What you’ll learn:
California’s Climate Corporate Data Accountability Act, known as CCDAA and SB 253, is transforming the expectations for corporate greenhouse gas reporting. Any company that does business in California and earns more than one billion dollars in total global revenue will soon need to disclose its emissions publicly and prepare for independent assurance of those disclosures.
The California Air Resources Board, or CARB, will finalize the detailed rules in early 2026. But the core direction is already clear. Companies will need accurate and traceable data, strong documentation, and a level of control that looks much closer to financial reporting than traditional sustainability reporting. This guide explains what audit readiness for SB 253 requires and how sustainability teams can begin preparing now.
CARB states that SB 253 applies to any partnership, corporation, limited liability company, or other business entity, regardless of the state where it was formed, if it does business in California and exceeds one billion dollars in total global annual revenue. CARB indicates that the meaning of doing business in California will follow the California Revenue and Taxation Code, which focuses on economic presence rather than a physical location.
“This is the emissions reporting bill. It applies to companies doing business in California with annual revenues over 1 billion dollars.”
CARB will require annual disclosures of:
Scope 1 emissions – Direct emissions from operations that the reporting company owns or controls.
Scope 2 emissions – Indirect emissions associated with purchased electricity, heat, steam, or cooling.
Scope 3 emissions – Upstream and downstream emissions from activities outside the company’s direct control. CARB has indicated that Scope 3 will be phased in after final methodological guidance is complete.
“Scope 1 and 2 reporting is happening, but CARB will be a little bit flexible for companies providing a good faith effort on Scopes 1 and 2.”
CARB has signaled that companies should prepare for:
CARB has also noted that companies making a good faith effort in the initial cycle will receive enforcement flexibility.
SB 253 shifts greenhouse gas reporting from voluntary disclosure to a regulated system with public posting, verifiable numbers, and independent assurance. The expectation is not perfection on day one. The expectation is a system that is controlled, consistent, and auditable.
Assurance providers apply well established audit principles. Even as CARB finalizes the rules, most auditors will focus on several consistent themes.
CARB’s draft template for Scope 1 and Scope 2 requires companies to disclose which organizational boundary approach they use: operational control, financial control, or equity share. Auditors will want to see a written rationale for this choice and a clear explanation of which locations, assets, and subsidiaries are included.
Every figure in the inventory must be linked to a verifiable data source. Auditors will check that invoices, metering data, travel records, supplier submissions, and system extracts can be located easily and match the values shown in the calculations.
Assurance teams look for calculations that follow the Greenhouse Gas Protocol. They will check emission factor sources, conversion factors, and assumptions. CARB’s workshop materials show that companies will need to specify emission factor sources and dates.
SB 253 pushes companies toward a more controlled reporting environment. Auditors will look for:
If a method, boundary, or assumption changes, auditors expect a clear explanation. CARB will require companies to describe methodology and any minor or de minimis sources, which makes documentation especially important.
“Load your business data, transform it into sustainability data, once and use it everywhere. Smart data management and good governance make assurance much easier.”
Evidence files are the core of audit readiness. They give auditors confidence that data is accurate, complete, and supported by documentation.
List every source feeding into your emissions calculations. Include who owns the data, where it is stored, the time period it covers, and how it is exported. Examples include:
Documenting this inventory creates a map that auditors can follow.
Avoid ad hoc files. Adopt a single evidence structure that is consistent across sites and reporting cycles. Many companies use an approach that mirrors a financial audit binder:
This improves clarity for auditors and internal teams.
Every number in your emissions inventory should be linked back to its supporting evidence. This can be done through file naming conventions, cross references in calculation workbooks, or integrated software that handles evidence management.
Record what has changed, why it changed, and who approved the change. This includes both data updates and methodological updates. In the absence of version control, auditors may conclude that the reporting process is not reliable.
Evidence includes invoices, system exports, supplier declarations, emails confirming data adjustments, and screenshots of system configurations. If a piece of data informs your emissions inventory, you should have proof of where it came from.
Transparent documentation is central to both audit readiness and regulatory compliance.
This document should describe your overall approach. It typically includes:
Organizational boundary
Defines which parts of the company are included in the inventory.
Under the Greenhouse Gas Protocol you choose one consolidation approach: equity share, financial control, or operational control. The choice determines which subsidiaries, joint ventures, and facilities fall inside your reporting perimeter. SB 253 requires companies to state this choice clearly and apply it consistently.
Operational boundary
Defines which emission sources are included once the organizational boundary is set.
It covers which Scope 1 and Scope 2 sources you count, and which Scope 3 categories you include or justify excluding. Under SB 253 the operational boundary must follow the Greenhouse Gas Protocol and be transparent enough for auditors to see what was included and why.
De minimis emissions are very small emission sources that have no meaningful impact on the total greenhouse gas inventory. Companies may classify a source as de minimis when:
Under SB 253 and the Greenhouse Gas Protocol, companies may treat these sources as de minimis, but must still disclose that they were identified, explain why they were considered immaterial, and show how the decision was made.
CARB’s draft template directly asks for a description of the methodology, so this document will be used repeatedly.
Auditors will expect to see the full trail:
A calculation that cannot be followed step by step will not pass assurance.
For Scope 3 categories, assumptions are often unavoidable. But they must be justified and documented. For example:
Auditors will not expect perfect Scope 3 data immediately, but they will expect a plan for progress.
Assurance is not a single event. It is the outcome of a mature reporting system. The most successful companies focus on readiness months before the audit begins.
Define roles for data owners, reviewers, approvers, and methodology leads. Create a documented process for how data flows from each department into the central inventory. Governance is often the difference between a smooth assurance process and a difficult one.
Finance teams already manage controls, documentation, and regular audits. Sustainability teams can borrow these practices. Examples include:
The more familiar the process looks to auditors, the faster the assurance engagement will move.
Early engagement allows you to test your system before the first audit cycle. You will learn:
Companies that begin this conversation early often reduce assurance costs in the first year.
Regulations will continue to evolve. It is inefficient to rebuild your data architecture every time a rule changes. A single reporting foundation that supports SB 253, SB 261, CDP, ISSB, and potential SEC climate rules reduces long term risk and effort.
Accurate emissions data has benefits beyond compliance. It uncovers inefficiencies, strengthens procurement decisions, and improves access to sustainable finance. As buyers look for low emissions suppliers, transparent disclosure increasingly becomes a competitive advantage.
SB 253 marks a significant step in the evolution of corporate climate accountability. It raises the standard for data quality, documentation, and transparency across US businesses. Companies that act now will avoid last minute pressure and will also build systems that deliver strategic value.
Audit readiness does not mean perfect data from day one. It means evidence that can be traced, methods that can be defended, and controls that reduce the risk of error. With the right foundations, companies will be ready for independent assurance and will be well positioned for the broader shift toward regulated sustainability reporting.
California’s climate disclosure laws demand accuracy, transparency, and confidence. Sweep gives you everything you need to be audit-ready.
Built for compliance. Backed by experience. Ready for California.
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