From Voluntary to Verifiable: Adapting to California’s New Climate Disclosure Standards

California’s passage of the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261) marks a turning point in U.S. climate reporting. For the first time, large companies, including many insurers, must prepare climate-related disclosures that carry statutory weight, firm deadlines, and, for SB 253, independent third-party assurance.

The laws arrive at a moment when insurers are already navigating climate-related pressures across underwriting, reserving, investment strategy, and regulatory oversight. The new reporting obligations interact with those systems, but they require different data and coordination across functions that may not have previously collaborated on climate reporting. 

With requirements this complex, many leaders are asking the same question: Where do we start?

A practical first move is to align on timing. Two timelines shape near-term planning and set the pace for work across the organization.

SB 261 originally set a January 1, 2026 deadline for publishing climate risk reports. However, a November 2025 federal appeals court order has temporarily paused enforcement while litigation continues. The California Air Resources Board (CARB) is proceeding with the statutory deadline and will open a docket to submit the report link from December 1, 2025, to July 1, 2026.

SB 253 remains on schedule and requires insurers to obtain assurance over Scope 1 and Scope 2 emissions disclosures, covering direct emissions from owned operations and indirect emissions from purchased energy. CARB has proposed an August 10, 2026 reporting deadline for Scope 1 and Scope 2 attestation, though this timing remains subject to final rulemaking. Scope 3 emissions, which capture indirect emissions across the value chain, are planned to phase in for reporting in 2027, with assurance requirements following on a later timeline.

However, a November 2025 presentation from CARB staff proposed excluding insurers from SB 253. This proposal is expected to be clarified at CARB’s next board hearing in January 2026. CARB maintains a schedule of past and upcoming climate disclosure presentations on its meetings and workshops page.

As of the date of this article, the proposal has not been accepted, and insurers that appear to be in scope should continue preparing forSB 253. Treating the law as applicable until CARB’s rulemaking is finalized reduces the risk of last-minute work and keeps climate reporting aligned with broader expectations from boards, regulators, and rating agencies.

Many insurers are continuing to prepare for SB 253 and SB 261, despite potential changes. At Johnson Lambert, we help insurers turn these requirements into a workable plan and, where SB 253 applies, provide the independent attestation California requires. This overview explains what SB 253 and SB 261 require, why insurers are especially affected, and practical steps to begin preparing for the 2026 reporting cycle.

SB 253: Turning Emissions Reporting into a Verifiable Obligation

SB 253 moves climate reporting from voluntary frameworks to a structured requirement with rigor similar to financial information. It applies to companies with more than $1 billion in gross annual revenue that are doing business in California, a group that includes many property and casualty, life, and health insurers, even if they are headquartered elsewhere.

A key feature is assurance. Under CARB’s proposal, companies are required to obtain limited assurance over Scope 1 and Scope 2 emissions for year-end 2025 in the 2026 reporting cycle. In 2030, California plans to transition to reasonable assurance, which reflects a higher level of examination, similar to an audit.

Parts of this will feel familiar to insurers that already operate under audit, MAR, or SOX. The difference under SB 253 is the type of proof. Instead of relying mainly on financial records, insurers will need operational data and inputs from facilities, IT, and vendors, along with controls that live outside the finance team. In practice, that means finding your Scope 1 and Scope 2 data, documenting how the numbers are calculated, mapping the controls that support them, and naming who owns each piece of evidence.

CARB released a draft Scope 1 and Scope 2 reporting template in October 2025 (the draft CARB reporting template). While using the template is voluntary in the first reporting cycle, it gives companies a preview of the documentation California is likely to require as reporting matures: how numbers were calculated, which entities and operations are included, the greenhouse gas categories reported, and a few basic emission intensity metrics.

SB 261: Climate-Related Financial Risk Reporting Becomes Mandatory

While SB 253 asks, “What are your emissions, and can you support them with independent assurance?” SB 261 asks, “How do climate-related financial risks affect your performance, strategy, and planning?” The law applies to companies with more than $500 million in annual revenue that conduct business in California. It exempts insurance companies that are already subject to the NAIC climate risk disclosure standard, so carriers that file the NAIC Climate Risk Disclosure Survey with the California Department of Insurance do not need to submit a separate SB 261 report.

SB 261 requires a structured public report that describes governance, risk assessment processes, and strategy. CARB plans to maintain a public docket for SB 261 reports, and the state’s initial timeline called for first disclosures in early 2026. A court order has paused enforcement while litigation proceeds. Even so, many insurers are continuing preparation because climate risk governance remains a focus for boards, regulators, and rating agencies.

For many insurance groups, SB 261 may still apply at the non-insurance parent or holding-company level, even when regulated insurance entities are exempt, and it closely tracks themes already present in NAIC climate disclosures and Own Risk and Solvency Assessment (ORSA) narratives. In practice, this means climate risk evaluation needs to be integrated into existing governance frameworks across the organization. Finance, ERM, actuarial, internal audit, sustainability, and operations leaders will need to align on a single narrative that explains how risks are identified, evaluated, and managed.

A complete SB 261 report addresses:

• Governance structures
• Risk identification and assessment processes
• Strategic considerations
• Financial impacts
• Metrics and targets that reflect climate-related risk

Why These Laws Matter to Insurers

Insurers already manage a wide mix of underwriting, claims, investment, and regulatory priorities. California’s climate disclosure rules land in the middle of that reality, which is why they can feel heavier here than in other sectors.

Three factors in particular make these laws especially relevant to insurers:

1. Many insurance groups meet the revenue thresholds and write premium in California, so group structures are more likely to fall within scope.
2. Boards, regulators, rating agencies, and the NAIC have already been asking insurers to explain how they manage climate-related risk, so these rules formalize questions that are already on the table.
3. Risk modeling and third-party vendors sit at the core of the business, which means more systems and partners are involved when insurers document emissions and climate risk information for public use.

It is understandable that this feels like a lot to coordinate. The next section focuses on how insurers can turn these pressures into a plan, one step at a time.

How Insurers Can Prepare for 2026

Preparation for SB 253 and SB 261 comes down to three connected steps. Starting now gives teams more room to improve data accuracy, strengthen governance, and coordinate responsibilities.

Step 1: Confirm Applicability

Identify which legal entities meet the revenue thresholds and count as doing business in California. Doing business can include writing premiums in the state, maintaining an office, or exceeding California’s gross-receipts thresholds for in-state activity ($735,019 in 2024, with thresholds updated periodically). In many groups, the parent or holding company meets the thresholds even if a regulated insurance subsidiary is treated differently under SB 261. Each legal entity should assess its own compliance obligations based on the statutory criteria and proposed definitions provided.

Step 2: Build Internal Readiness

Once scope is clear, coordinate across departments to define the data, controls, and narratives needed for both laws:

• SB 253: Locate Scope 1 (direct emissions from owned operations) and Scope 2 (indirect emissions from purchased energy) data, confirm systems can support assurance, and document how the numbers are calculated. The draft CARB reporting template provides a helpful outline of the categories, boundaries, and methods California is likely to expect.
• SB 261: Review how climate risk is governed, assess the key risks, and compile one public report aligned with the Task Force on Climate-related Financial Disclosures (TCFD) or International Financial Reporting Standards (IFRS) S2.

Step 3: Prepare for Disclosure and Assurance

As deadlines approach, move from planning to execution: For entities subject to SB 261, draft the climate risk report. For regulated insurance carriers, prepare the NAIC Climate Risk Disclosure Survey and align it with group-level narratives. At the same time, prepare emissions estimates consistent with CARB’s framework, document how you calculated the numbers and why, and gather the files an attestation team will need.

Engage an independent assurance provider well ahead of the proposed August 10, 2026 reporting date for Scope 1 and Scope 2 so you have time to resolve any data gaps.

How Johnson Lambert Supports Insurers

We know the hardest part of SB 253 is not the test itself. It is pulling together the evidence, documenting how numbers were calculated, and demonstrating that controls are in place and operating effectively. Our role is to organize and streamline that effort and provide the independent attestation California requires, while preserving independence at every step.

Our services, at a glance: 

• Independent attestation for SB 253: We issue independent opinions under AICPA attestation standards for Scope 1 and Scope 2 disclosures. Our work includes planning, understanding processes and controls, performing testing, and delivering a limited assurance opinion for the proposed 2026 reporting cycle. We also help insurers understand what will change as California moves toward reasonable assurance and begins to phase in Scope 3 assurance requirements.
  
• Readiness that preserves independence (non-attest): We do not calculate emissions, perform greenhouse gas inventories, or provide sustainability consulting. To protect independence, our readiness support focuses on non-attest activities that make assurance smoother:
  • Check whether your documentation supports attestation
  • Advise on control design and evidence ownership
  • Translate the draft CARB reporting template into a file structure your teams can follow
  • Align with internal audit or MAR to reduce duplicate effort

Working with Your Other Partners

Many insurers use software or sustainability firms for data and calculations. We coordinate with those teams so roles are clear: your partners generate the numbers, and we provide the independent attestation.

This model gives insurers a practical way to prepare now and meet the SB 253 requirement with an approach that fits how insurance organizations operate.

Preparing for What Comes Next

California’s climate disclosure laws are a real shift, and it is normal to have open questions while the work gets organized. For insurers, the tasks ahead tie directly to governance and add new responsibilities for measuring emissions, documenting methods, and preparing public reports.

Starting now makes the path smoother. Early work improves data quality, clarifies ownership, and reduces last-minute bottlenecks during assurance. Johnson Lambert can support preparation and provide the independent attestation required under SB 253.

Have questions or need a place to start? Let’s talk through timing, scope, and what preparation looks like for your team.