SB 253 & SB 261: What California's Climate Laws Mean for Your Properties

California just changed the rules for large companies. And those changes will land directly on commercial property owners — whether you're ready or not.

Two Laws. One Clear Message.

In 2023, California passed Senate Bills 253 and 261. Together, they require large companies to disclose their environmental footprint and climate-related financial risks.

These laws don't target buildings. They target the companies inside them. But the effect on commercial real estate is the same.

SB 253: Your Tenants Will Need Your Data

Any company earning over $1 billion annually must now disclose greenhouse gas emissions. Scope 3 is where your property enters the picture. It covers emissions from leased space. That means your tenant's energy use inside your building counts toward their required disclosure.

If you can't provide clean, verifiable consumption data — they have a problem. And soon, so do you.

Bottom line: Tenants subject to SB 253 will ask for your building's data. Properties that can deliver it will win renewals. Properties that can't will lose deals.

SB 261: Location Risk Is Now a Disclosure Event

Companies earning over $500 million must disclose climate-related financial risks. Two categories matter: Physical risks — flood, wildfire, extreme heat. Transition risks — new regulations, carbon costs, shifting market demand.

Where your property sits is no longer just a location decision. It's a risk disclosure event for your tenants.

Three Things to Build Before 2026

1. Sub-metering — Capture consumption by tenant, not just whole-building totals. 2. Utility data aggregation — Centralize your records with time-stamped, consistent data. 3. Audit-ready documentation — The data has to hold up under third-party review.

The Market Is Already Splitting

Institutional tenants are moving toward buildings that make compliance easier. Owners who can support emissions reporting will be preferred landlords when leases roll. Those who can't will face friction — on renewals, on new deals, and eventually on valuations.

The window to get ahead of this is open. It won't stay open long.

Is Your Property Compliance-Ready?

Williams Capital Advisors works with Southern California owners to evaluate asset positioning, lease structure, and long-term value strategy.