What California's SB 261 Climate Disclosure Law Means for Large Businesses

California has enacted a new climate disclosure law, Senate Bill 261 (SB261), that will take effect one January 1st, 2026. The legislation requires companies with annual revenues exceeding $500 million that do business in California, regardless of where they are headquartered, to publicly report on their climate-related financial risks.

While government agencies and non-profits are exempt, most large private organizations operating in the state will be affected. The regulation introduces formal disclosure requirements designed to increase transparency around how businesses identify, evaluate, and manage climate-related financial impacts.

Speak with our team to explore how climate risk insights can strengthen your compliance readiness and operational resilience.

What the Law Requires

Beginning in 2026, covered companies will be required to publish a Climate-Related Financial Risk Report every two years. The focus of SB 261 is on how climate change affects organizations, rather than how organizations affect the climate. 

In other words, this law is about climate-related financial risk disclosure, not emissions data or sustainability metrics.

Companies must report on two key areas:

• The financial risks they face from climate change. This includes potential threats such as wildfires endangering facilities, droughts affects supply chains, new carbon regulations increasing operational costs, or shifts in market demand that impact fossil-fuel or resource-dependent products.
• The measures they are taking to reduce or adapt to those risks. Examples may include relocating assets, diversifying suppliers, investing in climate resilient infrastructure, or integrating resilience into long-term planning. 

This type of disclosure is often referred to as outside-in reporting, examining how external climate factors influence a company's financial and operational stability.

Reports must be made publicly available, giving investors, regulators, and stakeholders visibility into how organizations are managing and preparing for these risks. 

Why it Matters

SB 261 represents an important step toward integrating climate risk into financial and operational decision-making. For many organizations, this will require a more structured approach to assessing and disclosing the potential impacts of climate change on their operations, supply chains, and long-term strategy. 

Although the reporting process may introduce new administrative responsibilities, it also provides an opportunity to strengthen internal risk management, enhance transparency, and align with global expectations around environmental accountability. 

Preparing for Compliance

For large companies operating in California, preparation should begin well before the 2026 implementation date. The first step is to evaluate existing risk management frameworks and determine how climate-related factors are currently being assessed. From there, companies can develop processes for collecting data, conducting scenario analyses, and documenting mitigation or adaptation strategies.

Organizations that begin this work early will be better positioned to produce accurate, compliant reports and respond to future regulatory or stakeholder requirements. 

Our Partnership with Everbridge: Supporting Your Climate Risk Readiness

At LTT Partners, we work with organizations to translate new regulatory requirements into actionable strategies. Through our partnership with Everbridge, we provide clients with access to advanced climate risk assessment solutions that help identify, quantify, and manage potential climate-related threats across operations, assets, and supply chains. 

Everbridge Climate Risk Assessment platform equips companies with scenario-based modeling tools that pinpoint which climate hazards such as flooding, wildfire, or extreme heat, pose the greatest risk to their business. This forward-looking insight enables organizations to:

• Understand their exposure to climate-related physical and transitional risks.

• Build comprehensive business continuity and resilience plans.

• Integrate climate considerations into enterprise risk management frameworks.

• Demonstrate compliance readiness and proactive leadership.

By combining LTT Partners strategic advisory expertise with Everbridge’s data-driven technology, we help clients approach SB 261 compliance with confidence. Together, we enable businesses not only to meet reporting obligations but to build long-term resilience and credibility in an evolving regulatory environment. 

Looking Ahead

SB 261 reflects a broader shift toward increased corporate transparency and accountability around climate risk. As similar requirements emerge in other jurisdictions, companies that invest early in data-driven assessment and clear disclosure will be better prepared to adapt.

By taking proactive steps today, organizations can ensure they meet California’s 2026 reporting deadline while strengthening their operational resilience and stakeholder trust. 

Connect with LTT Partners to discuss how we can support your climate risk reporting and resilience strategy.