Hundreds of companies doing business in California are focused on math when they should be focused on management. The August 10, 2026, deadline for reporting direct emissions under California’s SB 253 is fast approaching, yet companies treat these mandates as a data collection task delegated to their sustainability or Environmental, Health and Safety (EHS) teams.
But this is not simply data collection. Companies are severely underestimating the legwork, coordination and leadership needed to meet these requirements. They’re treating emissions math as the risk, when the true risk is a ‘governance vacuum.’
Without ownership, audit trails and integrated workflows, minimal compliance this year will lead to a chaotic scramble for businesses in 2027, when extensive and complex supply chain data reporting for Scope 3 is due. They could fail their audits and face severe legal and financial consequences.
Starting from zero
Of the 4,000 companies scoped for the August 2026 deadline, US-only companies face the most work. A sizable maturity gap divides US-only companies compared to the global organizations that have long navigated requirements for carbon footprinting and emissions data collection.
For instance, I recently spoke with one US company with over 10,000 employees and significant operations in California that had ‘absolutely nothing’ to track emissions. It hired a project manager with no sustainability expertise and was entirely dependent on third-party consultants for basic calculations.
The governance vacuum
Executive leadership creates the governance vacuum by dumping emissions reporting onto small EHS or sustainability teams. These teams lack the authority, budget, domain expertise and cross-functional support to pull audit-ready emissions data from production, HR, operations and finance.
There are four main structural gaps:
- Clear internal ownership and approval workflows.
- Standardized documentation and audit-proof trails.
- Reliable systems that automate calculations and aggregations and make emissions calculation a natural result of data collection.
- Scalable systems protected from manual, error-prone data entry that significantly reduce iterative effort and costs year-on-year.
Without this governance structure in place, companies will face more hardship – and risk – in 2027.
How lessons from Europe can inform the 2027 scramble
While companies focus on Scope 1 and 2 disclosures in 2026, SB 253’s Scope 3 requirements will be a wake-up call exposing those who neglected to prepare a governance structure in 2026. Scope 3 requires a massive effort, representing a business’s total upstream and downstream indirect supply chain emissions, which typically make up 90% of its total.
US boardrooms can learn from recent European challenges. When the EU rolled out the Corporate Sustainability Reporting Directive (CSRD), many companies underestimated the effort so critically that regulators delayed requirements. An even better parallel is the narrower scope of the UK’s Task Force on Climate-Related Financial Disclosures (TCFD) law, which, like SB 253, targets greenhouse gas emissions and financial risks. It provides a roadmap of similar challenges and mistakes for US-based companies to avoid.
Why better sustainability governance is better business
Climate change represents organizational risk. Stronger climate and emissions reporting secures access to global capital markets and invites more favorable interest rates from private lenders. It streamlines your audit process, saving you from external audits and regulatory penalties, and keeps you competitive with customers who demand sustainability proof.
Technology must be central to your plan. Manually tracking emissions data across spreadsheets creates errors and cannot be scaled, but SaaS solutions provide an audit trail and help you adjust numbers annually with minimal effort.
Questions to kick-start a governance discussion
Here are some questions to ask leadership in your next meeting:
- Who owns the final emissions number and what is the internal workflow for its verification?
- Is this effort cross-functional or isolated within a single department?
- Do we have a scalable internal system to track this data annually?
- How are we ensuring our emissions data is audit-ready? Have we engaged an assurance practitioner early enough?
- How can baseline emissions data inform mitigation plans that help reduce financial, operational and compliance risks?
- Does our general counsel have a clear understanding of the potential reputational and litigation risks of under-reporting our emissions?
- How are we using this data to manage financial risk?
Companies that make sustainability governance an organizational priority will have a smoother time navigating audits and positions themselves to thrive in the future.
