California SB 261 Climate Risk Disclosure Requirements

This document is a guide that outlines the California Senate Bill 261, known as the Climate-Related Financial Risk Act, which mandates large businesses operating in California to disclose their climate-related financial risks. The law, signed in October 2023, requires these businesses to report on both physical risks, such as wildfires and flooding, and transition risks associated with policy changes and market shifts. The guide specifies that the first disclosure report is due by January 1, 2026, and must be updated biennially. It also details the compliance requirements for U.S.-based corporations with annual revenues exceeding $500 million. The document emphasizes the importance of climate risk assessment as a regulatory requirement rather than an optional practice, indicating a broader trend towards enhanced climate risk reporting across jurisdictions. Additionally, it discusses the role of environmental consultants in helping businesses comply with SB 261 through Climate Risk Assessment Reports aligned with the TCFD framework.