For years, greenhouse gas reporting was largely voluntary in the United States: a CDP response, a sustainability report and perhaps a science-based target. That changed in 2026. Under California’s Climate Corporate Data Accountability Act (SB 253), the first mandatory Scope 1 and Scope 2 reports from large companies doing business in the state were due in August 2026, and Scope 3 reporting is scheduled to follow from 2027. At the same time, nearly 50 jurisdictions are moving toward ISSB-based climate disclosure, and the EU’s revised ESRS still require Scope 3. Multinational groups are now answering the same question for several regulators: can we produce emissions data that is complete, consistent and ready for assurance?
This playbook focuses on the data. It summarizes where California’s climate laws stand, how they relate to ISSB and CSRD requirements, and how to build a single emissions dataset, especially for Scope 3, that serves all of them. It is aimed at sustainability, finance and data leaders who need a realistic plan rather than another regulatory summary.
Where California’s Climate Laws Stand
SB 253: emissions reporting is live
SB 253 applies to US entities with more than $1 billion in total annual revenue that do business in California. The California Air Resources Board (CARB) approved implementing regulations on February 26, 2026, covering definitions, applicability, administration and fees. According to Miller Nash’s summary, the first Scope 1 and Scope 2 reports were due on August 10, 2026, with a fiscal-year cutoff determining which year’s data companies report, and fees assessed from September 2026 under a flat-rate structure.
Several design choices matter for data teams:
- Applicability tests rely on California tax concepts. “Doing business in California” follows the Revenue and Taxation Code, including a sales threshold, and revenue is measured as gross receipts using the lesser of the prior two fiscal years. Parent and subsidiary definitions follow CARB’s Cap-and-Invest program rules, which may not resolve every complex structure.
- Best-available data was accepted for the first cycle, and Cooley notes that CARB’s December 2024 enforcement notice allowed companies not already collecting Scope 1 and 2 data to submit a letterhead attestation in lieu of 2026 emissions data.
- Assurance was not required for the 2026 cycle; CARB is expected to address assurance phasing in later rulemaking, with work for Scope 1 and 2 expected from 2027 according to Miller Nash.
- Scope 3 is required from 2027, and CARB has been evaluating phase-in options, including broad, sector-based and category-based approaches with flexible calculation methods.
SB 261: climate risk reporting on hold
SB 261 requires entities with more than $500 million in revenue doing business in California to publish climate-related financial risk reports. On November 18, 2025, the Ninth Circuit issued an injunction blocking enforcement pending appeal, and CARB stated it would not enforce SB 261 while the injunction remains, describing reporting as voluntary. Oral argument was heard on January 9, 2026; in the sources we reviewed, no decision had been issued, and the court had raised the possibility of a remand focused on SB 253’s Scope 3 provisions. Companies should monitor the litigation closely, because a ruling could quickly reactivate SB 261 timelines or alter Scope 3 requirements.
Even with SB 261 paused, many companies are preparing climate risk reports aligned with ISSB standards or TCFD-style structures, because lenders, investors and other jurisdictions ask for the same information.
The Global Picture: ISSB and CSRD Converge on Scope 3
California is one piece of a broader trend. An IFRS Foundation update to its Advisory Council in November 2026 refers to nearly 50 jurisdictions on the journey to using ISSB standards, with companies in 13 jurisdictions applying them for FY2025 and six more from FY2026. IFRS S2 requires disclosure of Scope 1, 2 and 3 emissions measured under the GHG Protocol, and the ISSB is assessing whether to reference the updated GHG Protocol standards that are being developed to replace the 2004 Corporate Standard and 2011 Scope 3 Standard.
In the EU, the revised ESRS adopted in 2026 keep Scope 3 mandatory for in-scope companies and allow the three GHG Protocol consolidation approaches. The practical message is consistent across regimes: Scope 3 is not going away, and methodologies will keep evolving.
Build one emissions dataset with clear boundaries, documented methods and traceable sources, then map it to each regulator. Companies that build separate numbers for California, ISSB-based regimes and CSRD will spend more and explain more.
Why Scope 3 Is a Data Engineering Problem
Scope 3 covers 15 categories of indirect emissions across the value chain, from purchased goods and services to the use of sold products and investments. For most companies it is the largest share of the footprint and the hardest to measure, because the data sits outside the company’s control. The challenge is less about climate science than about data:
- Volume and variety. Procurement spend, supplier lists, product bills of materials, logistics records, travel data and sales volumes all feed calculations.
- Quality spectrum. Data ranges from spend-based estimates using economic emission factors to supplier-specific product carbon footprints.
- Change over time. Emission factor databases, supplier data and methodologies change, so recalculation and versioning are essential.
- Auditability. Assurance requires that each figure can be traced through calculations to source records and factor versions.
A Reference Architecture for Emissions Data
The most robust approach treats emissions accounting like financial accounting, with governed inputs, controlled calculations and auditable outputs.
- Source integration. Pipelines from ERP (procurement, inventory, sales), energy and utility data, fleet and logistics systems, travel platforms, HR (commuting) and supplier portals into a central data platform.
- Reference data. Versioned emission factor libraries, organizational hierarchies aligned to the chosen consolidation approach, and mappings from spend categories or materials to factors.
- Calculation layer. Transparent, version-controlled calculation logic per scope and category, producing results at transaction or activity level so they can be aggregated in any way regulators require.
- Quality and controls. Automated completeness and reasonableness checks, data quality scores per category, and review and approval workflows.
- Reporting and mapping. Outputs mapped to SB 253 submissions, ISSB-based disclosures, ESRS datapoints and voluntary frameworks, with lineage from every reported value back to sources.
Whether this runs in a specialist carbon accounting tool, a lakehouse on Databricks, Snowflake or Microsoft Fabric, or a combination, the principles are the same: keep data at the most granular level practical, version everything and separate inputs, factors and logic.
Step-by-Step Readiness Playbook
Step 1: Confirm applicability and boundaries
Work with tax and legal teams to determine which entities meet California’s revenue and doing-business tests and how parent and subsidiary relationships apply. Align the organizational boundary and consolidation approach across California, ISSB-based and ESRS reporting where possible, and document any differences.
Step 2: Harden Scope 1 and 2
With the first SB 253 cycle complete, review what was submitted: which sites used estimates, where meter or invoice data was missing and how market-based Scope 2 instruments were documented. Close gaps before assurance requirements arrive by automating utility data ingestion, standardizing fuel and refrigerant tracking and defining controls.
Step 3: Screen Scope 3 categories
Perform or refresh a screening of all 15 categories to identify which are relevant and significant. For most companies, purchased goods and services, capital goods, upstream transportation, use of sold products and end-of-life treatment dominate. Prioritize effort on these, and document why other categories are excluded or estimated simply.
Step 4: Start spend-based, then improve
Spend-based methods using procurement data and economic emission factors provide fast coverage. Then improve accuracy where it matters most: activity-based calculations for key materials, logistics data by mode and distance, and supplier-specific data for the largest suppliers. Track the method used for each line so the quality profile is visible over time.
Step 5: Engage suppliers intelligently
Focus requests on the suppliers that drive most emissions, use standardized formats where available and respect regulatory limits, such as the EU value-chain cap for smaller undertakings. Provide suppliers with clear guidance and accept a mix of company-level and product-level data, documenting the hierarchy you apply.
Step 6: Build controls for assurance
- Document methodologies, emission factor sources and versions, and key judgments.
- Implement review and sign-off for calculations and changes to factors or logic.
- Maintain a recalculation policy for structural changes and methodology updates.
- Run a mock assurance engagement before regulators require it.
Step 7: Prepare the narrative
Even while SB 261 is enjoined, prepare climate risk analysis aligned with ISSB-based requirements: governance, strategy, risk management, scenario analysis where performed, and metrics and targets. Reuse the same emissions data and risk assessments across reports.
Decision Criteria: Build, Buy or Combine?
Companies typically choose among specialist carbon accounting software, extending their data platform, or a hybrid. Consider:
- Data integration depth: can the solution ingest transaction-level ERP and logistics data at scale, or does it rely on uploaded summaries?
- Transparency: are calculations and factor versions visible and exportable for auditors?
- Multi-framework mapping: can outputs be mapped to SB 253, ISSB-based and ESRS requirements without parallel calculations?
- Methodology agility: how easily can you adopt updated GHG Protocol standards or new CARB guidance?
- Ownership of data: can you keep a full copy of inputs, results and lineage in your own platform?
A common pattern is to keep raw and calculated data in the enterprise data platform for lineage and analytics, while using a specialist tool for factor management, supplier engagement and reporting workflows.
Worked Example: A US Consumer Goods Company
Consider a hypothetical US consumer goods company with revenue above $1 billion, sales across the United States including California, manufacturing in North America and suppliers in Asia. It also has a listed subsidiary in a jurisdiction adopting ISSB-based standards and an EU operation that may fall into CSRD scope from 2027.
For the August 2026 SB 253 deadline, the company compiled Scope 1 and 2 data from utility bills and fuel records using spreadsheets, relying on estimates for several leased warehouses. It then launches a readiness program. First, it builds pipelines from its ERP and utility data provider into its data platform, replacing spreadsheets for Scope 1 and 2. Next, it screens Scope 3 and finds that purchased goods, especially packaging and agricultural ingredients, plus upstream logistics and end-of-life treatment of packaging account for most of its footprint.
The team calculates a spend-based baseline for all procurement, then replaces estimates for its top materials with activity-based calculations using bills of materials and purchase volumes. It invites its largest suppliers to share product-level footprints and logistics providers to share shipment data by mode. Every calculation line records the method, factor version and data source. By early 2027, the company can produce one emissions dataset with a clear quality profile, mapped to California, ISSB-based and ESRS formats, and it runs a mock limited assurance review to identify control gaps ahead of formal requirements.
Common Pitfalls
- Waiting for litigation to settle. Scope 3 data takes years to mature; legal uncertainty is not a reason to delay data foundations.
- Different numbers for different regulators. Inconsistent boundaries or methods invite questions from investors and auditors.
- Spreadsheet calculations. They do not scale, cannot be versioned reliably and are hard to assure.
- Over-engineering low-impact categories. Focus primary data efforts where emissions and risk are concentrated.
- Ignoring methodology change. Plan for updated GHG Protocol standards and factor databases with a recalculation policy.
Outlook
Over the next two years, expect CARB to finalize Scope 3 and assurance rules, the Ninth Circuit to clarify SB 261’s future, the ISSB to decide how to reference updated GHG Protocol standards and more jurisdictions to make ISSB-based reporting mandatory. Assurance expectations will rise across regimes. Companies that invest now in governed, granular emissions data will adapt to each change with configuration rather than reconstruction.
Conclusion
Climate disclosure has moved from voluntary narrative to regulated data. California’s SB 253 made Scope 1 and 2 reporting real in 2026, Scope 3 follows in 2027, and ISSB-based and ESRS regimes require the same core numbers. The winning strategy is to treat emissions accounting as a data engineering and controls discipline: integrate sources, version factors and logic, improve Scope 3 quality where it matters and map one dataset to every framework. That approach reduces cost, strengthens credibility and prepares the organization for whatever the courts and regulators decide next.
How Hanoi Technology Can Help
Hanoi Technology builds governed emissions data pipelines and calculation layers on modern data platforms so Scope 1, 2 and 3 figures are consistent and assurance-ready.
Further Reading
- CARB Adopts Initial Regulations for SB 253 and SB 261 – Miller Nash
- California’s SB 253 and SB 261: Developments and Litigation – Cooley
- CARB Moves Forward on Climate Disclosure Regulations While SB 261 Remains on Hold – JD Supra
- ISSB Update to the IFRS Advisory Council (November 2026) – IFRS Foundation
- EU Sustainability Developments (July 2026) – EY