California Issues Further Guidance For Climate Disclosures

Last week, on September 2, 2025, the California Air Resources Board announced that it had “released draft guidance to assist reporting entities in complying with the Climate Related Financial Risk Disclosure Program.”  This draft guidance had been “discussed at the August 21, 2025 workshop,” and “is intended to be used as a starting point for reporting entities.”  However, the regulator further stated that “this guidance document does not have the force of law.”  In other words, while the guidance may be useful to companies when crafting their response to the regulatory disclosure requirements, it cannot be relied upon absolutely. 

In essence, the bulk of the draft guidance constituted a checklist that could be used when preparing the climate risk report mandated for companies with revenue of more than $500 million.  It identified relevant reporting frameworks (e.g., the TCFD or IFRS), and briefly discussed certain categories of information that are expected: (1) governance; (2) strategy; (3) risk management; and (4) metrics and targets.  The draft guidance also answered a handful of additional questions, including that “most recent/best available data” should be used for the report, rather than calendar year or fiscal year data, specifically, as well as that, depending on the circumstances, a “subsidiary is not required to prepare a separate climate-related financial risk report (if the parent company is reporting on its behalf)."

Overall, the published guidance by the California regulator does not “move the needle” markedly--there are few surprises, and thorny questions of interpretation have not been resolved.  However, the mere fact that this guidance has been published--just weeks after the major legal challenge to the California climate disclosure regime was resolved in favor of the regulations (although that ruling is currently on appeal)--demonstrates that California is pushing ahead with the implementation of this regulatory regime, despite any lingering legal uncertainty.  In effect, California is signaling that its climate disclosure rule will come into force, and likely replace the SEC's moribund regulation as the de facto climate disclosure standard in the United States.