On September 2, 2025, the California Air Resources Board ("CARB") released draft guidance on SB 261 (the Climate-related Financial Risk Act) called a "Draft Checklist" that entities can use in preparing their climate-related financial risk reports that are due by January 1, 2026 (the "Guidance"). The Guidance can be found here.

The Guidance outlines minimum disclosure requirements in line with the Task Force on Climate-related Financial Disclosures framework ("TCFD"). Many of the matters discussed by CARB in the Guidance are consistent with what has been communicated in CARB's previous workshops.

Key takeaways:

• The Guidance states that reporting entities should focus on disclosing climate-related financial risks and measures adopted to reduce and adapt to climate-related financial risks that are material to their operations and financial outlook, using the lens of decision-usefulness for investors and other stakeholders.
• In addition to the minimum disclosures outlined in the Guidance, when drafting SB 261 disclosures, entities must (i) state which framework is being used (i.e., TCFD, IFRS S2 or another acceptable framework), (ii) discuss which recommendations and disclosures have been compiled and which have not, (iii) provide a short summary of the reasons why any recommendations/disclosures have not been included, and (iv) discuss any plans for future disclosures.
• Consistent with information shared in CARB's August workshop, the Guidance states that CARB will not require scenario analyses, despite such recommendation in the TCFD framework. CARB states that "where a qualitative scenario-based assessment is feasible and relevant for a particular company, CARB encourages its inclusion." Based on CARB's remarks at the August workshop, it appears that CARB may require scenario analyses reporting in future reporting periods. The Guidance does call for disclosure on "[t]he resilience of the organization's strategy, if any, taking into consideration the future impacts of climate change under various climate scenarios," which discussion may be qualitative in nature.
• Again consistent with the August workshop, the Guidance indicates that Scope 1, 2 and 3 emissions data is not a minimum CARB requirement for the initial SB 261 reporting period. In the August workshop, CARB noted that if companies have emissions data and it is material, then it should be provided; however, that point is notably missing from the Guidance.
• CARB notes in the Guidance that the law itself does not specify whether Calendar Year or Fiscal Year data should be covered in entities' reports. CARB repeated that covered entities should use the most recent/best available data for the first report.1
• CARB still has not provided any guidance or helpful instruction on parent-subsidiary relationship matters, including consolidated reporting. However, CARB has repeatedly stated that (i) only U.S. entities are in scope of the law, and (ii) companies can report at the parent level.
• As noted previously, CARB will establish a public docket for companies to post the link to their SB 261 reports. The docket will go online on December 1, 2025, and remain active until July 1, 2026. CARB indicated in its August workshop that the window for posting to the docket does not alter the SB 261 requirement that companies publish their SB 261 report on their website by January 1, 2026.

This article is part of a series on the California climate disclosure laws. For more information, see our previous articles: 'California Climate Disclosure Laws: CARB Refines Applicability, Deadlines, and Scope,' 'California Climate Disclosure Laws: CARB Affirms Reporting Deadlines, but Delays Regulations that Would Clarify Applicability,' and 'California Bills to Require Greenhouse Gas Emissions Reporting From Companies Doing Business in the State.'

In its July FAQs and the August workshop, CARB stated that, for the first reporting period for SB 261, it is looking for 'good faith reporting' based on the most recent, best available information, which could include data for fiscal years 2023/2024.