California’s 2026 Environmental Laws: What Manufacturers and Product-Based Businesses Need to Do Now

California’s 2026 legislative package continues a long-running pattern: the State uses environmental and consumer-protection laws to shape conduct, even beyond its borders. While several new statutes respond directly to the January 2025 wildfire disasters, many others reach deep into manufacturing, packaging, textiles, data management, and disclosure practices. These laws do not stop at traditional pollution control or permitting. They regulate product design, materials selection, how we generate and disclose environmental data, and how to assign responsibility for end-of-life product impacts.

For manufacturers and consumer-facing businesses, compliance in 2026 is not a one-time exercise. It is ongoing, measurable, and increasingly linked to enforcement risk, contractual exposure, insurance availability, and reputational harm. Some changes apply only to large entities, but even smaller companies may feel the effects through supply-chain demands and downstream reporting obligations. The clear trend is toward lifecycle regulation, data accountability, and earlier regulatory scrutiny. Here are some of the most consequential developments and what businesses should be thinking about now:

Wildfire Legislation: Expanded Protections and Commercial Impacts

In response to the 2025 wildfires, the Legislature enacted several measures expanding insurance protections and post-disaster recovery rules. Historically, California prohibited insurers from cancelling or non-renewing residential property policies for one year following a declared wildfire. New legislation extends similar protections to certain commercial policies, including small businesses and homeowners’ associations, effective January 1, 2026. These laws also require clearer disclosures regarding premium adjustments, coverage limitations, and claims handling following wildfire events.

For manufacturers, warehouse operators, and commercial property owners, these changes matter for two reasons. First, insurers now scrutinize fire-risk mitigation measures more closely, including building materials, on-site storage practices, and vegetation management. Second, inaccurate environmental or hazard disclosures can affect coverage disputes after a loss. Businesses should review insurance applications, property descriptions, and emergency preparedness plans to ensure consistency with actual site conditions well before renewal cycles begin in late 2025.

Plastic Bags and the End of “Functional” Reusability

California’s retreat from thicker plastic checkout bags illustrates a broader regulatory shift: compliance is judged by real-world outcomes, not labels or intent. Senate Bill 1053 amends the State’s plastic bag restrictions and effectively eliminates the “reusable plastic bag” category at grocery and convenience stores. The ban took full effect on January 1, 2026.

For manufacturers and retailers, SB 1053 signals that regulators will look past marketing claims and technical definitions. If a product calls itself “reusable” but functions as single-use waste in practice, California will regulate it as single-use. This approach complicates compliance for businesses that rely on narrowly drafted specifications or consumer behavior assumptions. 

Companies should reassess packaging choices now, evaluate lifecycle impacts, and confirm that supplier representations align with how products are actually used and discarded.

Textiles Enter the Extended Producer Responsibility Era

The Responsible Textile Recovery Act (SB 707) marks a major expansion of extended producer responsibility into the apparel and textile sector. Beginning January 1, 2026, covered producers must participate in a producer responsibility organization (PRO) responsible for textile collection, recycling, and reuse. By July 1, 2026, CalRecycle must approve a stewardship plan, and by January 1, 2027, fee collection and reporting obligations commence.

This law pulls product design directly into the regulatory sphere. Material selection, durability, recyclability, and sourcing now carry compliance implications. Manufacturers should identify whether they qualify as “producers” under the statute, inventory covered products sold into California, and budget for stewardship fees and reporting costs. Waiting until enforcement begins will limit options and increase the risk of operational disruption.

CEQA “Streamlining” and the Persistence of Risk

Recent amendments to the California Environmental Quality Act promise faster approvals for certain projects, but speed does not equal reduced exposure. Accelerated timelines compress review periods and raise the stakes for procedural errors. In practice, businesses face less flexibility to correct deficiencies once an application is deemed complete.

Companies pursuing manufacturing expansions, facility upgrades, or logistics projects in 2026 should not assume that statutory streamlining shields them from litigation. Compressed schedules increase the importance of defensible technical analyses and consistent project descriptions from the outset. Early coordination between legal, environmental, and engineering teams remains critical. In addition, it’s worth a reminder that just because CEQA may not affect proposed projects does not mean that environmental laws and regulations do not apply. State agencies maintain their rights and oversight responsibilities to ensure compliance.

Climate Disclosure Moves from Voluntary to Regulated

California’s climate disclosure regime, enacted through SB 253 and SB 261, reshapes sustainability reporting into a regulated activity. SB 253 requires companies with more than $1 billion in annual revenue doing business in California to report Scope 1 and 2 greenhouse gas emissions beginning in 2026, with Scope 3 reporting to follow. SB 261 requires climate-related financial risk disclosures by January 1, 2026, for covered entities.

Even companies below the revenue threshold will feel the impact. Larger manufacturers and retailers increasingly demand emissions data from suppliers to satisfy their own obligations. Estimates, assumptions, and third-party data now carry legal risk. Environmental statements are no longer aspirational narratives; they are regulated records that can trigger enforcement, investor scrutiny, and contractual disputes. Businesses should evaluate data quality, documentation practices, and internal review protocols now, before disclosure obligations attach.

AI Transparency and Environmental Claims

California’s AI transparency law, SB 942, takes effect January 1, 2026. It requires disclosures when businesses use generative artificial intelligence to produce content that could mislead consumers, including marketing and informational materials. As companies rely more heavily on AI to draft sustainability reports, ESG disclosures, and environmental claims, this law adds another compliance layer.

Undisclosed or inaccurate AI-generated environmental statements may expose businesses to claims under California’s Unfair Competition Law or consumer protection statutes. Companies should adopt internal controls governing AI use, require human review of environmental content, and document the basis for factual assertions tied to environmental performance.

Housing Standards and Indirect Environmental Effects

Changes to landlord-tenant habitability standards, including new requirements for landlords to provide major appliances in residential units effective in 2026, may seem far removed from environmental regulation. In practice, they influence demand patterns, durability expectations, and compliance scrutiny for appliance manufacturers and suppliers. California legislation routinely produces these secondary market effects, particularly when health, safety, and environmental goals intersect.

Manufacturers should watch not only statutes aimed directly at their industry, but also laws that reshape downstream purchasing and replacement cycles.

What This Means for Businesses

Taken together, California’s 2026 laws confirm a continued move away from point-source regulation toward full product and project lifecycle oversight. Data accuracy, transparency, and traceability now sit at the center of compliance. Environmental professionals will increasingly need to operate alongside finance, product design, and legal teams, rather than in isolation.

Businesses that engage early—by mapping product lifecycles, validating environmental data, reviewing supplier contracts, and aligning disclosures with actual practices—can reduce enforcement risk and improve credibility. Reactive compliance, by contrast, often results in repeated disruption and higher long-term costs. In California, compliance is not an event. It is a condition of doing business, embedded in how products are made, how information is shared, and how responsibility is defined.