General
How technology can streamline California SB 253 and SB 261 compliance — and save companies thousands
Misha Cajic
February 27, 2025
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7
min read
California’s SB 253 and SB 261 introduce new climate disclosure rules that will require companies to report their emissions and climate-related financial risks. While these regulations push businesses toward greater transparency, they also create concerns about cost and complexity. Many companies assume they’ll need to spend tens of thousands on consultants just to meet the new requirements. But with the right technology, much of this work can be done in-house, cutting costs while ensuring compliance.
SB 253, also called the Climate Corporate Data Accountability Act, requires companies with over $1 billion in annual revenue doing business in California to disclose their Scope 1, 2, and 3 emissions. This includes direct emissions from operations, indirect emissions from purchased energy, and supply chain-related emissions, which are often the hardest to track.
SB 261, the Climate-Related Financial Risk Act, applies to companies with $500 million or more in annual revenue. It mandates public disclosure of climate-related financial risks and the strategies being used to mitigate them. This aligns with the Task Force on Climate-related Financial Disclosures (TCFD) framework, meaning companies must assess how climate risks — such as extreme weather or carbon pricing — could impact their business.
Both regulations demand accurate data collection, verification, and reporting, which can seem overwhelming. Many companies have turned to consultants, assuming this is the only way to comply. But that’s no longer the case.
Historically, emissions accounting was a manual, consultant-driven process. Companies would gather fragmented data, hand it over to a sustainability firm, and wait for a report—often paying hefty fees for the service. Today, platforms like Avarni allow companies to automate much of the work, reducing both time and expense.
Avarni enables businesses to collect emissions data across their operations and supply chains without relying on third-party consultants. The platform integrates with existing accounting and procurement systems, pulling in financial data and automatically mapping it to emissions factors. This eliminates the need for manual calculations, streamlining Scope 3 reporting in particular.
A key challenge for many businesses is gathering accurate supplier emissions data. Instead of relying on broad estimates, Avarni’s **Supplier Engagement** module helps companies streamline supplier data collection at scale. Businesses can segment suppliers, track responses, and automate emissions calculations—at no cost to the suppliers themselves. This improves data accuracy and ensures compliance with SB 253, which requires companies to report verified Scope 3 emissions rather than industry averages.
Another major advantage of using technology is real-time tracking. Instead of waiting until the end of the reporting cycle to assess emissions, companies can continuously monitor their footprint and adjust strategies as needed. This proactive approach not only improves compliance but also helps identify cost-saving opportunities, such as switching to lower-carbon suppliers or optimizing energy use. With supplier engagement tools and automated emissions tracking, businesses can take full control of their sustainability data—without excessive consultant fees.
SB 261 requires companies to assess how climate change could impact their financial health, a process that traditionally involved costly, consultant-driven scenario planning. Now tools like Avarni’s forecasting and scenario planning feature allow businesses to test different emissions trajectories and financial risks in real time — without the need for external consultants.
Avarni enables companies to explore a wide range of scenarios, including transitioning to renewable energy, supplier emissions reductions, and carbon pricing impacts. Businesses can evaluate how switching emission sources—from fossil fuels to renewables — affects their overall footprint. They can also test the impact of supplier-specific emissions reduction targets, allowing them to plan more effectively for Scope 3 reporting. With vendor range targeting, companies can analyze different supplier commitment levels, gaining a more flexible understanding of future emissions scenarios. Additionally, carbon pricing simulations help businesses prepare for regulatory costs, while business growth modeling ensures emissions strategies scale with expansion plans.
Beyond forecasting, Avarni’s SBTi Targets feature strengthens Scope 3 reporting by automatically tracking which suppliers have set science-based emissions reduction commitments. Updated weekly in sync with the SBTi database, this tool gives businesses the most current data on supplier sustainability efforts. Instead of manually researching supplier commitments, companies can access this information instantly within Avarni, making it easier to set ambitious but achievable sustainability targets.
By leveraging these advanced forecasting and tracking tools, businesses can produce high-quality SB 261 disclosures efficiently and cost-effectively — without the need for expensive consultants.
Using an advanced accounting platform like Avarni allows companies to maintain full control over their climate data. Instead of relying on external consultants who may have limited access to internal financials, businesses can ensure that their emissions data is accurate, up to date, and tailored to their specific operations.
Cost savings are another major factor. Hiring a consulting firm for SB 253 and SB 261 compliance can easily run into six figures, especially for companies with complex supply chains. By contrast, using an automated emissions accounting platform allows businesses to generate compliance-ready reports at a fraction of the cost.
Additionally, bringing emissions accounting in-house means that companies build internal expertise, making future reporting easier. As regulatory requirements evolve, businesses with their own reporting capabilities will be better positioned to adapt without incurring additional costs.
For companies preparing for SB 253 and SB 261, the message is clear: technology is the key to efficient, cost-effective compliance. Instead of outsourcing emissions accounting, businesses can take control of their own reporting, save money, and future-proof their operations against evolving regulations.
