Supported by The Climate Center

SB 261 (Stern) Financial risk related to the climate crisis

COP26 Mobilization in Quezon City, Philippines
COP26 Mobilization in Quezon City, Philippines. Image by AC Dimatatac \

Existing law, The California Global Warming Solutions Act of 2006 (Act) requires the State Air Resources Board (ARB) to adopt regulations to require the reporting and verification of statewide greenhouse gas (GHG) emissions and to monitor and enforce compliance with the Act. The Act requires the ARB to make available, and update at least annually, on its website the emissions of GHGs, criteria pollutants, and toxic air contaminants for each facility that reports to the ARB.

SB 261, sponsored by California Environmental Voters, will require, on or before December 31, 2024, and annually thereafter, a covered entity (any business entity with total annual revenues in excess of five hundred million dollars that does business in California) to prepare a climate-related financial risk report disclosing the entity’s climate-related financial risk and measures adopted to reduce and adapt to climate-related financial risk disclosed.

This bill will require the covered entity to submit to the ARB, and make available to the public on its own website, a copy of the report and to submit to the Secretary of State a statement affirming, not under penalty of perjury, that the report discloses climate-related financial risk.

This bill will require the ARB to contract with a climate reporting organization to annually prepare a public report that contains specified information, including a review of the disclosure of climate-related financial risk contained in climate-related financial risk reports and an analysis of the systemic and sector-wide climate-related financial risks facing the state. The bill will authorize the Attorney General to bring a civil action against a covered entity for civil penalties in an amount up to $500,000 for each violation of these provisions.

Status: Signed by Governor Newsom on October 7, 2023.

Full bill text and related info.

Bill Author