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Thank you for signing up for our webinar: SB 261 in Focus: Understanding California’s Climate Risk Mandate
We hope you enjoy the on-demand recording!
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Please recognize that these responses have been prepared using our best judgment based on the information we have been able to glean to date. It is not intended as legal advice. You should consult with your legal counsel for advice with regard to the application of SB 261 to your business. Much of the interpretive guidance and the implementing rules are yet to be issued by the California Air Resources Board, and thus, final interpretations will be forthcoming.
1. Do we have clarity on what doing business in California means for these laws? and which companies are impacted.
CARB hasn't yet issued its rules to define what it means to "do business in California." They have indicated that they will issue proposed rules by the end of the year that will give a further sense of how they are thinking about this definition. They did issue some indicative guidance in FAQs they recently issued, where they pointed to the California Franchise Tax Board, which in turn points to the California Revenue and Taxation Code Section 23101.
2. Can we use what we have filed in our 2024 Sustainability Report as a submission?
CARB has indicated that it will be looking for good faith efforts to comply. CARB’s FAQs recognize that it takes time to translate climate information into a report, and therefore, CARB stated, “ it is reasonable to expect that initial climate-related financial risk reports submitted by January 1, 2026, may cover fiscal years (FY) 2023/2024 or FY 2024/2025, depending on the organization.”
3. Does the required climate risk analysis include both physical and transitional risks?
Yes.
4. Is there a validity period? We have a TCFD study done from 2021 - will this still be considered acceptable?
CARB hasn't addressed this specifically, but the law contemplates risk disclosure on the basis of the prior fiscal year, so a 2021 TCFD report might be a good place to start. However, based on CARB’s guidance in its FAQ, it likely will be looking for updated information. In its note about accommodations in the first year of reporting, CARB references the potential use of FY 2023/2024 data, as referenced above. It seems likely that data from a 2021 report will be older than what CARB is looking for.
5. Will the amount of financial impact for identified risks have to be published? If yes, what is the expected level of granularity?
SB 261 refers specifically to the TCFD framework, which calls for companies to disclose the “actual and potential impacts of climate-related risks and opportunities” on businesses, strategy, and financial planning, where material.
While SB 261 does not specify an exact quantitative threshold or required breakdown (for example, it does not mandate an itemized dollar value for each risk), it does require disclosure of material financial risks in sufficient depth to be decision-useful and reflective of board-level oversight.
The required granularity is thus consistent with TCFD expectations: organizations should quantify risks and impacts where possible but may supplement with qualitative analysis when quantification is not reasonably feasible at present. CARB has also made it clear in its FAQs that it is not expecting perfection, particularly in the first year of reporting, so if the company does not have quantitative information available, it seems reasonable to conclude that the company should provide a qualitative assessment.
6. Which entity of a company needs to report? The parent company, the affiliate operating in California, or others?
Any US entity that does business in California and meets the revenue threshold of $500 million annually has a reporting obligation. However, SB 261, as amended by SB 219, provides that climate-related financial risk reports may be consolidated at the parent company level, and subsidiaries are not required to prepare separate climate-related financial risk reports.
7. Can you please provide a report example to include disclosures of SB261 disclosures for a baseline year, just implementing sustainability reporting?
CARB hasn't posted any sample reports, but the TCFD, for years, has published an annual review of TCFD filings. When the IFRS Foundation/ISSB absorbed the TCFD, it took over that annual review process and issued its first review last year with some useful discussion of trends in TCFD reporting. Also, CDP's A List provides examples of companies that are reporting well to the TCFD/ ISSB standards. You might look at the TCFD reports from some of the A List companies.
8. Which version of the TCFD does CARB require?
SB 261 requires companies to disclose climate-related financial risks “in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) framework or an equivalent standard”. SB 261 doesn’t mandate a specific version of the TCFD, but requires alignment with the foundational four-pillar structure (Governance, Strategy, Risk Management, Metrics & Targets) and the key disclosure recommendations of the TCFD.
9. ISSB is more rigorous than TCFD, and TCFD is technically "retired." Is it likely that CA will require ISSB only in the future?
It does not seem likely. SB 261 has been enacted into law and points to the TCFD or ISSB. Any change that would require ISSB reporting would require an amendment to the law.
10. How strict will California be on point 2: Explanation of measures adopted - in year 1 of filing?
CARB has said that it doesn’t expect reporting to be perfect, particularly in the first year. The law provides that CARB should consider companies’ “good faith” measures to comply when it assesses whether to bring enforcement actions under the law. In its July 2025 FAQs, CARB stated, “to provide a phase-in period for reporting, climate-related financial risk disclosures made pursuant to the upcoming statutory deadline (January 1, 2026) may be based on the best available information, including information from fiscal years 2023/2024 or 2024/2025 (see above). CARB also recognizes that data quality and data sources may change over the course of the year, if additional data collection methods are put in place later.“
11. If the parent company is European-based but 1 of the USA-based entities is doing business in CA, does the $500 million turnover have to come from the USA-based entity or the whole group together?
CARB must still propose and adopt regulations to implement SB 261. However, our best reading of the law is that the revenue thresholds are assessed at the reporting entity level and including its subsidiaries. Thus, if the parent is not a US entity (formed in the US), then you would look to the US subsidiary’s turnover for itself and any of its subsidiaries, but you would not need to look upstream to the revenues of the non-US parent. We would like to clarify as well that the law looks to where the entity was incorporated or otherwise formed and not where it is based, so the operative consideration would be the jurisdiction in which the entity was formed.
12. Would the amount thresholds for being in scope of SB 261 only relate to revenue generated from its business in California, or does this cover the entity's global revenue?
Our understanding is that the revenue threshold covers the entity’s global revenue and is not limited to revenue earned in California. CARB provided in its FAQs, “to determine total revenue for a company, the initial staff concept is that 'total annual revenue' would be defined as gross receipts as outlined in California Revenue and Taxation Code § 25120(f)(2).”
13. Has California identified which company will be the "climate reporting organization" for the state program? If not, when will this be announced?
Pursuant to SB 261, companies must make their climate risk reports available on their websites. In addition, CARB stated in its FAQs that companies must also post the location of their climate risk reports on a docket that CARB will release on its website on December 1, 2025. That docket will be a central repository of information as to where companies’ climate risk reports can be found. The docket will remain up until July 1, 2026. It is not yet clear whether CARB will establish a separate reporting repository under SB 261. SB 261 requires CARB to contract with a climate reporting organization to review and report on the climate risk reports that are published pursuant to SB 261. It is not clear when that organization will be designated.
Further, SB 219 amended SB 253 (the greenhouse gas emissions disclosure law) to provide that CARB may hire an emissions reporting organization or CARB may itself create a digital platform, accessible to the public, that will post the data of reporting companies pursuant to regulations CARB will issue. We are still awaiting this rulemaking by CARB for further information.
14. What product does Persefoni have to support completing SB 261?
Persefoni offers a climate-related financial risk report as a service, custom-built for SB 261 compliance. You can learn more here: https://www.persefoni.com/solutions/sb-261
We will be diving deeper into how we support clients with SB 261 compliance in this and future sessions in our webinar series.
15. Are companies completing climate risk assessments to comply with SB261? If yes, what resources are they using to do so?
Yes. In our experience, many companies are conducting climate risk assessments to comply with SB 261. Persefoni supports customers in the assessment of their physical and transition risks, and the evaluation of their governance, strategy, risk management, and metrics and targets in line with the TCFD, and helps companies to draft their SB 261 reports. We partner with First Street to conduct a physical risk assessment to inform that piece of our analysis. We also find that some companies have long had practices of preparing TCFD reports and are continuing with those practices in compliance with SB 261. Some other customers are looking to law firms or other advisory firms to help them prepare.
16. What is the expected level of detail for the financial impact? Is it a one-year snapshot of the previous years, or is it forward-looking?
The law contemplates an assessment of risk both for the prior fiscal year and on a forward-looking basis, considering risks over the short, medium, and long term. The law doesn't define those time periods, but asks companies to disclose how they define short, medium, and long term. For many companies, these periods will align with their existing enterprise risk management frameworks.
17. Is the $1bn revenue threshold only for revenue generated from operations in California, or does it cover the total consolidated global revenue of the entity?
Total consolidated global revenue.
18. What is the authoritative source that defines the types of risks (drought, sudden storms...) to consider?
The law states: "Climate change is affecting California’s communities and economy with impacts including wildfires, sea level rise, extreme weather events, extreme droughts, and associated impacts to the global economy." That gives some indication of the types of risks that should be considered. The TCFD framework provides more detailed guidance. Our work with First Street also helps companies to identify the physical climate-related risks that they face and their likelihood. Our assessment of transition risks evaluates companies’ exposure to factors related to the transition to a lower-carbon economy, including regulatory, commercial, financing, and other risks.
19. What’s your sense of CARB’s expectations on scenario analysis? TCFD’s disclosures are ‘recommended’, whereas IFRS S2 requires scenario analysis. Is there an expectation that the climate risk reports include scenario analysis (to address Strategy (c))? Do we think CARB will eventually require scenario analysis?
Our best assessment is that CARB will be satisfied with good faith efforts to comply in the first year that cover the four pillars of the TCFD, but don't necessarily include quantitative scenario analyses. In future years, it could be that CARB will raise its expectations, but CARB's statements about looking for good faith efforts seem to indicate that it will provide some leniency in the first year of reporting.
20. As a private company and based on the legal text, is it required to share information for each pillar of the TCFD framework, or just share climate risks and its mitigation strategy in the report?
Companies are expected to do their best to cover each of the four pillars. We are happy to discuss further.
21. If we have not previously reported on sustainability, what constitutes a good-faith effort? I am envisioning a pretty basic 2-3 page Word document and high-level overview of the risks we've identified via a scenario analysis assessment we've just conducted with a third party.
We don't know with certainty what will be expected. We are encouraging our clients to do their best in responding to the four pillars and 11 disclosure recommendations of the TCFD. The length of the report is likely not as significant as the thought that goes into it and the completeness of the analysis under the TCFD framework.
22. Could you clarify the intent behind the December 1 to July 1 submission window for SB 261? Specifically, is the extended timeframe meant to provide flexibility for first-time reporters, or does it reflect a phased enforcement approach by CARB?
We have not read or heard anything from CARB to indicate the rationale behind the January 1, 2026, deadline. We also have not seen anything that indicates that the January 1, 2026, reporting deadline is being extended. In fact, by operation of the law, reports are due January 1. It could be that the December 1-July 1 submission window is the period before which CARB will establish a more permanent filing repository. It is also an indication that CARB will be collecting reports and monitoring compliance during that period. Companies that don't post by July 1, 2026, may find themselves exposed as potential enforcement targets.
23. Will there be a form/submission portal for the disclosure of this law?
SB 261 requires companies to disclose their climate risk reports on their websites and also to provide information about the location of the reports on a new docket that CARB will release on December 1, 2025, which will remain open until July 1, 2026. CARB’s rulemaking might clarify whether there will be any other submission portal or filing requirements after the initial filing period.
24. For the Jan 1 deadline, does the GHG inventory need to be for 2025 or can it be for 2024? We won't have all the 2025 info to be able to make the Jan 1 2026 deadline.
CARB clarified in its July 2025 FAQs that, for the initial SB 261 reports, covered entities should report GHG emissions data for either their most recently completed fiscal year for which data is available, which may be the 2024 fiscal year
25. Since SB253 only requires Scope 1 and 2 in 2026, is SB261 effectively requiring Scope 3 (assuming it is material) earlier than what is mandated by 253?
If Scope 3 emissions are material, technically, SB 261 requires companies to discuss those emissions if they have the data in January 2026. That said, SB 261 and CARB provide some leniency for good faith efforts, particularly in the first year of reporting, so failure to report Scope 3 emissions by January 1, 2026, would seem unlikely to result in an enforcement action.
26. If CARB has not finalized what to report, how do we know what to report?
The law is considered “self-implementing” for its first round, so you must adhere to the legislative text and the guidance provided in CARB’s FAQs, enforcement notice, and other guidance in the interim. Many companies are following the language of the law, the guidance CARB has issued, the interpretive materials underpinning the TCFD, and IFRS S2. CARB has made it clear that it will be looking for good faith measures to comply in this first year, not perfection.
27. Is the disclosures specific to the portion of the business in California?
No. The disclosure relates to climate risks within and outside California.
28. Are you able to share a link to the FAQ's Catherine just mentioned of CARB’s FAQs?
Here is a link to the FAQs.
29. Would using WRI's Aqueduct tool or WWF Water Risk Filter be good tools for one part of scenario analysis?
WRI’s Aqueduct tool and the WWF Water Risk Filter may be useful for scenario analysis, particularly as your climate risks relate to water-related risks such as scarcity and flooding. SB 261 doesn’t specify the tools that companies should use to conduct or support their scenario modeling. Using tools that provide a reasonable risk assessment for your company and industry would seem quite sensible.
30. TCFD requires a lot more than just a list of climate risks. To what extent is it required under SB-261 to report on the TCFD disclosures pertaining to metrics?
Under SB 261, covered companies are required to disclose climate-related financial risks and mitigation strategies in accordance with the TCFD framework or an equivalent standard. This includes reporting on the TCFD’s “Metrics and Targets” pillar—not just listing climate risks, but also providing the relevant quantitative and qualitative metrics used to assess climate-related risks and opportunities. The metrics and targets pillar provides that companies should disclose:
That said, as discussed above, the CARB FAQs and SB 261 itself make it clear that CARB is not looking for perfect reporting, particularly in the first year, but rather is looking for evidence that the company has taken good faith measures to comply. SB 261 further states “If a covered entity does not complete a report consistent with all required disclosures pursuant to clause (i) of subparagraph (A), the covered entity shall provide the recommended disclosures to the best of its ability, provide a detailed explanation for any reporting gaps, and describe steps the covered entity will take to prepare complete disclosures.”
31. Our parent company outside of the US has published TCFD reports at the global business level. Would it be appropriate to reference the report?
SB 219, which amended SB 261, permits reporting at the parent company level to satisfy subsidiary reporting. “Climate-related financial risk reports may be consolidated at the parent company level. If a subsidiary of a parent company qualifies as a covered entity pursuant to paragraph (4) of subdivision (a), the subsidiary is not required to prepare a separate climate-related financial risk report.”
32. What GHG data should be presented within the SB 261 reports? Should GHG emissions data be for CY 2024 or 2025 if the report is due by January 1, 2026?
For the January 1, 2026, reporting deadline, companies should present emissions data covering their most recent, complete fiscal or calendar year for which data is available at the time of reporting. This likely means using GHG data from the 2024 fiscal year for most companies, since complete 2025 data will generally not be available by the deadline.
CARB explicitly recognized in its July 2025 FAQs that entities may report using data from either their 2023/2024 or 2024/2025 fiscal year, depending on their accounting cycle. The guidance recognizes the challenges in collecting and verifying full-year 2025 GHG data in time for the January 1, 2026 report. As a result, companies are not required to provide 2025 GHG inventory data in their inaugural SB 261 report if that information is not yet available.
33. Will the rules include the level of detail needed in the disclosure? I imagine most companies will naturally err on the side of less detail than more.
It isn't clear what the rules will contain, particularly since SB 261 does not require CARB to adopt implementing regulations. We will have a much better sense when CARB publishes its proposed rules before the end of the year. We are seeing a wide range of approaches, from some companies that plan to provide detailed reports to those that simply want to report the minimum necessary. Of course, there are also many companies in the middle.
34. "You might look at the TCFD reports from some of the A List companies." Do you have a link or source available?
You can view CDP A List companies here: https://cdp.net/en/data/scores.
35. What specifically ought to be included in the Metrics and Targets section, especially since actual data is called for in SB 253?
Technically, the TCFD requires disclosure of scopes 1 and 2 emissions and scope 3 if material. However, in light of CARB's statements about good faith efforts and its enforcement memo on SB 253 from December 2024, CARB is unlikely to hold companies to task if they don't report this data in the first year, if they don’t yet have the data. If they plan to disclose in time to comply with SB 253 later in 2026, we are aware that some companies are stating that in their 261 reports.
36. Is there an expectation that companies perform a climate-related scenario analysis to fully align with TCFD?
Yes, but again, the concept of good faith efforts might well provide some flexibility in the first year of reporting if it is not possible to conduct quantitative scenario analyses in time for reporting by January 1, 2026.
37. Are we required to submit a link to our 2024 sustainability report in the portal CARB mentioned in the faq, or where would we need to?
It is not yet clear what CARB will require in its docket. We assume it might ask companies to provide a link or otherwise identify where their SB 261 report is available. We will know more by December 1, 2025, when CARB has indicated it will open the docket site.
38. Does public disclosure need to be on the company website/sustainability report, or can it be submitted on the CDP report instead?
It needs to be posted on the company's website and posted in CARB’s docket, which will be opened in December 2025.
39. Is CDP's public disclosure enough for this?
If your CDP disclosure does a good job of providing the disclosures pursuant to the TCFD, then it will suffice. Looking at your CDP responses is a sensible starting point because CDP incorporates the ISSB standards/ TCFD recommendations into its questionnaire and scoring. However, you will still be required to link to your disclosure on your website and enter information in the CARB docket to be opened on December 1, 2025.
40. What does "good faith effort" mean, and do you think we can get more clarity on that from CARB? If yes, when?
SB 261 itself says: "(2) The state board shall adopt regulations that authorize it to seek administrative penalties from a covered entity that fails to make the report required by this section publicly available on its internet website or publishes an inadequate or insufficient report. The administrative penalties authorized by this section shall be imposed and recovered by the state board in administrative hearings conducted pursuant to Article 3 (commencing with Section 60065.1) and Article 4 (commencing with Section 60075.1) of Subchapter 1.25 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations. The administrative penalties imposed on a reporting entity shall not exceed fifty thousand dollars ($50,000) in a reporting year. In imposing penalties for a violation of this section, the state board shall consider all relevant circumstances, including both of the following:
(A) The violator’s past and present compliance with this section.
(B) Whether the violator took good faith measures to comply with this section and when those measures were taken." This doesn't provide a great deal of guidance as to what "good faith measures" means, so we are applying best judgment. CARB also provided some indication of how it will approach enforcement of SB 253 in its December 2024 enforcement memo, which also alluded to good faith efforts. It also emphasized that it will be looking for good faith attempts to comply with its FAQs issued a few weeks ago.
41. How about the data being generated? How is it going to be channeled to “users,” e.g., investors? Could you describe the infrastructure?
The disclosures will be required on company websites and posted in the CARB docket to make the information as broadly available to users as possible.
42. Is the Scope 1 and 2 GHG calculation the same for both SB253 and SB261?
Both the TCFD and SB 253 look to the GHG Protocol for guidance on measuring Scopes 1 and 2 emissions. However, SB 253 requires the data to be verified by an independent assurance provider at the limited assurance level (until 2030, when reasonable assurance will be required). SB 261 does not require assurance.
43. One of our subsidiaries operates in California but has revenue below the SB 261 threshold. However, our parent holding company, which is located outside of California, has consolidated revenue exceeding the threshold. In this case, are we still required to comply with SB 261?
If your parent company is a US entity that does business in CA (including via the CA subsidiary) and has consolidated revenues over $500M, then it will have to report.
44. SB261 includes materiality filters - companies only need to disclose the risks that might realistically affect their financial performance. If a company has reported specific climate risks in the past as part of CDP, but established that the risks are not financial material, is CARB looking for that to be stated? Given that CDP aligns with TCFD, would CARB accept a CDP report?
These are good issues to discuss with your counsel. Generally, where our clients are reporting to CDP, that forms the basis for their 261 reports. If there are disclosures that you want to make but that you have determined are immaterial, you might consider making the disclosures and state that you do not believe the risks to be material. Again, we encourage you to discuss with your counsel.
45. How will CARB validate the 1/1/26 reports being published on websites for SB261?
The docket that CARB establishes will be one measure it can use to facilitate tracking compliance. In addition, SB 261, as modified by SB 219, provides that CARB may contract with a climate reporting organization to prepare a public report every two years that contains:
(A) A review of the disclosure of climate-related financial risk contained in a subset of publicly available climate-related financial risk reports by industry.
(B) Analysis of the systemic and sectorwide climate-related financial risks facing the state based on the contents of climate-related financial risk reports, including, but not limited to, potential impacts on economically vulnerable communities.
(C) Identification of inadequate or insufficient reports.
46. For SB 261, are companies only required to post the disclosures on websites, or is there a submittal/notification to California? For 253, how does this submittal process change (any required submittals - if so, where)?
Companies covered by SB 261 are required to publish their climate-related financial risk disclosures on their public-facing websites. In addition to website posting, companies must also provide the URL of their published report to CARB. CARB will open a public docket on December 1, 2025, for companies to submit links to their disclosures. Under SB 253, companies will be required to submit their reports to a portal that either CARB will maintain or a third party will maintain on behalf of CARB.
47. Is the first SB 261 report now due Jan 01, 2026?
Yes. Pursuant to the law itself, the first SB 261 report is due January 1, 2026.
48. If our parent company has conducted a physical and transition risk climate assessment, where we provided our data for that assessment, is our company good to go?
If your parent company publishes a TCFD report that satisfies the requirements of the law (aligns with the TCFD recommendations), you can rely on that to satisfy your SB 261 reporting obligations.
SB 219, which modified SB 261, provides that Reports may be consolidated at the parent company level. If a subsidiary of a parent company qualifies as a reporting entity pursuant to paragraph (2) of subdivision (b), the subsidiary is not required to prepare a separate report.
49. Is the reporting deadline for SB253 (Climate Corporate Data Accountability Act) still uncertain?
CARB has confirmed that reports under SB 253 will be required in 2026, but the specific date these reports will be required has not yet been established. CARB will likely address the reporting deadline in its rulemaking process, which CARB has said will kick off before the end of 2025 with the publication of proposed rules.
50. What are the enforcement and/or non-compliance penalties in these laws?
Under SB 253, CARB may issue penalties of up to $500,000 per year. Under SB 261, CARB may issue penalties of up to $50,000 per year.
51. So bearing this all in mind, could you shed some light on what a first report should look like in practice for a company that is brand new to this, and what the end state of a good-faith compliance effort might look like?
It is our opinion that a first report should endeavor to make disclosures in accordance with the four pillars and 11 disclosure recommendations of the TCFD based on the information you have available. CARB has not put out any sample disclosures, but there are many examples of TCFD reports, and their length, format, and depth are widely varied. We do not expect that there will be any specific format that CARB will require. Rather, it will expect reporting based on the TCFD recommendations or the ISSB standards.
52. Is the expectation that companies will report what they know, even if it is very little, and there are lots of gaps? i.e., identify the gaps, and explain how they will be addressed?
This approach is consistent with the guidance provided in SB 261: If a covered entity does not complete a report consistent with all required disclosures pursuant to clause (i) of subparagraph (A), the covered entity shall provide the recommended disclosures to the best of its ability, provide a detailed explanation for any reporting gaps, and describe steps the covered entity will take to prepare complete disclosures.
53. Will a copy of the company's response to the CDP Climate Change survey be sufficient since it is fully aligned with TCFD?
The content of your CDP report should be at least a good starting point and potentially all you need substantively. However, SB 261 requires companies to publish their reports on their website and identify that location in the public docket that CARB is establishing. At this point, it appears that you would need to post the information from your CDP report on your website rather than relying on your CDP filing.
54. Can you speak more to the business value of this compliance exercise? Transition risk value in particular seems ambiguous, given the current backlash.
The law is designed to go beyond being a check-the-box compliance exercise. It provides potential business value by enhancing risk management, easing access to capital, revealing opportunities, and driving long-term resilience, especially in the face of evolving transition risks. Transition risk under SB 261 refers to business impacts as the world moves toward a low-carbon economy. These include changes in regulations, customer demand, technology, and societal expectations. Even with political pushback, market demands continue to move global commerce toward decarbonization. This law will help companies to consider how those changes might impact their business.
55. Will private companies have to submit their disclosures publicly?
Yes. Private companies that are in scope of the law will have to publicly disclose their climate risk reports.
56. Can you provide the links to the ISSB reporting guidelines and the CDP A list?
Here is a link to ISSB resources and the CDP A list site.
57. "There's no hiding", but how will they know, without defining "doing business in California"? Are we saying someone will take the list of all publicly traded companies and bounce it against the list of submitting companies to look for gaps, then start witch-hunting and issuing fines?
We don’t expect there will be any witch-hunting. The point about there being no hiding was designed to say there will be transparency as to who has reported. For companies that are in scope of the law, the docket will provide a centralized location for users to find their reports.
58. Would the "early mover" PR aspect be applicable to companies on the revenue bubble as well?
It could provide good PR to report early. If you are on the revenue bubble, you’ll need to decide with your legal counsel and PR team, presumably, whether it makes sense to be an “early mover” and report early.
59. Does the scenario analysis pertain just to US sites? A consultant we met thought that we would only need to include US sites in what we need to submit for 261, but our understanding was that it applies to our global sites.
Our understanding is that SB 261 applies to physical risks wherever the company’s properties are and not solely those within the United States. That said, CARB has also made it clear that companies may use the best available information they have during this first reporting year, so if data as to climate risks for properties outside the United States is not available, it might make sense to start with a risk assessment of your US properties.
60. Some companies keep their CDP private in submission. What other resources can companies use for public sharing?
Those reports are still based on the CDP questionnaire, which incorporates the TCFD recommendations (now ISSB standards). You might benefit from the work that you put into preparing your CDP submission in crafting an SB 261 report to post on your website.
61. Could Catherine please clarify the “docket” she’s referencing? Many companies intend to use existing TCFD disclosures within their ESG/Impact/Sustainability reports that are already published on their website. Based on what has been published to date, this would meet the compliance requirements. Is this still considered a compliant method of disclosure, or do companies have to post a separate statement? Most companies do not want to publish separate and duplicative statements unless necessary.
CARB described the public docket in its FAQs posted July 9, 2025.
62. Do we need to assess the risks in our supply chains or only for our business?
SB 261 defines “Climate-related financial risk” to mean “material risk of harm to immediate and long-term financial outcomes due to physical and transition risks, including, but not limited to, risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, consumer demand, and financial markets and economic health” (emphasis added). As such, if supply chain risks represent material risks to your business, you should consider their inclusion.
63. Do you have perspectives about how information disclosed could be used against a company by non-state actors?
Companies should certainly consider their disclosures from a broader perspective and involve their legal and other appropriate teams in their decisions as to how to craft or fine-tune the disclosures.
Thank you for signing up for our webinar: SB 261 in Focus: Understanding California’s Climate Risk Mandate
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