- within Environment, Criminal Law and Employment and HR topic(s)
- with readers working within the Environment & Waste Management and Utilities industries
The first deadline under California's Climate Related Financial Risk Disclosure Program—California SB 261 (codified as California Health & Safety Code section 38533)—is quickly approaching. By January 1, 2026, companies, doing business in California with annual revenue exceeding $500 million must submit their initial biennial public report to the California Air Resources Board (CARB) on their climate-related financial risk and the measures adopted to reduce those risks.
CARB estimates that approximately 4,160 companies are required to meet these reporting requirements. On December 1, 2025, CARB will make available a public docket for companies to post links to their climate-related financial risk reports. CARB will keep the docket open till July 1, 2026.
So, what must companies report under Section 38533?
CARB's September 2, 2025, Climate Related Financial Risk Disclosures: Draft Checklist provides guidance on minimum reporting expectations consistent with the four “pillars” found in the Task Force on Climate-related Financial Disclosures (TCFD):
- Governance: a description of governance structures for identifying, assessing and managing climate-related financial risks and opportunities;
- Strategy: a description of actual and potential impacts of climate-related risks and opportunities on the company's operations, strategy and financial planning (where material), taking into consideration the future impacts of climate change under various climate scenarios;
- Risk Management: a description of how climate-related risks are identified, assessed and managed; and
- Metrics and Targets: description of the metrics and targets used to assess and manage relevant climate-related risks and opportunities.
The CARB guidance also clarifies that a subsidiary do not need to submit a climate-related financial risk report if its parent reports on its behalf.
On September 25, 2025, CARB sent an email with CARB's Preliminary List of Reporting/Covered Entities and Stakeholder Survey of reporting/covered entities under Section 38533. Companies should check to see if they are on the list. It is noteworthy that CARB does not represent this as a comprehensive list and companies should determine if they are a reporting entity under Section 38533, even if they are not on this list.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
