10 Things Your Company Should Be Doing to Get Ready for California’s SB 261 Climate Risk Law
California’s SB 261 is one of the most ambitious climate risk disclosure laws in the United States—and it’s coming fast. If your company does business in California and earns over $500 million in annual revenue, you’ll need to publicly report your climate-related financial risks starting in 2026.
That might sound like a long time from now, but trust us: it’s not.
Here are 10 things your company should be doing right now to get ahead of the curve—and avoid scrambling when the deadline hits.
1. Understand What SB 261 Actually Requires
Before you jump into assessments or reports, take time to understand what’s actually in the legislation. SB 261 requires a biennial public disclosure of climate-related financial risks and how your company plans to reduce or manage them—drawing heavily from TCFD (Task Force on Climate-related Financial Disclosures) guidance.
2. Designate a Climate Risk Point Person
Whether it’s someone in sustainability, risk management, finance, or legal—someone needs to own this. SB 261 disclosures will require input across departments, and having a clear coordinator will help avoid duplication, delays, and dropped balls.
3. Inventory Your Physical Assets
From warehouses to retail stores, if you don’t know where your assets are, you can’t assess their exposure to climate hazards like wildfire, flooding, or heatwaves. Start building a clean list of facilities with latitude/longitude and property values.
4. Get a Screening-Level Physical Risk Assessment
No need to go overboard. A simple location-based climate risk screen can help you quickly identify which facilities are most at risk—and provide the foundation for your financial risk disclosures.
5. Review Your Financial Planning Assumptions
Do your financial models account for climate impacts? Probably not. Think about how rising insurance costs, supply chain disruptions, or asset write-downs from climate events could affect your balance sheet, P&L, and cash flow.
6. Map Risks to Business Strategy
SB 261 doesn’t just want you to list risks—it wants to know what you’re doing about them. Begin connecting climate risks to your strategic priorities (e.g., site selection, supplier diversification, resilience investments).
7. Start Tracking Climate-Related Spending
You don’t need to overhaul your accounting system, but you should start flagging OpEx and CapEx related to climate risk mitigation and adaptation. Investors and regulators will want to see what you’re investing in—and why.
8. Engage Your Legal and Comms Teams Early
Disclosures under SB 261 must be public, so your legal and communications teams need to be part of the process. You’ll want language that is clear, defensible, and reputationally sound.
9. Look at CDP, IFRS, and CSRD for Synergies
If you’re already disclosing to CDP or preparing for IFRS S2 or CSRD, you’re in luck: many of the SB 261 requirements align. Use these frameworks to your advantage—and don’t reinvent the wheel.
10. Don’t Wait Until 2026
Your first disclosure will require data, analysis, and collaboration across teams. It will take time. Start now with a lightweight approach—like our SB 261 Starter Package—so you’re not scrambling at the last minute.
Need a Practical, No-Drama Way to Get Started?
We can help you:
Identify physical climate risks across your U.S. locations
Quantify financial exposures
Write a professional, disclosure-ready climate risk report
Send us an email at info@sustainabilityconsulting.com and we’ll help get you get started.