{{item.videoDuration}}
{{item.title}}
{{item.text}}
{{item.videoDuration}}
{{item.text}}
Key takeaways:
- PwC analyzed close to 100 voluntary reports that were available on California Air Resources Board’s public docket as of January 2026.
- For many companies, this is new territory: 63% of voluntary submissions were first-time climate risk reports.
- Most early filers report real climate risk exposure: physical and transition threats are the rule, not the exception.
- Target-setting is not universal: 59% of companies disclose GHG reduction targets.
Over the last few years, PwC has been monitoring how companies have been responding to the new requirements in the EU. Our focus now turns to California’s SB 261, which centers on disclosures of climate-related financial risks and related mitigation measures. While the California Air Resources Board (CARB), the agency responsible for enforcement of SB 261, recently approved regulations to operationalize the state’s climate-related disclosure laws, enforcement is currently subject to a court-ordered stay.
Until the court case is resolved, CARB has indicated that companies may submit reports on a voluntary basis. As of January 30, 2026, approximately 94 submissions were available on CARB’s public docket. While these submissions may not necessarily reflect how companies would have responded in the absence of the injunction, they may provide some insights into how organizations are approaching disclosures about climate-related risks, like the ones required by SB 261. Our review of these initial voluntary submissions reveals:
- More companies identify significant climate-related risks than those that don’t: Most companies disclose having both physical and transition climate risks, as well as related opportunities, with only a small minority reporting no significant risks or opportunities.
- Scenario analysis approaches indicate a range of maturity: While qualitative scenario analysis is most common, a notable 21% of companies analyzed are already using quantitative techniques, reflecting early signs of maturity and deeper engagement with climate risk modeling.
- Metrics and targets disclosures vary in detail: The vast majority of early submissions report Scope 1 and Scope 2 GHG emissions, and over half also disclose Scope 3 emissions. However, only about 59% disclose clear GHG reduction targets, and the depth of information varies, highlighting that while GHG metrics are foundational approaches to target-setting and broader climate-related metrics remain uneven across reporters.
Taken as a whole, these voluntary submissions also make clear that approaches vary across reporters, reflecting differences in experience, data availability, and internal processes. As reporting requirements are finalized and implemented, disclosures may change in scope, consistency, and level of detail.
About the population of reports reviewed
The initial group of reports reviewed span several industries, with Industrials and Services (34%) accounting for the largest share of early submissions. California’s laws require both private and public companies to comply with its disclosure requirements. While public and private companies are represented among early voluntary reporters, private companies modestly outnumbered public companies in this initial sample.
PwC’s analysis also revealed that 63% of these early submissions represent a company’s first climate-related risk report. Many of the first-time disclosures were submitted by private companies that had not previously published standalone climate risk reports.
Voluntary disclosures largely don’t go beyond the TCFD
California’s SB 261 requires companies to provide disclosures in accordance with the recommended framework and disclosures of the Task Force on Climate-related Financial Disclosures (TCFD). While it gives companies the flexibility to align disclosures with various climate disclosure frameworks, including the climate standard within the International Sustainability Standards Board (ISSB), most early reporters (91%) structured their voluntary disclosures using the TCFD recommendations. Even as some organizations may anticipate more rigorous regulatory requirements in other jurisdictions, TCFD remains a common reference and/or starting point for climate-related financial risk reporting.
In this set of voluntary reports, 73% of companies submitted standalone climate-related financial risk reports, while a smaller subset leveraged climate risk disclosures within broader sustainability or other reporting. Additionally, 34% of companies note that they have not included all disclosures recommended by the TCFD, citing exclusions such as quantitative scenario analysis, GHG emissions, and other metrics.
Reporting periods vary across these reports, in line with CARB’s minimum guidance allowing flexibility in defining reporting timeframes during the voluntary submission period. While some reports did not specify the reporting period, nearly 65% of the companies reported either calendar or fiscal year 2024 data and were less likely to include 2025 information (26%), which could be an indication of the time needed to collect and report non-financial data given the submission early in 2026.
Key findings across the TCFD’s four disclosure pillars
The TCFD framework groups climate-related disclosure recommendations into four pillars: governance, strategy, risk management, and metrics and targets. These pillars are designed to provide decision-useful disclosures on how an organization may be impacted by climate-related risks and opportunities. We assessed how the first wave of companies responded to each pillar’s recommendations:
Governance
Ninety-one percent of companies report that both the board and management oversee climate-related risks. The board often shares oversight responsibility with several committees and subcommittees including audit (37%), corporate governance (29%), sustainability (20%), and risk (16%). Just 10% of companies report no board level involvement. Among companies describing board oversight, the structure of engagement varies across committees that meet at various frequencies throughout the year, as shown below. Many companies describe goal setting and business continuity planning as the main climate-related activities overseen by the board. As for management oversight, 66% of companies report that their sustainability function oversees climate-related risks.
Strategy
Most reporters identify both physical and transition risks. Commonly cited physical risks include increased severity of extreme weather events, rising mean temperatures, and changes in precipitation patterns. Frequently referenced transition risks include regulatory mandates on products, increased costs of lower-emissions technology, rising raw material costs, and rising stakeholder expectations. Most reporters also referenced opportunities consistent with the TCFD’s focus on risks and opportunities, with the most cited opportunity being the cost savings from the use of lower-emission energy sources, more efficient production and distribution processes, and the market advantage of the development or expansion of lower-emissions goods and services. The identification of opportunities is consistent with other PwC research findings that show companies are gaining valuable insights from the non-financial data they are collecting and analyzing. A small percentage (7%) did not identify any significant climate-related risks or opportunities.
Beyond risk identification, many companies provide context around how risks are evaluated, in alignment with TCFD recommendations. Seventy-two percent of reports include commentary on the significance or materiality of disclosed risks, with 68% of reports mentioning the processes for how risks are prioritized and/or materiality determinations are made including risk assessments. In addition, 40% of reports disclose that the company has a transition plan, indicating varying levels of detail around how identified risks and opportunities may be addressed over time.
With respect to scenario analysis, approaches vary across early submissions. Most reporters (56%) focused on qualitative analysis, with one in five (21%) also providing quantitative metrics. When specific scenarios are disclosed, companies most frequently reference scenarios from recognized third-party providers (e.g., Intergovernmental Panel on Climate Change (IPCC)).
A subset of companies (13%) quantified financial impacts associated with climate-related risks. When quantitative metrics are provided as part of scenario analysis, disclosures reference measures such as asset exposure, changes in energy prices, and historical loss due to extreme weather.
Risk Management
Seventy-seven percent of reporters describe integrating climate-related risk considerations into their existing enterprise risk management (ERM) processes. When integration is described, companies reference incorporating climate risks into established risk identification, assessment, and monitoring cycles. The level of detail provided on methodologies, thresholds, and escalation processes vary across disclosures.
Metrics and targets
The TCFD recommendations ask companies to disclose greenhouse gas emissions (Scope 1 and Scope 2 emissions, and if appropriate, Scope 3 emissions) as well as any metrics and targets used to manage material climate-related risks. In the set of companies observed, 76% disclose Scope 1 and Scope 2 emissions and 56% disclose Scope 3 emissions. Among companies reporting Scope 3, the categories disclosed vary, although Category 1 (Purchased Goods and Services), Category 3 (Fuel- and energy-related activities), and Category 6 (Business Travel) are most referenced. Nearly six in ten reporters (59%) disclose GHG reduction targets, with approaches to target-setting and the level of detail provided varying across submissions.
In addition to emissions, some companies disclose other climate-related metrics, including measures related to energy efficiency, fleet electrification, renewable energy consumption, and waste and water management. Disclosure of these non-GHG metrics is less consistent across the set of voluntary reports.
What early filings reveal and what comes next
Not all of the submitted reports were prepared specifically for compliance with SB 261, and in fact, some reports indicated that changes are likely once reporting is mandated. The initial voluntary submissions, however, may provide an indication of how some companies are approaching climate-related financial risk disclosures.
Consistent with the broader landscape of climate risk reports informed by the TCFD guidelines, these reports show a range of breadth and depth, which may reflect differences in data availability, strategy, and internal governance structures, or may reflect a company’s approach to transparency and minimum requirements.
It's also important to note that CA SB 261 is only part of a rapidly developing landscape of climate risk and sustainability reporting requirements. The disclosure of climate-related financial risk and GHG emissions are central to multiple regulatory frameworks worldwide. Given the overlapping disclosure obligations organizations face, efficiencies can be gained by leveraging common data sources where applicable. With CA SB 261 grounded in the TCFD guidelines—which also underpin other regulatory requirements such as ESRS and the ISSB’s IFRS S2—companies may be able to leverage centralized data collection processes and controls, reducing redundancies and fostering greater consistency in their disclosures.
PwC has developed a 12-month roadmap designed to help companies lay a strong reporting foundation, operationalize reporting processes, and effectively communicate sustainability-related disclosures. By following this guidance, companies can be proactive and develop a forward-looking reporting strategy amid evolving regulations.
Sustainability and ESG services
PwC can help you build a reporting strategy.
Sustainability reporting
Key insights on global sustainability reporting regulations.
{{filterContent.facetedTitle}}
{{contentList.loadingText}}
{{contentList.loadingText}}
Contact us
Follow us
