Senator Henry Stern SB 261 Fact Sheet Page 1
Contact: Gil Topete at (916) 651-4027 or [email protected] SB 261 (STERN)
FINANCIAL CLIMATE RISK DISCLOSURES
Updated: 03/9/23
SUMMARY
Requires a “covered entity” to annually prepare
a climate -related financial risk report and
submit the report to the state.
THE PROBLEM
The detrimental effects of climate change pose
significant risk to the long-term economic
success of our state , impact s the health and
livelihood of the communities in which we live,
and disrupt the value chains on which we and
California businesses rely.
Material and financial risks associated with
climate change have the potential to destabilize
capital markets and le ad to serious negative
consequences for financial institutions and the
broader economy. Ignoring these risks can be
very costly, while finding the path towards a
net zero future can offer economic stability ,
opportunity, and growth for California. Many
corporations across the US are taking the lead
in voluntarily disclosing their climate risk ;
however, informed and smart decision making
on climate change is being hampered by
inadequate and incomplete climate risk
disclosures.
For the state’s economy to prosper, and to
safeguard the people of California, more and
higher quality climate risk disclosure s from
corporations are needed.
BACKGROUND
In 2018, California’s Fourth Climate Change
Assessment1 warned that California is more
susceptible to the growing effects of climate
1 CA's Fourth Climate Change Assessment; Statewide Summary Report. January 16, 2019
change than other parts of the country because
of several vulnerable climate regions it
contains. For example, California’s coastal
region will disproportionately experience the
effects of sea level rise , including coastal
erosion and encroachment on densely
populated areas. Given this unique
vulnerability, it is essential for California to
understand the risks created by climate change
and the opportunit ies corporations have to take
responsibility for these risks and collectively
drive towards solutions to ensure California’s
economy grows and remains climate resilient.
In 2017, the international Financial Stability
Board’s Task Force on Climate -Related
Financial Disclosures (TCFD), consisting of 31
members from around the world , released
climate-related disclosure recommendations2
for companies , which has become the leading
international standard for climate disclosure
across industries.
In the US, i nvestor demands have also spurred
the Securities & Exchange Commission ( SEC)
to propose its own climate disclosure rules for
publicly listed companies in 2022 . Still,
disclosure is needed from all leading
companies, including the private sector.
California is primed to lead the way in
requiring companies to disclose th eir climate
risk by setting the bar on TCFD -aligned
disclosure, filling in the gaps from proposed
SEC rules, and providing a blueprint for other
US states to drive disclosure from non -SEC
regulated entities.
2 Recommendations of the Task Force on Climate-related Financial Disclosures. June 15, 2017
Senator Henry Stern SB 261 Fact Sheet Page 2
Contact: Gil Topete at (916) 651-4027 or [email protected]
SOLUTION
Standardized, comprehensive, and mandatory
climate risk disclosure is needed at the state
level to provide robust and actionable
information to enable informed decision
making on the climate crisis’s systemic impacts
on capital markets. Accurate and timely
disclosure of how climate risks impact a
company's finances will enable the
transparency key to a well-functioning
economy. Disclosure will help mitigate the risk
of over- or undervaluing investments that could
slow economic growth and progress towards a
healthier, more resilient, carbon-neutral future.
In addition, while changes associated with a
transition to a zero-carbon economy present
significant risk, they also create significant
opportunities for organizations focused on
climate change mitigation and adaptation
solutions.
SB 261 will require covered entities , as
defined, to prepare a n annual climate-related
financial risk disclosure report and submit the
report to the state . These reports will provide
climate-related financial risk information and
planning in accordance with the existing TCFD
recommendations and framework. The
Advisory Group established by Executive
Order N -19-19 will then conduct an annual
assessment of statewide disclosures and
climate-related financial risk , as well as seek
input from stakeholders on recommendations to
improve the disclosure process.
SPONSOR
Ceres
SUPPORT
350 Bay Area Action
350 Conejo / San Fernando Valley
350 Humboldt
350 Juneau
350 Marin
350 Sacramento
350 South Bay Los Angeles
350 Southland Legislative Alliance
350 Ventura County Climate Hub
Accelerate Neighborhood Climate Action
Alter Eco
Americans for Financial Reform
Avocado Green Brands
Ban SUP (Single Use Plastic)
Businesses for a Livable Climate
California Environmental Voters
Call to Action Colorado
CALPIRG
CalSTRS
CatholicNetwork US
CatholicNetwork US (Colorado)
Citizens’ Climate Lobby, Sacramento/Roseville
Chapter
Climate 911
Climate Action California
Climate Action Campaign, Humboldt Unitarian
Universalist Fellowship
Climate Hawks Vote
CO Businesses for a Livable Climate
Coalition for Clear Air
Coastside Jewish Community
Community for Sustainable Energy
Conejo Climate Coalition
Cool Planet Group of First Presbyterian
Church, Palo Alto
Divest Oregon
DSM North America
East Valley Indivisibles
Elders Climate Action NorCal Chapter
Elders Climate Action SoCal Chapter
Environment California
Extinction Rebellion San Francisco Bay Area
Fossil Free California
Friends Committee on Legislation of California
Friends of the Earth
Giniw Collective
Glendale Environmental Coalition
Greater New Orleans Housing Alliance
Grove Collaborative
Honor the Earth
Senator Henry Stern SB 261 Fact Sheet Page 3
Contact: Gil Topete at (916) 651-4027 or [email protected] I-70 Citizens Advisory Group
Indivisible Alta Pasadena
Indivisible Ambassadors
Indivisible Ambassadors (Colorado)
Indivisible CA: StateStrong
Indivisible California Green Team
Larimer Alliance for Health, Safety and
Environment
Leading Change Consulting and Coaching
Littleton Business Alliance
Los Angeles Climate Reality Project
Mayfair Park Neighborhood Association Board
Mental Health & Inclusion Ministries
Mind Eye World
Montbello Neighborhood Improvement
Association
Mothers Out Front California
Natural Resources Defense Council (NRDC)
North Range Concerned Citizens
Oil & Gas Action Network
Peninsula Interfaith Climate Action (PICA)
Public Citizen
RapidShift Network
San Fernando Valley Climate Reality Project
San Francisco Bay Physicians for Social
Responsibility
Santa Cruz Climate Action Network
Save EPA (former employees)
Sierra Club CA
Sierra Nevada Brewing Company
Small Business Alliance
SoCal 350 Climate Action
SolidarityINFOService
Southwest Organization for Sustainability
Spirit of the Sun, Inc.
Stand.earth
System Change Not Climate Change
The Climate Center
The Green House Connection Center
The Phoenix Group
The Vessel Project of Louisiana
Third Act
Transformative Wealth Management, LLC
Trinity Respecting Earth and Environment
(TREE)
Union of Concerned Scientists
Unite North Metro Denver
Urban Ecology Project
Wall of Women
Western Slope Businesses for a Livable
Climate
Womxn from the Mountain
Working for Racial Equity