California’s SB 261 may be currently enjoined, but that isn’t stopping many companies from complying with early voluntary reporting. SB 261 requires in-scope companies to disclose material climate-related financial risks. PwC recently analyzed close to 100 voluntary reports. These are the trends they identified:
- “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.”
The authors identify 63% of voluntary respondents as first-time climate risk reporters. While the early reports lacked depth beyond the core TCFD disclosure pillars, they do offer a window into how companies are approaching SB 261. Even without its mandatory provisions in place, SB 261 is driving risk disclosures. While some companies did not submit full voluntary reports, we’re still seeing good faith efforts at early reporting.
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