Physical climate risk data,
ready for SB 261.
California paused the deadline. Not the data problem.
SB 261 makes climate disclosure public for U.S. firms with over $500 million in revenue doing business in California. Posted on your own homepage, filed in CARB's docket, read by investors, journalists and litigators. Whichever framework you pick (IFRS S2, TCFD-aligned, or CSRD), the hard part is the same: asset-level physical climate risk that defends itself under scrutiny.
SB 261 is California's Climate-Related Financial Risk Act. Signed October 2023, biennial public report aligned to TCFD-aligned recommendations or IFRS S2, posted on your own website with a link filed in CARB's docket. The original 1 January 2026 deadline is enjoined; SB 253 (the GHG emissions sibling, $1bn+ revenue, Scope 1 and 2 due 10 August 2026) is unaffected.
U.S. business entities with over $500 million in total annual revenue doing business in California. Insurance companies excluded. CARB estimates ~10,000+ entities in scope. SB 261 status: enjoined pending the 9th Circuit ruling. CARB has stated it will provide an alternate reporting date once the appeal is resolved. Maintain a ready posture: enforcement could resume on short notice.
A first-of-its-kind public disclosure mandate.
The Climate-Related Financial Risk Act sets the broadest scope of any U.S. climate disclosure rule. It covers thousands of companies far beyond traditional financial regulation, and the report is public. SB 261 is the climate-risk disclosure (over $500 million in revenue). Its sibling, SB 253, is the GHG emissions disclosure (over $1 billion in revenue, Scope 1 and 2 due 10 August 2026). Closely linked, but distinct obligations.
The pause didn't change the data problem.
Whatever the courts decide, the disclosure mandate doesn't go away. And the hardest part of any framework, IFRS S2, TCFD-aligned or otherwise, is the same: defensible asset-level data on physical climate risk.
On your homepage. For everyone.
Reports must be posted on your own corporate website, with a link filed in CARB's public docket. Investors, journalists, competitors and litigators all read it. The bar isn't compliant. It's defensible.
Asset-level. Survives the second question?
Scenario analysis at portfolio or country level is fine until a journalist asks about a specific facility. Asset-level physical climate risk data is what survives the second-order questions.
Resilience needs evidence.
SB 261's reduction and adaptation requirement is unique: explicit disclosure of the measures you've adopted. Adaptation strategy and climate resilience claims rest on the same physical climate risk data that drives climate scenario analysis.
The SB 261 framework: four TCFD pillars plus three California-specific requirements.
The four-pillar architecture (Governance, Strategy, Risk Management, Metrics & Targets) originated with the Task Force on Climate-related Financial Disclosures and now lives on in IFRS S2 (the ISSB successor that SB 261 explicitly recognises as equivalent). SB 261 builds on those pillars and adds three of its own: reduction and adaptation measures, gap disclosure, and public posting. Click each area to see what's actually required.
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Pillar 1: TCFD Governance
Who's accountable, and how.
Disclose how the board oversees climate-related risks and how management assesses and manages them.
- Board's process for monitoring climate-related risks and opportunities
- Frequency of climate items on the board agenda
- Management roles and reporting lines for climate risk
- How climate considerations influence strategy and budgets
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Pillar 2: TCFD Strategy
How climate reshapes your business.
Describe identified climate risks and opportunities over short, medium and long-term horizons. Plus the resilience of your strategy under different climate futures, especially physical climate risk.
- Climate-related risks and opportunities by time horizon
- Impact on business, strategy and financial planning
- Scenario analysis including a 2°C-or-lower scenario
- Resilience of the strategy under different climate futures
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Pillar 3: TCFD Risk Management
From identification to integration.
Show how you identify, assess, and manage physical climate risk and transition risk, and how that fits into your overall enterprise risk framework.
- Process for identifying and assessing climate-related risks
- Process for managing climate-related risks
- Integration into overall enterprise risk management
- Treatment of physical climate risk and transition risk
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Pillar 4: TCFD Metrics & Targets
Show your work.
Disclose the metrics and targets you use to assess and manage climate-related risks, including emissions where relevant.
- Metrics used to assess climate risks aligned with strategy
- Scope 1, 2 and (where appropriate) Scope 3 GHG emissions
- Targets for managing climate risks and performance against them
- Cross-industry and industry-specific metrics where material
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SB 261 specific requirement
Beyond TCFD: what are you doing about it?
SB 261 goes further than TCFD by explicitly requiring disclosure of measures adopted to reduce and adapt to identified climate-related financial risks. This is where adaptation strategy meets the climate resilience case.
- Specific actions taken to reduce climate-related financial risks
- Adaptation measures for unavoidable physical climate impacts
- Investments in resilience, capital expenditure or transition
- Progress against previously disclosed measures
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SB 261 specific requirement
Document what's missing, and why.
If you can't fully report against the framework (TCFD-aligned or IFRS S2), you must explicitly disclose the gaps, explain why, and outline steps to close them. Transparency is required, not optional.
- Detailed explanation of any reporting gaps
- Description of steps the entity will take to close them
- Best-available data and proxies, with assumptions stated
- Timeline for remediating gaps in future reports
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SB 261 compliance mechanics
Where it lives.
Reports must be published on your own corporate website with a link filed in CARB's public docket. An annual fee applies once enforcement resumes.
- Posted on the company's own internet website
- Link filed with CARB's public docket
- Annual fee for CARB administration (rulemaking pending)
- Penalties up to $50,000 per reporting year (when enforced)
Public reports need defensible data.
Once your report is on your website, anyone can pressure-test it. Asset-level physical climate risk, forward-looking scenarios, transparent gap disclosure, audit-grade methodology. The same data spine carries climate scenario analysis, adaptation planning and the climate resilience case to investors.
Asset-level physical climate risk
Asset-level exposure across real estate, supply chain nodes and operational facilities. State averages won't survive scrutiny, and they won't underwrite a credible adaptation plan.
Forward-looking scenarios
Climate-risk reporting requires scenario analysis including a 2°C-or-lower future to test transition risk, and a high-warming pathway (≥3°C, RCP8.5, NGFS Hot House World) to test physical risk. Historical loss data alone won't get you there, and proxies must be transparently documented.
Transparent gap disclosure
SB 261 explicitly allows partial reporting, but only if you transparently disclose what's missing, why, and how you'll close it. Best-available data with stated assumptions, not silence.
Multi-framework portability
IFRS S2 (ISSB), TCFD-aligned, EU CSRD. Climate disclosure data should travel across regimes, not be rebuilt for each one. One data spine, multiple jurisdictions.
Physical climate risk data, built for SB 261 and the public scrutiny that follows.
Spectra is the physical climate risk data platform behind public climate disclosures at companies and financial institutions with over $13.5 trillion in combined AUM. One asset-level data spine serves SB 261, IFRS S2, ESRS E1 and TCFD-aligned filings; reduction and adaptation evidence flows from the same source.
Asset-level exposure, 2bn+ assets
Material physical climate risk for every U.S. site in scope. 11 hazards including flood, wildfire, heat and drought at address-level precision. Survives the second-order question from a journalist or short-seller because the answer is property-specific, not a state average.
Forward-looking scenarios
SB 261 expects scenario analysis including a 2°C-or-lower pathway. Spectra delivers IPCC CMIP6 SSPs, CMIP5 RCPs and NGFS pathways across 2030, 2040 and 2050 horizons. Transparent assumptions and uncertainty disclosure make the gap conversation defensible.
Reduction and adaptation evidence
SB 261's distinctive requirement is the disclosure of measures adopted to reduce and adapt to identified risks. Spectra flags the assets driving the risk, supports adaptation prioritisation, and tracks progress year-over-year for biennial reporting cycles.
Defensible methodology
ISO 27001 and ISO 14001 certified, full methodology and uncertainty documentation. Built for a public report on your own homepage that investors, journalists and litigators will pressure-test, and for the parallel IFRS S2, AASB S2, CSDS and ESRS E1 filings on the same data spine.
Are you ready for SB 261 climate-related financial risk reporting?
Pick your industry. The questions tailor themselves to sector-specific climate-disclosure guidance, where physical climate risk hits hardest in your value chain.
SB 261 readiness self-check
SB 261: the questions sustainability and legal teams are asking right now.
What is SB 261?
SB 261 is the California Climate-Related Financial Risk Act, signed into law by Governor Gavin Newsom in October 2023. It requires U.S. business entities with over $500 million in total annual revenue doing business in California to publish a biennial climate-related financial risk report aligned with TCFD-aligned recommendations or IFRS S2. The report must be posted on the entity's own corporate website with a link filed in CARB's public docket. SB 261 is the broadest US climate disclosure regime by entity count, covering an estimated 10,000+ companies. Insurance companies are excluded.
Is SB 261 still in effect?
The statute remains on the books, but enforcement is paused. On 18 November 2025 the Ninth Circuit Court of Appeals granted an injunction halting enforcement of SB 261 pending the resolution of a First Amendment challenge brought by the U.S. Chamber of Commerce. CARB issued an enforcement advisory on 1 December 2025 confirming it will not enforce the original 1 January 2026 reporting deadline. Oral arguments at the Ninth Circuit took place on 9 January 2026; as of May 2026 no ruling has been issued. CARB has stated it will provide an alternate reporting date once the appeal is resolved. SB 253, the GHG emissions sibling, is unaffected and remains on track for an initial 10 August 2026 reporting deadline.
Who has to comply with SB 261?
U.S. business entities (public and private) with total annual revenue exceeding $500 million in the prior fiscal year and doing business in California, with insurance companies explicitly excluded. CARB proposes using gross receipts as defined in California Revenue and Tax Code §25120(f)(2) as the revenue test, with no deduction for operating costs. "Doing business in California" follows the Section 23101(b) tax-code test (with subsections 3 and 4 omitted). CARB has published a preliminary list of entities it believes are in scope but stresses the list may be incomplete; entities are responsible for assessing their own applicability. Subsidiaries can be covered through consolidated reporting at the parent level.
What's the difference between SB 261 and SB 253?
SB 261 and SB 253 are siblings in California's Climate Accountability Package, signed together in October 2023, but they cover different things and apply to different entities. SB 261 (over $500M revenue) is climate-related financial risk disclosure aligned to TCFD or IFRS S2: governance, strategy, risk management, metrics and targets, plus reduction and adaptation measures. Biennial public report. Currently enjoined. SB 253 (over $1B revenue) is GHG emissions disclosure: Scope 1 and 2 due 10 August 2026, Scope 3 from 2027. Annual public report. Not enjoined. Most large multinationals are in scope of both. The data spine that supports SB 261 climate scenario analysis also supports the SB 253 emissions disclosure.
Should we keep preparing while enforcement is paused?
Yes. The injunction pauses enforcement, but does not invalidate the statute, and CARB has been clear it will set an alternate deadline once the appeal is resolved. If the Ninth Circuit upholds the law, compliance obligations could resume on relatively short notice. Approximately 50 companies have voluntarily submitted SB 261 reports to CARB's docket, and many large multinationals are continuing to prepare drafts, recognising that a public climate report is increasingly expected by investors regardless of statutory mandate. The conservative posture is to maintain a "ready" state: complete the asset-level physical climate risk assessment, prepare scenario analysis, draft governance and risk-management language, and document gaps transparently.
How does Climate X help with SB 261 reporting?
Climate X provides asset-level physical climate risk data built for SB 261 governance, strategy, risk management, metrics and the distinctive reduction-and-adaptation requirement. The Spectra platform covers 2 billion+ assets globally with 11 hazards including U.S. flood, wildfire, heat and drought exposure at address-level precision. Multi-pathway scenarios use IPCC CMIP6 SSPs, CMIP5 RCPs and NGFS pathways across 2030, 2040 and 2050 horizons aligned with SB 261's short, medium and long-term framing. Methodology is ISO 27001 and ISO 14001 certified, defensible under public scrutiny, and serves parallel filings under IFRS S2, AASB S2, CSDS and ESRS E1 from one data spine. Explore Spectra or book a demo to talk through your reporting cycle.
From hazard to disclosure.
Asset-level physical climate risk and adaptation data, ready for SB 261, IFRS S2, TCFD-aligned reporting and the climate resilience case downstream.
