10, 2026. 

CARB is exercising enforcement discretion during the first reporting cycle. Companies may submit Scope 1 and Scope 2 data they already had or were collecting when CARB issued its December 2024 enforcement notice, whether or not the data has received limited assurance. Requirements for 2027 and subsequent reporting periods are still being developed.   

A reporting requirement with global reach  

The significance of SB 253 extends beyond companies’ California operations. 

Covered companies must report emissions across their global operations, rather than only those generated within the state. A company that meets the revenue and business-presence thresholds may therefore need to account for electricity consumption and associated Scope 2 emissions across facilities and subsidiaries in multiple markets. 

SB 253 directs companies to report in conformance with the Greenhouse Gas Protocol, a widely used framework for measuring and reporting corporate emissions. CARB has noted that alignment with the protocol can support interoperability with other disclosure programs, including IFRS S2, the International Sustainability Standard Board’s (ISSB) climate disclosure standard, and the European Union’s Corporate Sustainability Reporting Directive (CSRD). 

Greater scrutiny of Scope 2 claims 

SB 253 does not mandate the purchase of renewable energy certificates (RECs), but its disclosure and assurance requirements set a higher standard for substantiating market-based Scope 2 emissions claims, increasing the value of high-quality, traceable RECs as credible evidence of renewable electricity procurement. 

For companies reporting renewable electricity procurement, the quality of the underlying instruments and records matters. Auditable, internationally recognized registry-issued RECs provide documented evidence of the environmental attributes associated with a defined quantity of electricity generation. 

Instruments like RECs and I-RECs allow companies to credibly reflect renewable energy procurement actions in their Scope 2 emissions reporting, resulting in a smaller organizational carbon footprint. Companies that can’t present that evidence must rely on what’s called the ‘residual mix’, a punitive default emissions factor for the local grid that only counts the emissions of power (typically fossil-derived) not already claimed by other system users with rights to RECs. With increasing public scrutiny of companies’ commitment to decarbonization and climate action, that credible Scope 2 claim can help position brands more competitively in the market.

Additionally, many leading companies are now building emissions criteria into their procurement tendering processes, meaning supplier companies stand to lose business if they can’t provide verifiable evidence of an operational carbon footprint that meets the standard. Policies like SB253 shine a brighter light on these distinctions, reinforcing the importance of carbon accounting underpinned by internationally recognized instruments.  

Registry infrastructure strengthens the claims behind the report 

The credibility of an energy attribute certificate depends partly on the infrastructure supporting it. 

A registry-issued REC creates a standardized record covering the certificate’s lifecycle. That record can help sustainability, finance, compliance, and assurance teams reconcile procurement activity with reported electricity consumption and market-based Scope 2 calculations. This helps companies demonstrate that the certificates they claim were validly issued, belonged to the reporting company, were retired for the relevant reporting period, and were not also claimed by another party. 

These controls can make registry-issued instruments valuable in several ways: 

• Traceability: Each certificate can be linked to an identified generation source and production period. 

• Clear ownership: Registry records document transfers between market participants. 

• Retirement evidence: Companies can show that certificates were retired against their electricity consumption and are no longer available for resale. 

• Reduced double-counting risk: Electronic registry controls help prevent the same environmental attribute from being issued, transferred, or claimed more than once. 

• Assurance readiness: Standardized records provide auditors with evidence to examine when reviewing reported Scope 2 emissions. 

• International consistency: RECs can help multinational companies apply a more consistent procurement and documentation approach across different electricity markets. 

This becomes increasingly important as emissions reporting moves closer to financial-reporting disciplines. Companies need to know what they purchased, where and when the associated electricity was generated, who owned the instrument, and whether it was retired correctly.  

Reliable registry infrastructure, recognized by global carbon accounting standards, gives companies a clearer evidentiary basis for answering those questions. 

Part of a broader international reporting shift 

California’s requirements form part of a wider move toward mandatory corporate sustainability reporting. 

The EU’s CSRD has introduced extensive sustainability disclosure obligations, while  other jurisdictions, including  Türkiye, Malaysia, India, and Brazil, are implementing or developing related reporting frameworks. Although the requirements differ, many draw on common standards and methodologies, including the Greenhouse Gas Protocol and guidance from the ISSB. 

For multinational companies, this increases the value of systems and instruments that can support consistent, verifiable reporting across markets. Internationally recognized energy attribute certificates (EACs), coupled with reliable registry records, can provide a common evidentiary foundation even where local electricity systems and certificate programs differ. 

Preparing for more rigorous disclosure 

Companies subject to SB 253 should treat the first reporting cycle as the beginning of an ongoing disclosure and assurance process. 

Practical priorities include: 

1. Confirm the reporting boundary. Determine which entities, facilities, and operations fall within the company’s global reporting perimeter. 
2. Review Scope 2 claims. Establish which electricity claims rely on RECs, I-RECs, supplier products, power purchase agreements, or other contractual instruments. 
3. Verify certificate provenance. Confirm that certificates were issued through recognized registries and contain the necessary generation, ownership, and vintage information. 
4. Reconcile certificates with consumption. Check that certificate volumes, locations, reporting periods, and retirements align with the company’s electricity use and stated methodology. 
5. Preserve retirement records. Maintain accessible registry evidence showing that instruments were retired for the company’s benefit and are no longer transferable. 
6. Prepare for assurance. Organize registry records and supporting documentation so an external provider can trace reported claims back to the underlying instruments. 

SB 253 does not prescribe how much renewable electricity a company must procure. It does, however, increase the importance of being able to substantiate what a company reports. 

As corporate emissions disclosure becomes more standardized and assurance-driven, registry-issued RECs can help companies turn renewable electricity purchases into traceable, auditable evidence.   

To talk through your Scope 2 disclosures, get in touch with the Xpansiv team here.