A Snapshot of the Latest Updates
- October 2025: The California Air Resources Board (CARB) adjusted its timeline for developing climate disclosure rules under SB 253 and SB 261 to the first quarter in 2026. CARB explained that the extension allows more time to review public comments and refine key definitions and reporting processes. The agency emphasized its goal of ensuring that the final regulations are clear and workable for companies of different sizes and industries.
- November 2025: During the November 18 Workshop, CARB revised their proposed definition of “doing business” in California1, introduced first-year reporting changes to SB 253, and clarified the minimum reporting requirements for SB 261.
- November 2025: Also on November 18, following an emergency application filed by the U.S. Chamber of Commerce and other business groups, the Ninth Circuit Court of Appeals issued a temporary suspension regarding the enforcement of California's SB 261. While the application sought to stop enforcement of both SB 261 and SB 253, the court only granted the injunction for SB 261, allowing SB 253 to proceed. Oral arguments are scheduled to begin January 9, 2026.
What do these updates mean for your business?
The latest news creates uncertainty for many companies about timing and their next steps. While SB 261’s mandatory disclosures may be temporarily suspended, there is still significant value in publishing Taskforce on Climate-Related Financial Disclosure (TCFD)-aligned reports. TCFD still remains a baseline standard for reporting to other disclosures, including CDP and International Financial Reporting Standards (IFRS) Sustainability Standards. The content prepared for a TCFD-aligned report cross-functions with many other voluntary and regulatory disclosures, regardless of industry or sector. From a reputational standpoint, moving forward with a TCFD-aligned disclosure demonstrates your organization’s commitment to thoroughly evaluating climate-related risks and understanding the financial impacts related to your operations. Finally, in the event that SB 261 is ultimately approved, having a prepared disclosure ready for publication can mitigate the risk of non-compliance following a ruling in the appeals process in 2026.
Our advice: While the bill may be delayed, the impacts of climate change are not. Global disclosure regulations, like those in Australia, Canada, and even in the European Union, continue to move forward. By proactively addressing climate-related risks, companies are better prepared for business continuity and resiliency in the face of rising energy costs, flood risks, drought, and more. We recommend companies stay the course and continue preparing for SB 261, using this delay as an opportunity to refine your reporting practices.
A Deeper Dive: Understanding California’s SB 261
Who Must Comply?
SB 261 applies to public and private companies, including financial institutions, that conduct business in California1 with gross revenues over $500 million in the preceding fiscal year. The law’s reach is expansive, covering not just companies directly involved in environmental sectors, but those across industries like banking and real estate, which might face significant financial risks from climate change. While insurance companies are considered to be exempt from SB 261, the National Association of Insurance Commissioners adopted a standard for insurance companies to also report their climate-related risks in alignment with TCFD. For covered subsidiaries, if the parent company also qualifies, then the parent company disclosure satisfies the requirement for both.
When Does Compliance Begin?
The compliance deadline of January 1, 2026, has been suspended due to the action taken by the Ninth Circuit Court of Appeals. Oral arguments will begin on January 9, 2026, however that date is subject to change.
What Data Must Be Collected?
The heart of SB 261 lies in its demand for clear, actionable climate-related disclosures in alignment with the internationally recognized TCFD framework or its successor, the International Financial Reporting Standards Sustainability Standards (IFRS S2 Climate-related Disclosures). Companies are expected to report the following:
1. Governance
Companies should describe the role of their board of directors and senior management in overseeing climate-related risks and opportunities. This includes outlining how these risks are identified, assessed, and managed at various levels of the organization.
2. Strategy
Companies are asked to identify material risks to their operations, assets, and value chains associated with climate change, and disclose the potential financial impacts of the identified risks, over the short-, medium- and long-term. These risks are divided into two categories:
- Physical Risks: Risks associated with events such as extreme weather, wildfires, floods, and droughts.
- Transition Risks: Market, policy and legal, technology, and reputation risks stemming from the global societal shift to low-carbon technologies and regulatory environments.
Companies should also perform scenario analysis to determine how risks and impacts are expected to develop under different future climate states. The scenario analysis should include a low carbon scenario, such as a 2° Celsius or lower warming trajectory.
3. Risk Management
Companies should demonstrate how climate-related risks are addressed in broader business planning and strategy. This may include strategies like transitioning to renewable energy sources, reinforcing supply chain resilience, and adopting energy-efficient technologies.
4. Metrics and Targets
Companies are asked to disclose the key metrics used to measure and manage climate-related risks and opportunities and describe any relevant climate-related targets (e.g., emissions reduction targets).
What Should My Company Do Now?
As climate change accelerates, the financial risks tied to it become more significant. SB 261 seeks to ensure that businesses remain transparent and accountable for their actions, providing investors and stakeholders with the information they need to make informed decisions. The regulation also encourages businesses to take proactive steps in managing climate-related risks, helping mitigate potential long-term financial losses. By requiring companies to address these risks now, California is setting a nation-wide precedent for climate action that is inspiring similar measures in other states and regions such as Illinois, New York, and Washington.
For businesses subject to SB 261, compliance will require careful planning, data gathering, and risk assessment. However, those who act now can not only meet the regulatory requirements but also position themselves as leaders in climate responsibility.
Ready to get Started?
Discover how Antea Group can assist you with comprehensive climate-related risk assessment and disclosure preparation. Learn more about our Climate-Related Risk Assessment services.
FOOTNOTE:
1 The California Revenue and Taxation Code (RTC) Section 23101 defines “Doing Business.” However, the November 2025 recommendation from CARB omits §23101(b)(3-4) relating to property holdings and payroll thresholds.
Therefore, for the purposes of SB 253 and SB 261, an entity is considered to be “doing business” if it:
- § 23101 (a): Engages in any transaction for the purpose of financial gain within California; and
- § 23101 (b): Meets either of the following conditions during any part of the reporting year:
- Organized or commercially domiciled in California; or
- The California sales exceed certain thresholds (e.g., $735,019 in 2024), including sales by an agent or independent contractor of the entity.
