Governance
How the board and management oversee climate-related risks and opportunities.
California SB 261 · Climate-Related Financial Risk Act
California SB 261 compliance, made simple
Everything you need to publish your climate-related financial risk report under California SB 261: who must comply, the TCFD / IFRS S2 structure, deadlines and the current legal status. Built on the same data as your SB 253 disclosure.
- Report aligned with TCFD and IFRS S2, across the four pillars
- Reuse your SB 253 emissions data for the metrics pillar
- Cover SB 253 and SB 261 together, from one source of truth
Trusted by teams preparing for California climate disclosure
California SB 261 at a glance
$500M+Annual revenue to be in scope
TCFD / IFRS S2Reporting framework
Every 2 yearsBiennial report
$50KMaximum penalty per year
What is California SB 261?
California SB 261, the Climate-Related Financial Risk Act, requires large companies doing business in California to publish a climate-related financial risk report every two years. The report describes the climate risks the company faces and the measures it has adopted to reduce and adapt to them.
It was signed in 2023 alongside SB 253, amended by SB 219 in 2024, and is overseen by the California Air Resources Board (CARB). Where SB 253 is about the numbers, SB 261 is about the story behind them.
Who must comply with SB 261?
Any U.S. company, public or private, with more than $500 million in total annual revenue that does business in California. Insurance companies are exempt because they face separate climate-risk rules.
Because the threshold is half of SB 253's, roughly 10,000 companies are estimated to be in scope, and every SB 253 filer is also caught by SB 261.
What the SB 261 report must contain
A TCFD / IFRS S2-aligned report structured around four pillars.
Strategy
The actual and potential impacts of climate risks on the business, strategy and financial planning.
Risk management
How the company identifies, assesses and manages climate-related risks.
Metrics & targets
The metrics and targets used to assess and manage risks, including GHG emissions.
SB 261 deadlines & legal status
The reporting date is in flux after a court challenge. Here is where things stand.
- Jan 1, 2026Statutory first deadline for the climate risk report.
- Nov 2025Ninth Circuit injunction pauses enforcement pending a legal challenge.
- NowCARB will not enforce the January deadline and is expected to publish new dates after the appeal.
- ThenBiennial reporting cycle continues every two years.
Enforcement is paused, not cancelled. CARB can impose penalties of up to $50,000 per year, so keep your report ready for short-notice filing.
TCFD or IFRS S2: which framework?
SB 261 lets you report under the TCFD recommendations (2017 or later) or the IFRS S2 / ISSB sustainability standard. IFRS S2 is built on the TCFD structure, so both share the same four pillars. A report prepared for another government or regulated-exchange requirement (such as CSRD) can also satisfy SB 261.
CARB explicitly recognizes these framework choices, which lets companies at different maturity levels comply with what they already produce.
How to build the report
SB 261 is a narrative report, not a spreadsheet. You describe governance, run a climate risk and scenario assessment for strategy, document your risk-management process, and report your metrics and targets, drawing on your GHG inventory.
You must post the report publicly on your website and submit the link to CARB, identifying your framework and disclosing any gaps and improvement plans. Convene finance, risk, legal and sustainability early; the hardest inputs are cross-functional, not technical.
Does SB 261 apply to you?
The threshold is lower than SB 253. Pick the profile closest to your company.
U.S. company over $500M doing business in California
If your entity has more than $500 million in annual revenue and does business in California, you are in scope for SB 261, even if you are below the $1 billion SB 253 threshold.
Over $1B: subject to both laws
Companies above $1 billion must file both the SB 253 emissions disclosure and the SB 261 risk report. Treating them together avoids duplicated data work.
Insurance businesses are exempt
SB 261 explicitly exempts businesses in the insurance sector, which are already subject to separate climate-risk requirements from the Department of Insurance.
You already publish climate risk
If you already report under TCFD, IFRS S2 or CSRD, a compliant report can satisfy SB 261. The task becomes formatting and filing, not building from scratch.
SB 261 vs SB 253: how they fit together
Two halves of California's corporate climate disclosure. Most large companies need both.
SB 261 is the qualitative half: a narrative on climate risk and how you manage it. SB 253 is the quantitative half: your Scope 1, 2 and 3 emissions inventory. They reinforce each other, because the emissions data from SB 253 populates the metrics and targets pillar of your SB 261 report. Building them separately duplicates work; building them together gives you one aligned dataset.
| SB 261 | SB 253 | |
|---|---|---|
| What it is | Climate financial risk report | GHG emissions disclosure |
| Revenue threshold | Over $500M | Over $1B |
| Nature | Qualitative (narrative) | Quantitative (data) |
| Framework | TCFD / IFRS S2 | GHG Protocol |
| Frequency | Biennial | Annual |
| Max penalty | $50,000 / year | $500,000 / year |
Also over $1B? You need both. California SB 253 explained →
How to get SB 261-ready, step by step
Confirm scope and pick a framework
Check the $500M threshold and choose TCFD or IFRS S2. Both are accepted by CARB; IFRS S2 builds on TCFD.
Convene a cross-functional team
Bring together sustainability, finance, enterprise risk, legal and internal audit. SB 261 is a narrative built on financial and risk inputs.
Draft against the four pillars
Write governance, strategy, risk management, and metrics & targets. Disclose gaps and improvement plans where data is still maturing.
Publish and file with CARB
Post the report on your website and submit the link to CARB. Then plan your next biennial update.
Build your SB 261 report on solid data with Dcycle
A risk report is only as credible as the metrics behind it. Dcycle gives you that foundation.
01
Audit-ready metrics pillar
Your Scope 1, 2 and 3 inventory, structured and traceable, ready to feed the metrics and targets section of your report.
02
One dataset, both laws
Cover SB 261 and SB 253 from a single source of truth, with no duplicated data collection.
03
Multi-framework by design
The same data supports TCFD, IFRS S2, CSRD, CDP and EcoVadis. See supported frameworks.
Free Dcycle guide
Download the California SB 261 compliance guide
Who must comply, the TCFD / IFRS S2 structure, the four pillars, the current legal status and a step-by-step path to a filing-ready climate risk report.
Free · PDF · 2026 edition
SB 261California SB 261 Compliance Guide2026 edition
Go deeper on California climate disclosure
Sister law
California SB 253
The emissions-disclosure half of California climate reporting.
Read more →DataScope 3 & climate data
The emissions data that feeds your metrics pillar.
Read more →FrameworksFrameworks Dcycle supports
TCFD, IFRS S2, CSRD, CDP and more from one dataset.
Read more →DemoTalk to an expert
See how to cover SB 261 and SB 253 together.
Read more →Frequently asked questions about California SB 261
What is California SB 261?
California SB 261, the Climate-Related Financial Risk Act, requires large companies doing business in California to publish a climate-related financial risk report every two years, describing the climate risks they face and how they manage them. It is overseen by the California Air Resources Board (CARB).
Who must comply with SB 261?
U.S. companies (public or private) with more than $500 million in total annual revenue that do business in California. Insurance companies are exempt. Because the threshold is lower than SB 253, roughly 10,000 companies are in scope.
What must the SB 261 report contain?
A climate-related financial risk report aligned with the TCFD framework (2017 or later) or IFRS S2 / ISSB standards. It is structured around four pillars: governance, strategy, risk management, and metrics & targets, plus the measures adopted to reduce and adapt to identified risks.
How often is the SB 261 report due?
It is a biennial report (every two years). The company must post it publicly on its website and submit a link to CARB. Companies may disclose gaps and improvement plans.
When is the SB 261 deadline?
The statutory first deadline was January 1, 2026. A Ninth Circuit injunction and a CARB enforcement notice have paused enforcement while a legal challenge proceeds; CARB is expected to provide new dates.
What are the penalties for SB 261?
CARB can impose administrative penalties of up to $50,000 per reporting year for non-compliance.
What is the difference between SB 261 and SB 253?
SB 253 is quantitative: it requires GHG emissions disclosure (Scope 1, 2 and 3) for companies over $1 billion in revenue. SB 261 is qualitative: it requires a climate-related financial risk report (TCFD / IFRS S2) for companies over $500 million, filed every two years. Companies over $1 billion are typically subject to both.
Can we use our CSRD or TCFD report for SB 261?
Yes. A report prepared under TCFD, IFRS S2, or another government or regulated-exchange requirement can satisfy SB 261, as long as it covers the required disclosures. You can reuse existing climate risk work rather than starting over.
Does SB 261 require emissions data?
SB 261 is risk-focused, but the metrics and targets pillar draws on your emissions inventory. The Scope 1, 2 and 3 data you build for SB 253 feeds directly into your SB 261 metrics, which is why it pays to treat both together.
How can Dcycle help with SB 261?
Dcycle gives you the emissions and climate data foundation your SB 261 report relies on, structured and traceable, and helps you align the metrics and targets pillar with your SB 253 disclosure so both filings draw from one source of truth.
Talk to an expert
Cover SB 261 and SB 253 together
In 30 minutes we show you how to build the data foundation for your climate risk report and your emissions disclosure at once.
- Where you stand on SB 261 and SB 253
- One dataset for both California laws
- A no-obligation 30-minute call
Get your SB 261 climate risk report ready
Download the guide or book a demo and build both California disclosures from one source of truth.