California’s SB 261 requires large companies doing business in the state to publish a report on their climate-related financial risks and risk management strategies by January 1, 2026, and every two years thereafter. If your organization earns over $500 million in annual revenue and does business in California — even without being headquartered or incorporated there — this law likely applies to you.
The law mandates disclosure aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework. But what does that mean in practice — and how simple can your effort be while still complying?
To meet the legal threshold, your disclosure must include a description of:
You can put the disclosure on your website as a PDF. You may also need to put a link to the disclosure document on a Calfornia-hosted register. No third-party assurance or quantitative modeling is required.
While this “check-the-box” approach may be sufficient for compliance, it comes with trade-offs. Without deeper analysis, many companies miss critical insights into how climate risk could affect their capital planning, insurance strategy, or long-term resilience. Legal, EHS and risk teams may struggle to prioritize adaptation actions or defend the adequacy of risk management to boards, investors, or regulators.
For some companies, starting with a light-touch approach and expanding over time may be appropriate. But even basic compliance requires coordination across functions and credible documentation. SB 261 may be a reporting obligation — but it’s also a signal to build climate risk into the business conversation and plan for long-term resilience.
Climate risk disclosure is still a relatively new requirement for many companies, and SB 261 introduces added complexity given its alignment with TCFD. Even for organizations aiming to do the minimum, practical questions quickly appear: What qualifies as a “material” risk? How do you tie climate impacts to financial performance? How much documentation is enough — and how do you avoid creating legal exposure?
Support can help ensure alignment across internal functions—legal, EHS, risk, sustainability — and provide access to established frameworks, market benchmarks and technical data that streamline the process. In many cases, external partners can complete assessments faster and more cost-effectively than in-house teams. For example, WTW’s climate tools and proprietary data sets can quickly identify location-specific physical risks and model financial impacts — saving significant time, reducing internal burden, and improving the quality of results.
For companies looking beyond basic compliance, expert support can also help evaluate CapEx and OpEx exposure, run scenario analyses and prioritize resilience investments in line with enterprise strategy.
Whether your goal is to meet baseline requirements or build a more future-ready risk program, external perspective can help make the process more efficient, credible and actionable.
01
Disclose the organisation’s governance around climate related risk and opportunities
02
Disclose potential impacts of climate related risks and opportunities on the organisation’s businesses, strategy and financial planning
03
Disclose how the organisation identifies, assesses and manages climate related risks
04
Disclose the metrics and targets used to assess and manage relevant climate related risks and opportunities
Impacts on:
Responses might include:
This chart highlights climate-related risks and opportunities. Low emissions scenarios involve market, reputation, and policy challenges, while medium and high emissions scenarios emphasize acute and chronic physical risks.
This chart highlights climate-related risks and opportunities. Low emissions scenarios involve market, reputation, and policy challenges, while medium and high emissions scenarios emphasize acute and chronic physical risks.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
