California Climate Law Update: SB 261 and SB 253 Explained
SB 261 (California’s Climate-Related Financial Risk Act) compliance is right around the corner. Are you ready and are you aware of the December 1st Enforcement Advisory? Scroll below to read the update. As a reminder, SB 261 requires all business entities engaged in business in California — with annual revenues over $500M — to submit biennial disclosures regarding climate-related financial risk (CRFR). The initial SB 261 report must be submitted to the CARB public docket (open December 1, 2025 — January 1, 2026) and posted on the company website by January 1, 2026. Scroll below for critical information about the CARB checklist & guidance, and the preliminary list of companies just released on September 29th, 2025.
DECEMBER 1ST UPDATE — On December 1, 2025, the California Resources Board (CARB) issued an Enforcement Advisory. which noted that it will not enforce the January 1, 2026 deadline for filing the SB 261 report due to a Ninth Circuit Court injunction. However, companies can still voluntarily report via a public docket open until July 1, 2026, while awaiting a final ruling from the appeals court. Covered entities should continue preparing their reports as CARB plans to provide new timelines after the legal challenge is resolved, with draft regulations expected in early 2026. If you adopted the TCFD framework into your reporting
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CHECKLIST — On September 2nd, 2025, CARB released a draft checklist for SB 261 for the initial climate-related financial risk report that must be posted on a company’s website by January 1, 2026. The checklist includes minimum disclosures, clarifications, key links, and resources related to the frameworks (e.g. TCFD, IFRS2 ) that companies may use to meet reporting requirements. NOTE: CARB has noted that including Scope 1,2, and 3 emission reporting is not a minimum requirement for initial SB 261 reporting on January 1, 2026.
PRELIMINARY COMPANY LIST — Is your company on the CARB list? On September 29th, CARB published its preliminary list of thousands of entities that may be subject to upcoming reporting requirements under either or both SB 253, which covers GHG emissions, and SB 261, which covers climate-related financial risks. CARB has acknowleged that the list may be incomplete and has posted a survey to collect more information about additional entites that may be subject to regulations or stakeholders that might qualify for an exemption. The agency stated the following: "Each potentially-regulated entity remains responsible for compliance with statutory requirements, regardless of whether it was included in staff’s preliminary list or outreach."