SB 261 Explained: California's Climate-Related Financial Risk Report (2026 Status)
SB 261 requires US companies with more than $500 million in annual revenue that do business in California to publish a climate-related financial risk report every two years, using TCFD or ISSB. The first reports were due 1 January 2026, but a Ninth Circuit injunction has paused enforcement since November 2025.
Last updated 2 November 2026 · By Ella Sustainability Team
Get startedWhat is SB 261?
Who has to report under SB 261?
SB 261 requirements at a glance
| Requirement | What it means | Status |
|---|---|---|
| Climate-related financial risk report | Disclose climate-related financial risks and the measures taken to reduce and adapt to them | Required every two years |
| Framework | TCFD recommendations, or ISSB (IFRS S2) or an equivalent framework | Comply or explain any gaps |
| Publication | Make the report available on your own website | Each reporting cycle |
| First deadline | Originally 1 January 2026 | Paused by Ninth Circuit injunction; no new date set |
| Consolidation | Report can be prepared at parent company level | Allowed |
| Annual fee | Separate SB 261 fee under CARB's Initial Regulation | Notices by 10 December each year |
| Maximum penalty | Administrative penalty for non-compliance | Up to $50,000 per reporting year |
The Ninth Circuit injunction: where SB 261 stands in November 2026
What goes into an SB 261 report
How to prepare for SB 261
How Ella helps with SB 261 and SB 253
How Ella helps
ESG reporting software
Climate risk, CDP and framework reports built from one collected, audit-ready data set.
ESG strategy software
Materiality, targets and transition plans that feed straight into climate risk reporting.
Carbon accounting software
Scope 1, 2 and 3 with a source on every number, ready for assurance and SB 253.
Related resources
SB 253 Explained: California's Climate Disclosure Law for Scope 1, 2 and 3 Emissions (2026)
SB 253 requires US public and private companies with more than $1 billion in annual revenue that do business in California to report Scope 1 and 2 emissions each year, then Scope 3 from 2027, using the GHG Protocol. The first Scope 1 and 2 reports are due by 10 November 2026.
Scope 1 and 2 emissions explained: definitions, examples and how to calculate them
Scope 1 emissions come from sources your company owns or controls, such as gas boilers, company vehicles and refrigerant leaks. Scope 2 emissions come from the electricity, heat, steam or cooling you buy. You calculate both by multiplying activity data, like kWh or litres, by an emission factor, then report Scope 2 two ways: location-based and market-based.
CDP reporting explained: how scoring works and why the data is the hard part
CDP reporting means answering CDP's annual environmental questionnaire, usually because an investor or a large customer asked you to. Responses are scored from D- to A across four levels. In the 2026 cycle the scoring deadline was 16 September, and final responses close in the week commencing 26 October.
Best ESG Software in 2026: 11 Platforms Compared
The best ESG software depends on who is asking you for data. Workiva and Sweep suit enterprises filing CSRD or ISSB reports. Watershed and Persefoni suit carbon-heavy enterprises. Ella suits sustainability teams handling EcoVadis, CDP, SECR and customer requests: AI-native ESG software that collects, cleans and reports your data for you.
Frequently Asked Questions
What is SB 261?
SB 261, the Climate-Related Financial Risk Act, is a California law requiring US companies with more than $500 million in annual revenue that do business in California to publish a climate-related financial risk report every two years.
Is SB 261 in effect?
SB 261 is law, but its enforcement has been paused since 18 November 2025 by a Ninth Circuit injunction pending appeal. CARB has said it will not enforce SB 261 while the injunction stands and will set a new reporting date afterwards.
What is the SB 261 penalty?
Administrative penalties are capped at $50,000 per reporting year under the statute.
What framework should an SB 261 report use?
The statute points to the TCFD recommendations, and also accepts reports prepared under ISSB standards (IFRS S2) or an equivalent framework. Companies must explain any gaps in their disclosure.
Can a parent company file one SB 261 report for its subsidiaries?
Yes. The report can be prepared at the consolidated parent company level, and a subsidiary that qualifies on its own does not need to publish a separate report.
What is the difference between SB 253 and SB 261?
SB 253 requires annual reporting of Scope 1, 2 and 3 emissions for companies above $1 billion in revenue. SB 261 requires a biennial climate-related financial risk report for companies above $500 million. SB 253 is not affected by the injunction.
Should we just pay the SB 261 fine instead of reporting?
The $50,000 cap can look cheaper than compliance, but the data and governance work behind an SB 261 report also feeds SB 253, CDP, customer RFPs and lender requests. Most companies will need that work regardless.
What software helps with SB 261?
ESG reporting software such as Ella collects the emissions and risk data, supports a climate risk and materiality assessment and drafts disclosures against TCFD or IFRS S2 from one audit-ready data set.