Complying with California SB 253: A Practical Guide to Scope 1, 2, and 3 Disclosure

SB 253 compliance is the largest mandatory corporate climate disclosure obligation in the United States — and the obligation most US companies underestimate. Roughly 5,000 organizations meet the $1 billion revenue threshold and do business in California; for each of them, SB 253 sets up a phased, externally-verified annual emissions disclosure that escalates from limited to reasonable assurance over time. This page lays out what the Act requires, where the technical work concentrates, and how Greentruth's QETs and GasTrace produce the records the disclosure rests on.

SB 253 compliance, in one paragraph. California SB 253 — the Climate Corporate Data Accountability Act — requires US companies with over $1 billion in total annual revenue doing business in California to disclose Scope 1, Scope 2, and (later) Scope 3 emissions under the GHG Protocol Corporate Standard, with third-party verification escalating from limited to reasonable assurance. CARB administers implementation. Greentruth's QET-NG, QET-RNG, and QET-CCS substantiate Scope 1 and residuals; GasTrace produces verified Scope 3 Category 3 EACs (free at the GREET default tier) for the natural-gas line that is the hardest part of the disclosure for most reporters.

For the campaign-style page

SB 253 was signed into California law in 2023 and is being implemented through CARB rulemaking. The Act establishes a mandatory annual greenhouse gas emissions disclosure obligation for large US companies that meet the revenue threshold and operate in California. Three architectural facts a reporting team needs to internalize:

• Anchored to the GHG Protocol Corporate Standard. Disclosures use the standard's Scope 1 / Scope 2 / Scope 3 architecture, with the standard's organizational-boundary and operational-boundary rules.
• Phased by scope. Scope 1 and Scope 2 come first; Scope 3 follows one year behind in the statutory architecture.
• Phased by assurance. Verification starts at limited assurance and escalates to reasonable assurance per the schedule fixed in the statute.

The Act's reach matters. Penalties for non-compliance, reputational consequences in the assurance review, and the strategic implications of a first-time disclosure that becomes a permanent reference point all make SB 253 compliance work worth treating as a multi-year operational project, not a single-cycle reporting exercise.

The full GHG Protocol explainer

For the foundational QET overview

Two thresholds determine SB 253 scope:

• Revenue. The statute applies to entities with total annual revenue above $1 billion. The threshold is total revenue, not California-specific revenue.
• California nexus. The entity must be doing business in California as the term is defined under California's franchise tax framework — a definition that captures a much wider population than companies headquartered in the state.

The combination is what makes the in-scope population large. Companies headquartered anywhere in the US (and many international entities operating subsidiaries in California) meet both thresholds. The estimated population is ~5,000 organizations.

Determining whether you are in scope is not trivial — and the answer often depends on the corporate structure and the way intercompany transactions cross the California line. A first move in any SB 253 readiness conversation is to confirm in-scope status with counsel before the technical work begins.

For corporate sustainability leadership

For ESG / disclosure teams

SB 253 phases in by scope. The statute's broad architecture is fixed; CARB's rulemaking is refining specific dates, formats, and (in some cases) the assurance schedule. The architecture:

For most in-scope companies, Scope 3 is by far the largest number. It is also the line where the assurance escalation hurts the most, because the underlying data is most often constructed from industry averages, supplier surveys, and modeled defaults. Each of those gets thinner as the verifier moves from limited to reasonable assurance.

The verification dimension is the most consequential operational dimension of SB 253 compliance. Two practical points to internalize:

A reporter that builds its data infrastructure for reasonable assurance from day one — rather than retrofitting later — saves a meaningful amount of effort across the escalation. The shift is not a “more of the same” exercise. Reasonable assurance asks the verifier to test methodology, sampling, and underlying records at a materially deeper level than limited assurance does.

Greentruth's QETs are verified to ISO 14064-3 reasonable assurance at the token level — the assurance posture you'll need at the high end of the escalation is the assurance posture the tokens already carry.

How ISO 14064-3 underpins the QET family

For most in-scope companies, Scope 1 emissions are dominated by natural-gas combustion and (for some sectors) on-site process emissions. Three Greentruth instruments touch the Scope 1 line:

• QET-NG — for combusted natural gas. The token carries a verified multi-pollutant carbon intensity (CH₄, CO₂, N₂O converted via IPCC AR5 GWP100: CH₄ = 28, N₂O = 265) for a specific producer-and-pathway combination, replacing a national or basin-average emission factor with verified primary data.
• QET-RNG — for fuel substitution where the company is moving from fossil natural gas to renewable natural gas. Biogenic CO₂ is preserved as a separate carve-out per the GHG Protocol biogenic guidance.
• QET-CCS — for the neutralization-at-residuals layer of a credible long-term claim, alongside Scope 1 abatement.

A QET retirement does not transfer Scope 1 emissions between parties. The producer's Scope 1 inventory stays the producer's. The buyer's retirement of the token sharpens the inputs to the buyer's own Scope 1 number — exactly what SB 253 compliance work asks for.

QET-NG · QET-RNG · QET-CCS · How retirement anchors the claim

Scope 3 Category 3 — Fuel- and Energy-Related Activities — covers upstream emissions from the fuels and electricity a company consumes. For most SB 253 reporters with a meaningful natural-gas footprint, the Scope 3 Cat 3 number is where the largest defensibility gap lives.

GasTrace is the surface that closes that gap:

• Free at the GREET default tier for every U.S. delivery location.
• Decomposed across the full upstream value chain — Production, Gathering & Boosting, Processing, Transmission, Storage, Distribution.
• Validated pipeline pathway across EarnDLT's 32,000-segment Lower-48 network model.
• Status flags surfaced before purchase (ISO 14064-3 Validated, Exceeds Limit, Error Corrected, Path Not Found).
• Producer-specific upgrades via QET-NG and QET-RNG where the buyer wants to sharpen specific stages.

For SB 253 compliance specifically, the practical leverage point is that the highest-risk line on the disclosure — the natural-gas Scope 3 line — is the one Greentruth makes most directly audit-defensible, at no cost for the GREET default tier.

The full GasTrace product page

For the Machine-Ready API to embed into ESG software

Reasonable assurance, when it arrives, will test where each Scope-by-Scope number lives in the data hierarchy. Greentruth's QET-NG methodology v2.3 makes the hierarchy explicit and records each token's tier as an attribute:

• Site-specific primary. Measurements at the specific producer site contributing to the buyer's supply.
• Process-specific primary. Measurements at a comparable process at the same operator, where site-specific data isn't available.
• Peer-reviewed secondary. Published peer-reviewed data for the relevant production or processing pattern.
• Industry-average secondary. Industry-average factors (the R&D GREET 2025 defaults underlying GasTrace's free tier).

The point is to make the assurance review predictable. A QET-NG carrying site-specific primary data is more straightforward for a verifier to sign off on at reasonable assurance than one carrying industry-average data — but both are auditable, with the hierarchy tier recorded as a token attribute and the verifier of record stamped on the certificate.

How modeled defaults vs measured values trade off

SB 253 sits inside a wider disclosure architecture. A reporter in scope of one is often in scope of all three:

• SB 253 (Climate Corporate Data Accountability Act). Mandatory annual GHG emissions disclosure across Scope 1, 2, and 3. $1 billion revenue threshold.
• SB 261 (Climate-Related Financial Risk). Mandatory disclosure of climate-related financial risks, aligned with TCFD-style framing. $500 million revenue threshold — a broader population.
• IFRS S2 (ISSB). Voluntary international standard converging with SB 261's TCFD-aligned framing, plus quantitative disclosures aligned with the GHG Protocol.

The three regimes draw on overlapping data architectures. Greentruth's QETs are designed to feed all three from a single underlying record, with framework-aligned exports produced at retirement. SB 253 is the disclosure; SB 261 and IFRS S2 are the adjacent obligations that the same underlying data substantiates.

How QETs align across reporting frameworks

How SBTi treats this stack

The Climate Registry General Reporting Protocol

SB 253 compliance is not a carbon credit program, not satisfied by self-attestation, and not a one-time exercise. It is a recurring, annually disclosed inventory under the GHG Protocol Corporate Standard with third-party assurance escalation built in. A QET retirement does not transfer Scope 1 emissions; it substantiates a specific verified physical unit of fuel or electricity that feeds the disclosure with audit-defensible data.

Three corollaries that in-scope reporters most often need to internalize:

• Industry-average emission factors get thinner under reasonable assurance. They are auditable under limited assurance but fragile at the high end of the escalation. Site-specific primary data is what survives a deeper verifier review.
• A QET retirement is not the disclosure itself. It is an input that substantiates a specific line. The disclosure is what you file under CARB's reporting framework.
• The first disclosure cycle establishes a baseline. It is referenced in every subsequent cycle as the starting point against which trajectory is measured. Getting it right is more important than getting it done quickly.