Something big is coming to American business—and it’s not innovation, investment, or growth. It’s regulation. Disguised as transparency. Packaged in green.

In 2023, California passed two laws—SB 253 and SB 261—that are poised to rewrite the rules of corporate governance, risk, and reporting across the United States. Set to take effect in 2026, these laws demand that companies not only measure and report their greenhouse gas emissions—but also evaluate and publish speculative risks tied to climate change decades into the future. That may sound like a niche accounting update. It’s not. This is ESG policy through the back door—a state-level attempt to impose global climate standards on American firms, bypassing both the U.S. Congress and the Constitution.

I've been very critical of California and it's destructive policies quite a bit over the past year. Anyone who has listened to me has heard me warn about this for years: the rise of bureaucratic environmentalism that bypasses voters, undermines energy sovereignty, and forces businesses to become arms of the climate compliance state. With SB 253 and SB 261, the gloves are off. This isn’t climate stewardship. It’s an institutional power grab, executed through a weaponized form of disclosure.

Let’s unpack what these laws really do—and why every business leader in America should be paying attention.

Two Laws, One Agenda

The two bills work in tandem, and I'll explain how.

SB 253, the “Climate Corporate Data Accountability Act,” requires companies making over $1 billion annually and operating in California to publicly report their Scope 1, 2, and 3 greenhouse gas emissions, including emissions they don’t directly control.

SB 261, its policy cousin, applies to firms with revenues over $500 million and mandates that they disclose their climate-related financial risks, modeled after recommendations from the international Task Force on Climate-Related Financial Disclosures (TCFD).

Together, these laws create a sweeping mandate: disclose your direct emissions, your energy use, your suppliers’ and customers’ carbon footprints, and your climate risk exposure—all verified by third-party auditors, and all posted publicly. This is what needs attention: these requirements apply to any company merely “doing business” in California, regardless of where they’re headquartered. That means a furniture maker in Ohio, a logistics company in Texas, or a grain exporter in Kansas could be pulled into California’s ESG compliance dragnet—simply for having a customer or some aspect of their business flow in the Golden State.

This isn’t environmental policy. It’s legal imperialism.

Scope 3: The Fantasy That Breaks the System

Of all the demands in SB 253, Scope 3 emissions are by far the most extreme—and the least feasible. You might be asking: what are Scope 3 emissions? They’re not the fuel you burn or the power you use. They’re the indirect emissions linked to everything in your value chain—your suppliers, your customers, even how your products are disposed of. Think: business travel, shipping, product use, waste, investments, capital goods, employee commuting.

For most companies, Scope 3 represents up to 80–90% of total emissions—and none of it is fully traceable. California wants you to report all of it. Every year. Verified.

That means:

• If a supplier in Indiana uses diesel instead of natural gas—your ESG score takes the hit
• If a downstream customer misuses your product—you’re accountable
• If your vendors are small family businesses with no emissions records—you have to drop them or face disclosure penalties

This isn’t just a paperwork burden. It’s a supply chain shakedown. And for mid-market firms, the message is clear: comply, consolidate, or get crushed.

Compliance as a Cost Center

The practical implications are enormous. Firms are already building “climate disclosure task forces” involving legal, finance, procurement, IT, and PR. New enterprise software is being purchased to track emissions. ESG consultants are being hired. Insurance and liability experts are being brought in to review the fallout of publishing imperfect or unverifiable data.

We’re not talking about minor budget shifts here. For large firms, this means millions in annual compliance costs. For smaller companies in the value chain, it may mean getting cut entirely from procurement contracts due to their inability to meet reporting expectations. And none of this, by the way, reduces emissions. It reclassifies them, then penalizes them. This is regulatory theater masquerading as climate action.

The Strategic Target: Energy, Industry, and the Working Economy

Can we be realistic and stop with the pretending and acknowledge that these laws are not aimed at tech startups or media firms in downtown San Francisco. They are aimed squarely at the productive, energy-intensive sectors of the American economy, which are also pillars of it. I'm talking about oil and gas, freight and logistics (because they get goods from supplier to consumer), construction and cement, food processing and distribution, manufacturing and of course agriculture.

These are the industries that can’t just pivot to low-emissions alternatives overnight, because they deal in physical inputs, legacy infrastructure, and complex global supply chains. They are also—coincidentally—the very sectors most targeted by ESG investors and climate activists for “transition risk.”

SB 253 and SB 261 give those same ideological forces a new tool: compulsory self-incrimination through disclosure. And it does so by weaponizing the concept of risk itself. Under SB 261, a firm must now speculate on its vulnerability to climate scenarios decades in the future, under varying regulatory, meteorological, and market conditions. Not only is this pseudo-scientific—it’s impossible to verify or disprove. of course, these Neomarxists and Technocommunists operate in ambiguity, which makes it the perfect cudgel for activist lawsuits and investor pressure—remember when Blackrock was all on that?

ESG Without Consent: The Constitutional Problem

This is where the deeper danger lies. California isn’t just regulating its own backyard. It’s using its market size—roughly $4 trillion in GDP—to set climate policy for the entire country. And it’s doing so without a single vote in Congress, and with no national framework to govern or restrain it.

Some will say, “Well, at least it’s not a carbon tax.”

Let’s be sober and clear about this though: price manipulation, disclosure mandates, and ESG scoring all come from the same technocratic ideology—one that elevates bureaucratic control above energy independence, economic growth, and national resilience. This is all about degrowth and deindustrialization.

California’s disclosure mandates are not a gentler alternative to taxation. They are a parallel enforcement mechanism, cloaked in accounting language and enforced by auditors instead of regulators. This is the future ESG advocates want: a system where no law is passed, but every company is forced to obey.

I want to reall stress that this is not about carbon. It’s about control. It’s about shifting the burden of environmental ambition onto the very companies that make the real economy run. And unless this approach is checked—legally, politically, or through industry resistance—it will spread. That’s how soft mandates become hard rules. How one state becomes the standard-setter for the nation. And how voluntary ESG becomes mandatory ideology.

Here's a joke of sorts to think about: The left have such good ideas, that they're mandatory.

Read the white paper Backdoor ESG: The Corporate Consequences of California’s Climate Disclosure Mandates. PDF | Word Doc