California SB 261 Climate Risk Reports: What the First Wave of Published Disclosures Shows

Roughly 10,000 entities fall within the scope of California's Climate-Related Financial Risk Act. By early May 2026, 154 had filed a climate risk report with the state.

That gap is not evidence of mass non-compliance. It is the product of an injunction. The Ninth Circuit paused enforcement of SB 261 on 18 November 2025, weeks before the statutory deadline, and California's regulator confirmed it would not enforce the 1 January 2026 date. Everything filed since has been voluntary.

Which makes the resulting dataset unusually interesting. These are reports from companies that chose to publish when nothing compelled them to, meaning the most motivated, best-prepared end of the market. Two independent analyses have now examined them, and both reach an uncomfortable conclusion: even among the willing, the disclosures often stop short of what investors say they need.

For the next cycle, that is the finding that matters.

Why These Reports Exist At All

SB 261 requires US-organised entities with more than 500 million dollars in total annual revenue doing business in California to publish a climate-related financial risk report every two years, aligned to the TCFD recommendations or an equivalent framework, and to file a link to it on a public docket. Insurance companies are excluded.

The first reports were due on 1 January 2026. On 18 November 2025 the Ninth Circuit granted a preliminary injunction pending appeal in the constitutional challenge brought by the US Chamber of Commerce and others, pausing enforcement. On 1 December 2025 the California Air Resources Board issued an enforcement advisory confirming it would not pursue entities that failed to post and submit by the statutory deadline, and opened the public docket the same day for voluntary submissions, keeping it open until 1 July 2026.

The Ninth Circuit heard oral argument on 9 January 2026 and, as of writing, has not ruled. CARB has said it will set an alternate reporting date once the appeal resolves. Its companion law, SB 253, was not enjoined and continues on its own track.

So the reports analysed here were filed into a regime that was legally paused, by companies under no obligation to file. That self-selection is the single most important thing to hold in mind when reading the findings.

What The Two Analyses Found

PwC examined close to 100 reports available on the docket as of 30 January 2026. Its headline findings: 63 per cent were first-time climate risk reports, physical and transition risk exposure was the rule rather than the exception, and 59 per cent of companies disclosed greenhouse gas reduction targets.

Governance and Accountability Institute and Ceres published joint research on 1 September 2026 covering 154 voluntary disclosures as of early May. Their method is worth noting because it produces something reusable: they translated CARB's disclosure checklist into outputs structured against TCFD and IFRS S2, built measurable indicators for each, extracted data points from every report using an analysis tool, then manually verified the extractions against the source documents. The output is a set of indicators that can be applied to future submissions, plus case studies of stronger practice.

Their findings are where the substance sits.

The Twelve Per Cent Problem

Two numbers define the quality gap, and they are the same number.

Nearly all early reporters identified both physical and transition risks. But only 12 per cent mentioned a formal transition plan, and only 12 per cent quantified the financial impacts of the climate risks they had identified.

Read those together and the pattern is clear. Companies are competent at the identification stage, which is the part TCFD makes most legible and the part a checklist can drive. They fall away at the two points where disclosure becomes genuinely demanding: attaching a number to the risk, and setting out what management intends to do about it.

The research frames this precisely. Companies can technically satisfy the minimum disclosure requirement while producing disclosures that fall short of what investors actually need. Ceres put the same point from the investor side, noting that the market has moved past the question of whether companies will disclose climate risk, and that the live question is whether those disclosures connect risk to financial impacts, business strategy and concrete transition plans.

For a law explicitly titled the Climate-Related Financial Risk Act, an 88 per cent rate of non-quantification is a striking result.

Governance Without Substance

The second finding is more subtle and, for boards, more uncomfortable.

Ninety-two per cent of early reporters disclosed board-level oversight of climate-related issues. On its face that is a strong number, and it reflects a decade of governance guidance landing. But the researchers were explicit that governance structure alone did not guarantee substantive climate action or disclosure quality.

Set the two findings side by side. Ninety-two per cent have board oversight. Twelve per cent have a transition plan. Whatever those boards are overseeing, in most cases it is not a plan.

This is the gap most likely to attract scrutiny in the next cycle, because it is easy to test. A reader can check whether a company claiming board-level climate oversight has anything for that board to oversee, and the answer will frequently be no.

Where Companies Did Better

The picture is not uniformly weak. The research found companies demonstrating more leadership in preparing greenhouse gas emissions inventories, in many cases including Scope 3.

That is notable because SB 261 does not require emissions disclosure at all. It is a climate risk law, not an emissions law. Companies are producing inventories anyway, and the likely explanation is straightforward: many of the same companies face SB 253, which requires Scope 1 and 2 reporting from November 2026 and Scope 3 from 2027, and they are building once for both.

PwC's finding that 59 per cent disclosed emissions reduction targets points the same way. The emissions workstream is further advanced than the risk workstream, probably because it has a harder deadline attached and a clearer methodology behind it.

Reading The Sample Honestly

Three caveats deserve stating, because they cut in different directions.

The sample is self-selected and skews positive. These companies filed with no legal obligation, at their own cost, into a public docket. Whatever the average quality of the 154, the average quality across 10,000 in-scope entities will be lower. If 12 per cent of the willing quantify financial impacts, the figure across the full population will not be higher.

These reports may not represent what companies would have filed under mandate. PwC makes this point directly. A voluntary submission made during an injunction is a different artefact from a compliance filing, and it may be either more cautious or more ambitious than a mandated report would be.

Sixty-three per cent were first attempts. Judged as first efforts by companies with no prior climate risk reporting, the results look considerably more reasonable. The relevant comparison is not against mature CSRD reporters but against a standing start.

There is also a genuine reason for optimism about trajectory. G&A's own longer-run research on Russell 1000 companies found TCFD alignment rising from 4 per cent in 2019 to 60 per cent in 2023. Disclosure practice scales quickly once a framework becomes embedded, and a mandatory regime should accelerate that further.

Lessons For The Next Cycle

Quantify something. The single clearest differentiator in this dataset is whether a company attached financial figures to its identified risks. Ranges, scenarios and qualified estimates all count. A risk described without any financial dimension is not a climate-related financial risk disclosure in any meaningful sense, and 88 per cent of early filers left that gap open.

Build the transition plan before the next report, not during it. Twelve per cent is a low base, and transition plans are becoming the reference artefact across multiple regimes, including UK SRS disclose-or-explain requirements and SBTi's Corporate Net-Zero Standard V2 for larger companies. A plan built once serves several disclosure obligations.

Make board oversight describable in specifics. If 92 per cent of filers claim board oversight, the claim itself carries no signal. What differentiates is describing what the board actually reviewed, when, and what decisions followed.

Use CARB's checklist as a floor, not a target. The checklist exists to establish minimum compliance. The research is explicit that meeting it does not produce a disclosure investors find useful. Treat it as the structure and add the substance.

Reuse the emissions work. Companies subject to both laws should build one dataset. The SB 253 Scope 1 and 2 deadline of 10 November 2026 arrives before any reinstated SB 261 date, which makes emissions the natural anchor for both.

Read the case studies. The G&A and Ceres paper includes examples of leading disclosure practice, which is more useful for drafting than any list of deficiencies.

Watch the docket for benchmarking. Every filed report is public. For a company preparing its own, the docket is a free library of peer practice, including the weak examples that show what not to do.

What Happens Next

The regime's status still depends on the Ninth Circuit. If the injunction lifts, CARB will set a new reporting date and has indicated it will give notice. If the court rules the other way, SB 261 may be reshaped or struck, though the companion SB 253 has so far been treated differently and continues.

Either outcome leaves the underlying position unchanged for most large companies. Investors, lenders and customers are asking for this information regardless of what the statute requires, and 154 companies filed under no compulsion precisely because they had concluded that. The reports on the docket now are the benchmark the next cycle will be measured against, including by the people who read them looking for the gap between a governance claim and a plan.

Preparation Checklist

1. Confirm whether you are in scope: US-organised entity with more than 500 million dollars in total annual revenue doing business in California, with insurance companies excluded.

2. Note that enforcement remains paused pending the Ninth Circuit ruling, and that CARB will set an alternate reporting date once the appeal resolves.

3. Treat the voluntary docket as a benchmarking resource, since every filed report is public.

4. Quantify financial impacts of identified risks, using ranges or scenarios where point estimates are not possible, since only 12 per cent of early filers did.

5. Develop a formal transition plan, which only 12 per cent of early filers referenced and which serves multiple regimes.

6. Describe board oversight in specifics rather than asserting it, given that 92 per cent claimed oversight without corresponding substance.

7. Use CARB's Climate Related Financial Risk Report Checklist as a structural floor rather than a quality target.

8. Choose your framework deliberately from TCFD, IFRS S2, or another framework required by a government or exchange.

9. Build greenhouse gas inventory work once, serving both SB 261 context and SB 253 obligations.

10. Diarise the SB 253 Scope 1 and 2 deadline of 10 November 2026, which is unaffected by the SB 261 injunction.

11. Publish on your own website and file the link on CARB's docket, since both steps are required.

12. Review the G&A and Ceres case studies of leading practice before drafting.

Position as of early September 2026. SB 261 enforcement remains subject to a Ninth Circuit injunction and no ruling had issued at the time of writing. The findings described here come from voluntary submissions made during that injunction and may not represent how companies would report under mandate. Confirm current requirements against CARB and take professional advice for your circumstances.

Sources

Governance and Accountability Institute and Ceres, PwC, California Air Resources Board, Climate Related Financial Risk Report Checklist, California Health and Safety Code Section 38533, United States Court of Appeals for the Ninth Circuit, Task Force on Climate-related Financial Disclosures recommendations, IFRS Foundation, Ropes and Gray, Nixon Peabody, Nelson Mullins, Jones Day, Foley and Lardner, Akin Gump, Persefoni, Climate X

This article is intended for general professional information and does not constitute legal, financial, or investment advice.