Executive summary
California’s climate disclosure requirements may still be evolving, but waiting for complete regulatory certainty could leave construction and real estate companies scrambling. Now is the time to assess data readiness and strengthen reporting and risk management processes that will support compliance and stakeholder expectations alike. By acting early, organizations can reduce risk, improve governance and build confidence, regardless of how the regulatory landscape ultimately develops.
Why construction and real estate leaders should prepare now
For construction and real estate executives, uncertainty around California climate disclosure requirements has created a difficult question: should organizations invest in preparation now or wait for greater regulatory clarity?
It's a reasonable question. Reporting timelines and implementation expectations have evolved, with injunction delays affecting SB 261 and the extended Nov. 10, 2026 SB 253 emissions disclosures deadline offering brief relief and leading some companies to wonder whether it makes sense to move forward with compliance before every detail of the requirements is finalized.
However, regulatory uncertainty doesn’t mean they should de-prioritize preparation. In fact, it’s the opposite: companies that delay readiness efforts until all questions are resolved may find themselves with less time than expected to build the reporting capabilities they need.
“The construction and real estate sector faces unique challenges in collecting, validating, and reporting emissions data across large and complex property portfolios,” said Kristi Knudson, Grant Thornton ESG & Sustainability Director. “With the California climate requirements’ shifting timeline, construction and real estate leaders face not only timing uncertainty, but pressure to determine which reporting activities to prioritize.”
Determine the impact
Before taking action, organizations should first determine whether they are likely to be affected. Not all construction and real estate companies fall within the scope of California’s climate disclosure requirements. Applicability depends on specific criteria, including whether an organization is doing business in California with $500 million or more in revenue for SB 261 or $1 billion or more in revenue for SB 253.
At the same time, some companies may face climate-reporting expectations from investors, suppliers, municipalities or other stakeholders regardless of a regulatory mandate, while other multinational companies may need to comply with Europe's evolving regulatory reporting requirements under the Corporate Sustainability Reporting Directive.
Evaluate the time it will take to prepare
Once companies understand their potential exposure, the focus should shift from compliance timing to readiness.
“Construction and real estate organizations often operate across multiple properties, projects and locations, creating challenges when gathering and validating information needed for climate disclosures,” Knudson said. “Reporting responsibilities may also span finance, accounting, legal and sustainability functions, requiring coordination across teams that have not historically worked together on reporting initiatives.”
Many organizations that are newer to sustainability reporting underestimate how much time these activities can take. Collecting reliable data often means pulling emissions information from disparate systems across properties, projects and subcontractors — data that likely wasn’t structured with disclosure in mind. Common gaps include inconsistent measurement methodologies across business units, missing documentation and emissions sources that haven’t been tracked at all. Organizations without dedicated sustainability personnel may find readiness work competing with operational priorities.
Decide when to act
Even if the reporting deadline extends further into the future or requirements evolve, the greater risk may be postponing foundational work that remains valuable regardless of how requirements ultimately develop.
“Organizations can begin evaluating reporting processes, assessing data quality, identifying readiness gaps and strengthening governance without making assumptions about future regulatory outcomes,” Knudson said.
Key steps construction and real estate leaders can take today include:
- Evaluate reporting processes: Map current data flows and reporting workflows across finance, legal and sustainability functions to understand what already exists and where reporting responsibility currently sits.
- Identify readiness gaps: Assess data availability and quality against likely disclosure requirements, with a specific focus on gathering data that informs greenhouse gas emissions reporting.
- Strengthen governance: Assign clear ownership across teams, establish review and sign-off processes and document methodologies so reporting can withstand scrutiny.
- Upskill teams: Train personnel on emissions calculation methodologies and their specific role in the reporting process, so responsibilities don’t default to a single overextended function.
“An area where many clients come to us wishing they had started work sooner is assurance readiness,” Knudson said. “As climate disclosures become subject to greater scrutiny, organizations may need to demonstrate that the information supporting their reporting is complete, reliable and has the proper controls in place. Preparing for assurance expectations can help companies identify weaknesses early, rather than under compressed timelines later on.“
Content disclaimer
This Grant Thornton Advisors LLC content provides information and comments on current issues and developments. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
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