Cleaning solar panels in California, USA. Photo: Dennis Schroeder / NREL
The International Sustainability Standards Board (ISSB) standards will be accepted under California’s climate disclosure rules, which take effect at the start of 2026, the state’s regulator has said. The announcement came as a federal judge refused to halt the rules while they are being challenged in court.
The California Air Resources Board (Carb) confirmed that companies can use one of several frameworks, including standards issued by the ISSB and the Task Force on Climate-related Financial Disclosures (TCFD).
In addition, institutions may use any “report developed in accordance with any regulated exchange, national government, or other governmental entity”.
While reports from the EU’s corporate sustainability reporting directive will be accepted, the agency did not clarify if proposed changes to the law under the EU’s omnibus push would be approved.
The ISSB has notably left the EU from its jurisdictional profiles as Brussels continues to debate changes to the CSRD.
Carb also clarified the minimum levels of reporting it expects, including: governance structure for identifying climate risks; potential and actual impacts of climate risk; opportunities in the short, medium and long-term; and how climate risks are identified, assessed, and managed.
Carb noted that reporting on scope 1, 2 and 3 emissions is not required for the initial reporting period, as “gathering this data may not be feasible,” the agency wrote.
Ongoing legal challenges
California’s climate disclosure laws require large companies operating in the state to disclose both their direct and indirect greenhouse gas emissions and any financial risks from climate change.
The legislation was the first of its kind in the US, going even further than the US Securities and Exchange Commission reporting requirements. The SEC rules have since been put on hold as the regulator waits for the court to rule on whether the agency had the authority to issue the regulations.
The California climate disclosure rules are being challenged in court on the grounds they violate free speech. In August, a federal judge denied a motion to keep the state from moving ahead with its reporting rules. The litigation is expected to continue into 2026.
This page was last updated September 18, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
