California closed out the year with two notable updates to its climate-risk disclosure law, SB 261 (Climate-Related Financial Risk Reporting). While neither changes the underlying statutory requirements, both actions from the California Air Resources Board (CARB) provide clarity for companies preparing for compliance and considering voluntary reporting.

1. CARB Confirms It Will Not Enforce the January 1, 2026 SB 261 Deadline During the Appeal

CARB issued a new SB 261 Enforcement Advisory clarifying that the agency will not enforce any requirement for companies to submit Climate-Related Financial Risk Reports by the statutory January 1, 2026 deadline.

Why?
The Ninth Circuit’s November 18, 2025 preliminary injunction—which pauses enforcement while SB 261 is under appeal—remains in effect. CARB reaffirmed that covered entities (those with >$500M in annual revenue doing business in California) will not face penalties for missing the 1/1/26 deadline as long as the injunction is active.

CARB also stated it will issue further instructions—including a revised reporting date—after the litigation concludes. This is consistent with CARB’s earlier posture but offers welcome confirmation for companies planning 2026 reporting cycles.

Executive takeaway:
Companies should continue preparing their climate-risk processes and governance, but the formal deadline is paused until the courts resolve the appeal.

2. CARB Opens a Public Docket for Voluntary SB 261 Submissions

Separately, CARB launched the SB 261 voluntary reporting docket for companies that wish to submit their Climate-Related Financial Risk Report ahead of the delayed deadline.

Entities choosing to voluntarily submit must:

• Upload a company statement on official letterhead using the file naming format:
  CompanyName_Statement_date

• If submitting a consolidated report, list all subsidiaries included.

• Ensure the report is also posted publicly on the company’s website.

• Provide a link to the publicly posted report in the “Message” field of the docket submission page.

This process mirrors other voluntary disclosures CARB has hosted and signals that the state is prepared to receive reports even during the injunction.

Executive takeaway:
Voluntary reporting is now possible—and may be valuable for companies seeking to demonstrate climate-risk readiness to investors, regulators, and business partners, even though enforcement is on pause.

Why These Updates Matter for ESG and Compliance Leaders

These two actions do not change the substance of SB 261. Instead, they:

• Confirm temporary non-enforcement while the legal process plays out.

• Provide a formal channel for voluntary submissions, which may help companies manage stakeholder expectations during regulatory uncertainty.

• Reinforce that CARB remains committed to the law’s long-term implementation—even if the timeline shifts.

For large enterprises already building climate-risk processes aligned with frameworks like TCFD (Task Force on Climate-Related Financial Disclosures) or ISSB IFRS S2, this update suggests that preparation should continue uninterrupted, but without near-term penalty exposure.