Comment Letter in Response to Proposed California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation
August 11, 2026
Clerks’ Office
California Air Resources Board
1001 I Street
Sacramento, California 95814
Re: Proposed California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation
Honorable members of the California Air Resources Board,
Thank you for the opportunity to comment on the modifications the California Air Resources Board (CARB) has made to the Proposed California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation. The modifications are insufficient as CARB has not removed § 96071(b)(2) exempting entities regulated by the California Department of Insurance (CDI) and other entities in the business of insurance from the proposed regulation. The undersigned organizations strongly urge CARB to remove this exemption before finalizing the regulation.
The proposal, offered by CARB staff at the July 21 public workshop, to subject insurance companies to the requirements of SB 253 beginning in 2027 is an insufficient remedy to the exemption for insurance companies included in the Initial Regulation. The Initial Regulation is not clearly limited to 2026 and thus by finalizing this regulation, CARB would be exempting insurers from emissions reporting under SB 253 unless and until the exemption is reversed in a future regulation. Moreover, future regulation that may subject insurance companies to the requirements of SB 253 will be in conflict with the Initial Regulation. Rather than take this cumbersome and unlawful approach, CARB should remove the exemption for insurance companies outright in the Initial Regulation.
Exempting insurance companies exceeds CARB’s authority as it is contrary to statute and legislative intent.
As we have argued previously, the exemption for insurance companies in the proposed Initial Regulation would exceed CARB’s authority as it is contrary to statute and legislative intent (See February 9, 2026 and April 13, 2026 Comment Letters attached hereto and incorporated herein by reference). The California legislature originally considered versions of both SB 253 and SB 261 that did not exempt insurance companies. However, an exemption was ultimately added to SB 261 in recognition that the climate financial risk disclosure required by SB 261 significantly overlapped with the National Association of Insurance Commissioners’ (NAIC) Climate Risk Disclosure Survey administered by CDI. By contrast, SB 253 was signed into law without an exemption for insurance companies. At CARB’s February 26 hearing, SB 253 sponsor Senator Scott Wiener testified that the insurance industry was intentionally included in SB 253. CARB lacks the authority to carve out an exemption that does not exist in the statute and that the bill sponsor confirmed is contrary to legislative intent.
CARB has justified the exemption as a measure to avoid “duplicative effort” for reporting entities, claiming that requiring insurers to report their greenhouse gas emissions under this rule would be duplicative with the NAIC’s Climate Risk Disclosure Survey. But the NAIC report is not duplicative with the reporting requirements of SB 253. While SB 253 mandates that all covered entities disclose their Scope 1, 2, and 3 emissions, the NAIC survey simply encourages insurers to “disclose Scope 1, Scope 2, and if appropriate, Scope 3 greenhouse gas emissions.” There is no statute or regulation requiring insurers to report greenhouse gas emissions to CDI, nor does CDI have any authority to enforce fines or penalties against insurers who decline to disclose emissions. In March, Public Citizen published an analysis confirming that insurer reports to CDI do not satisfy the requirements of SB 253, finding 75 percent of the largest property & casualty insurers in California disclose their Scope 1 and 2 emissions but only 10 percent of the largest insurers make meaningful emissions disclosures to CDI inclusive of Scope 1, 2, and 3 emissions.
Furthermore, even if the emissions disclosures insurers made to CDI were comprehensive, these disclosures would not justify exempting insurers from submitting emissions disclosures to CARB. SB 253 does not authorize CARB to exempt insurers or any other sector from disclosing to CARB. Instead, the statute permits a reporting entity already reporting emissions to another national or international entity to submit those emissions disclosures to CARB as well, so long as those disclosures meet the requirements of SB 253.
The insurance exemption included in the Initial Regulation is not limited to 2026 and thus would be in conflict with future regulations requiring emissions disclosure from insurance companies.
CARB staff have since acknowledged the gap between insurer emissions reporting to CDI and the requirements of SB 253. CARB materials from the July 21 SB 253 public workshop include the following: “Staff found that CDI reporting may not satisfy the requirements of SB 253 in future years (starting with 2027), as it does not include Scope 3 or assurance requirements.” In response to this gap, CARB staff proposed that “Beginning in 2027, …insurance entities may submit the same report to satisfy both CDI and SB 253 requirements, provided it meets reporting requirements under CARB’s regulation implementing SB 253. If a CDI report does not address all CARB requirements, reporting entities must supplement their report with the remaining required information.”
The problem with the solution CARB staff propose is that the Initial Regulation is not clearly limited to 2026 and thus by finalizing this regulation, CARB would be exempting insurers from emissions reporting under SB 253 unless and until the exemption is reversed in a future regulation. This is a legally dubious and unnecessarily cumbersome approach, given the Initial Regulation has yet to be finalized. Furthermore, workshop materials are not a guarantee that future regulation will be undertaken to remove the insurance exemption or do so effectively. The proposed solution also fails to address the core issues at hand—that the insurance exemption in the Initial Regulation is unlawful as it exceeds CARB’s authority. The only plausible way to implement CARB staff’s proposal would be to expressly limit the exemption by modifying the Initial Regulation to 1) provide that it applies only to insurers who make SB253-compliant Scope 1 and 2 emissions disclosures to CDI in 2026 and 2) by clarifying that the exemption is only in effect for 2026 reporting, and will not be in effect for all future years. Without this change, which is not in the current proposed language, the Initial Regulation plainly exempts insurers from the fee structure and reporting program into the future, and subsequent regulations that do cover insurers would be in perpetual conflict.
We urge CARB to remove the exemption for entities regulated by CDI and other entities in the business of insurance from the regulation and to finalize the regulation thereafter.
Sincerely,
Americans for Financial Reform Education Fund
Consumer Watchdog
Dave Jones, CA Insurance Commissioner, Emeritus
Public Citizen
Sierra Club California
cc: Kenneth J. Pogue, Director
California Office of Administrative Law
300 Capitol Mall, Suite 1250
Sacramento, CA 95814-4339