Disclosure focus
The practical emphasis is usually on the organisation as a whole, not just a few high-profile sites. That means looking across relevant operations, assets, supply chains and business activities where climate risk could matter, rather than limiting the discussion to flagship locations or isolated examples.
This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official CARB source.
Prepare
What to collect before drafting
Tick each field as the evidence lands. Owners are the teams that usually hold the source files.
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Capital and investment risk
Treasury / financeCapture the climate-related threats that could affect invested capital, financing decisions, or the value of financial holdings, with a clear note of the affected asset, exposure, and why it matters.
Evidence Risk register, treasury or investment committee papers, portfolio review notes, and scenario analysis outputs.
Watch for Does not reconcile to the investment register or treasury risk log, so the affected holdings are described at the wrong level or left out.
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Customer demand risk
Commercial / salesCapture how climate-related change could alter customer buying patterns, product take-up, or service demand, including which customer groups or channels are affected.
Evidence Commercial forecasts, sales pipeline reviews, customer research, and product planning papers.
Watch for Customer segments are mixed up with overall market demand, so a specific product or channel impact is missed.
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Workforce health risk
Health and safety / HRCapture climate-related threats to worker wellbeing and safety, including the activities, sites, or roles exposed and the nature of the hazard.
Evidence Health and safety assessments, incident logs, site risk reviews, and occupational health reports.
Watch for The assessment is not aligned to the health and safety incident log, so a site, role, or hazard is omitted.
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Market stability risk
Strategy / financeCapture climate-related effects that could disturb wider market conditions or economic performance, and explain the channel through which the business could be affected.
Evidence Macro risk papers, market analysis, finance committee materials, and external economic outlooks.
Watch for The business impact is confused with general market commentary, so the actual transmission path to the company is not identified.
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Operating disruption risk
OperationsCapture climate-related threats that could interrupt day-to-day business activity, including the process, site, or function exposed and the likely disruption.
Evidence Business continuity plans, operational risk logs, site resilience reviews, and incident reports.
Watch for The scope is too broad and does not tie back to the operational risk register, so a specific process or site is missed.
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Physical climate risk
Risk / sustainabilityCapture the material climate hazards that could directly affect assets, sites, or activities, and note whether the issue is acute or longer-lasting.
Evidence Physical risk assessment, asset location maps, insurance reviews, and climate scenario analysis.
Watch for Acute events and longer-term exposure are blended together, so the hazard type and affected location are not clear.
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Supplier disruption risk
Procurement / supply chainCapture climate-related threats to the flow of goods or services from suppliers, including which tier, route, or dependency is exposed.
Evidence Supplier risk assessments, procurement reviews, logistics reports, and continuity plans.
Watch for The supplier list does not reconcile to procurement records, so a critical tier-one or logistics dependency is left out.
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Risk timing bands
Strategy / riskCapture when each climate-related risk is expected to matter, using the organisation’s short, medium, and long planning windows consistently across all risks.
Evidence Risk methodology, planning assumptions, strategy papers, and scenario analysis timeframes.
Watch for The timing bands are applied inconsistently, so a short-term issue is reported as long term or vice versa.
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Transition climate risk
Risk / sustainabilityCapture the material climate-related threats arising from the move to a lower-carbon economy, including the policy, technology, market, or reputation channel involved.
Evidence Transition risk assessment, regulatory watchlists, strategy papers, and scenario analysis outputs.
Watch for The assessment is limited to policy change and misses technology, market, or reputation drivers, so the transition exposure is incomplete.
Before you start
- Have you fixed which parts of the business you are covering here: money and investments, customers, staff wellbeing, markets, day-to-day operations, supply lines, or only the climate risks that matter most?
- Have you agreed the time bands you will use for each risk view, and are they the same ones you will use throughout the draft?
- Can every point you plan to include be traced back to a source note, model, report, or other record you can show later?
- Have you decided whether you are describing weather- and event-driven exposure, change-driven exposure, or both, and are you using the same meaning each time?
- Have you checked that the wording you use matches your organisation’s own operating language, rather than a framework label, so the same issue is not described two different ways?
How to prepare it
Request the data
Request the climate risk evidence from Risk / ERM
Translate the disclosure into an internal business question — then adapt it to your organisation's own language.
What climate-related risks could affect the business, and how are they described across the organisation’s main risk categories and time horizons?
Use your organisation’s own risk language first, then map it to the disclosure categories. For example, ask for the risks your teams already track in risk registers, scenario work, business continuity, or strategic planning, rather than using framework labels in the first ask. Check the official source before sign-off.
Weak request
Please provide the climate-related financial risk disclosure evidence for the reporting period, including physical and transition risks and all material categories.
Why it fails: It uses framework language first, which can force the owner to translate before they can answer. It also does not point to the organisation’s own risk records, so the response may be incomplete or hard to trace back to source documents.
Better request
Please send the latest risk register extract, scenario analysis, or board paper for [reporting period] covering the climate risks your team already tracks for [entity/boundary]. Use your internal risk names first, and include anything that affects investments, customers, people, operations, suppliers, markets, and the time windows you use for planning. Please add the source file, owner, last update date, and a short note on how each risk was assessed.
Formal email template
Subject: Request for climate risk evidence for [reporting period] Hi [name/team], We are preparing the climate risk section for [reporting period] and need your help with the underlying evidence. Please send the latest material you hold on climate-related risks for [entity/boundary], using your own internal risk terms. In particular, please include anything you have on: - risks to investments or capital allocation - risks to customer demand or sales - risks to people health and safety - risks to markets or wider economic conditions - risks to operations and service delivery - physical climate impacts - risks to suppliers and logistics - transition-related risks - the time windows you use for near, mid, and longer term planning For each item, please include the source file or system, the date last updated, the owner, and a short note on how the risk was assessed. If you already have a risk register extract, scenario pack, board paper, or similar, that would be ideal. Please send by [date]. Thanks, [preparer name]
Short Teams / Slack version
Hi [name/team] — could you share the latest climate risk evidence for [reporting period] for [entity/boundary]? Please use your own risk terms and send any register extract, scenario pack, or board paper covering impacts on investments, customers, people, operations, suppliers, markets, and physical/transition risks, plus the time windows used. Please include source, owner, and last update date. Thanks — [name]
Industry examples
Manufacturing
Context. A plant-heavy business with exposed sites, logistics dependencies, and supplier concentration.
Adapted request. Please share the latest operational risk pack for [reporting period] covering weather-related site disruption, equipment damage, utility interruptions, supplier delays, and any transition risks affecting production, logistics, or capital spend. Use the names your operations and risk teams already use, and include the source pack, owner, last review date, and planning horizon.
Example response. A risk register extract listing site flood exposure, heat-related downtime, supplier route disruption, and energy cost sensitivity, with references to the quarterly ERM review and the business continuity tracker.
Financial services
Context. A lender or investor with exposure through portfolios, counterparties, and market conditions.
Adapted request. Please send the latest risk paper for [reporting period] covering climate-related impacts on portfolios, counterparties, market conditions, client demand, and operating resilience. Please use the terms your credit, investment, and risk teams already use, and include the source paper, owner, review date, and the time windows used in planning.
Example response. A committee paper summarising portfolio sensitivity to flood and heat exposure, client sector demand shifts, and transition pressures on selected counterparties, with links to scenario analysis and the risk dashboard.
Draft your disclosure
Notes that turn data into a disclosure
LRA training templates — adapt them to your organisation, and check the official source before sign-off.
Method note
The disclosure should explain the basis used to identify and group climate-related financial risks, including how the organisation distinguished physical from transition exposures and how it assigned them to short, medium and long time periods.
Context note
The figures should help readers understand where climate-related financial risk is concentrated, which parts of the business or value chain are most exposed, and whether the main concerns are immediate or longer dated.
Fluctuation statement
If the profile changes from one period to the next, the reporter can note whether that reflects a revised assessment, a change in business activity, updated climate assumptions, or movement in the timing or severity of the risks.
Content index entry
SB261-CLIMATE-RISK Climate-related financial risk disclosure — [location / page] / [notes]Download Centre
Preparation tools & forms
Download preparation tools for SB261-CLIMATE-RISK with free verified email access for 24 hours. Source-report links remain public.
Check
For each claim, check the evidence
We based the coverage figure on the operations and activities we actually reviewed, and we can show how we decided what was in and out.
Risk An assurer will test whether the boundary was set consistently, whether exclusions were deliberate, and whether the figure could be overstated or understated by selective coverage.
Evidence to check Boundary memo, inclusion/exclusion list, management sign-off, source population listing, and any reconciliation between the reviewed population and the reported figure.
We used the same reporting approach across the disclosed areas, and we can point to the framework note that guided how the information was assembled.
Risk An assurer will check whether the preparation basis was applied consistently and whether the report really follows the stated reporting approach rather than a mix of methods.
Evidence to check Reporting methodology paper, framework mapping, internal guidance, version-controlled draft, and evidence of review against the chosen reporting basis.
We checked the disclosed area for climate-related financial exposures affecting people and invested assets, and we would note clearly if nothing material was found.
Risk An assurer will probe whether the assessment covered the right population and asset base, whether materiality was judged consistently, and whether a ‘none identified’ statement is supportable.
Evidence to check Risk assessment workbook, materiality criteria, workshop notes, asset and workforce lists, and sign-off from the relevant business owners.
We documented the actions already in place to lessen the exposure and to adjust our plans, and we can trace each action back to the risk it was meant to address.
Risk An assurer will test whether the response measures are real, current, and linked to the risks described, rather than being generic or aspirational.
Evidence to check Action tracker, project plans, control descriptions, budget approvals, implementation evidence, and ownership records for each measure.
Where our reporting was not fully complete, we explained the gaps, set out what we could support at the time, and recorded the next steps for filling the missing pieces.
Risk An assurer will check whether omissions were clearly explained, whether the partial disclosure is honest about limitations, and whether there is a credible plan to improve completeness.
Evidence to check Gap log, rationale for omissions, draft-to-final change log, improvement plan, and evidence of follow-up actions or assigned owners.
We used the time bands we had defined in advance when assessing the disclosed risks, and we can show how those periods were applied in the analysis.
Risk An assurer will probe whether the chosen periods were set before the assessment, applied consistently, and matched the way the risk analysis was actually performed.
Evidence to check Time-horizon methodology, planning papers, risk assessment outputs by period, and evidence that the same bands were used across the disclosure.
Evidence pack to prepare
Common reporting gaps
- The information is presented without a date or as-at point.
- The scope or boundary of the statement is left undefined.
- Key terms are used inconsistently across the report.
- Material changes since the previous period are not disclosed.
- Assertions are made without supporting detail or a source record.
- Boilerplate is used that does not actually answer what is asked.
Where drafts go wrong
Mistakes to avoid and where judgement is needed
The left column is what preparers get wrong while collecting; the right column is where you will have to make and explain a judgement.
Mistakes to avoid
- Wrong ownerChasing the board pack team for operational climate risk inputs leaves the data owner out of the loop, so the evidence comes from the wrong desk.
- Framework language instead of business termsAsking teams for transition and physical risk in framework wording makes them translate twice, which often produces inconsistent source data.
- No clear boundaryCollecting figures without stating which entities, sites, or activities are in scope leads to mixed populations that cannot be compared cleanly.
- Wrong period basisPulling data from a different reporting window than the one used for the disclosure creates mismatched numbers and stale evidence.
- Mixed counting basisCombining headcount, spend, and incident counts in one file without labelling the basis makes the dataset impossible to reconcile.
- Source labels lostCopying values into a summary sheet without keeping the original file names, system tags, or document references breaks the audit trail.
- Separate groups mergedPutting supply chain, operations, and customer-related risk inputs into one bucket hides which business area each item came from.
- Missing evidence metadataSaving the data point without the date, owner, version, and source note leaves no way to show where it came from.
- No sign-off trailLetting the spreadsheet move on without named review and approval means nobody can show who checked the figures before use.
Judgement needed
- Set the reporting perimeter after acquisitions or disposalsUse the group boundary that matches the period you are reporting, and if a business has been bought or sold during the year, explain whether its risks are included for the full period, part of the period, or excluded, with the same approach applied across the risk areas you cover.
- Choose one way to handle different country definitionsWhere local teams use different labels or thresholds for the same climate risk, map them to a single internal description for the disclosure and explain any country-by-country differences so readers can see how the organisation has aligned them.
- Decide how to treat activities that sit just inside or outside scopeFor sites, entities, products or suppliers near the boundary, state the rule you used to include or exclude them and explain any cut-off or practical threshold so the treatment is consistent and understandable.
- Fix the time basis before drafting the narrativePick one reporting date or period-end basis for the year, then explain if any risk information comes from a different cut-off because of data availability, so the timing of the disclosure is clear.
- Separate measured figures from informed estimatesWhen direct measurement is not available, say which points are based on records and which rely on estimates or management judgement, and explain the method used so users can judge the reliability of each item.
- Explain how you rounded numbers and totalsIf you round figures or percentages, use one rounding approach throughout and note it where needed so the individual figures still reconcile sensibly to the overall picture.
- Aggregate sensitive workforce or customer information carefullyIf privacy rules prevent naming small groups or locations, combine the data to a level that protects individuals and explain the aggregation level so the disclosure still shows the nature of the risk without exposing personal information.
- Align risk language across the different risk typesIf the same underlying issue affects capital, demand, staff, markets, operations or supply chains, decide whether to describe it once or in several places, and explain the linkage so the reader can follow the organisation’s view of the risk.
Examples
How it reads on the page
Synthetic, written by LRA — not from a company report, not text from any standard.
We describe how climate-related risks could affect our business over the near, middle and longer term, separating weather-driven losses from transition pressures. - Physical hazards could disrupt generation sites, damage grid assets and raise repair spend; in this example, £18m of the £30m estimated exposure is near term, £9m is medium term and £3m is long term, with the same profile also affecting employee safety and the continuity of our operations and supply chain. - On the transition side, policy, technology and market shifts could reduce customer uptake, weaken asset values and tighten financing conditions; here, £12m of the £20m estimated exposure is near term, £6m is medium term and £2m is long term, with knock-on effects for capital deployment, consumer demand, financial markets and the wider economy.
This example shows a utility-style reporter linking weather damage and transition pressure to operations, workers, suppliers, customers, investment value and broader market conditions across three time horizons.
We explain how climate-related risks may affect our group across short, medium and longer horizons, using separate estimates for weather-related and transition-related pressures. - Physical events such as heat, flood and water stress could interrupt production, affect staff wellbeing, and strain inbound ingredients and packaging; in this example, £9m of the £15m estimated exposure is short term, £4m is medium term and £2m is long term. - Transition pressures, including changing regulation, customer preferences and financing conditions, could reduce demand, pressure margins and lower the value of planned investments; here, £6m of the £10m estimated exposure is short term, £3m is medium term and £1m is long term, with possible spillovers into our operations and the broader economy.
This example shows a manufacturer describing physical and transition risks in plain language, with separate time buckets and clear links to demand, investment value, worker safety, supply continuity and market-wide effects.
Quality ladder
- Basic
We see climate-related financial risk across our operations, supply chain, customers, workforce, markets and investments.
- Better
We see climate-related financial risk across our operations, supply chain, customers, workforce, markets and investments, with the main pressure points being physical events and the shift to a lower-carbon economy.
- Best
We see climate-related financial risk across our operations, supply chain, customers, workforce, markets and investments over the short, medium and long term, with physical events and the shift to a lower-carbon economy as the main pressure points, and the recent increase in supply-chain disruption reflects more frequent weather-related delays.
Check your understanding
Scenarios to work through
A preparer is drafting the climate-risk section for a group with manufacturing sites, a lending book, and a large retail customer base. The team has notes on flood exposure at two plants, possible changes in customer buying patterns, and a review of how weather events could affect deliveries.
A finance lead has prepared a short paragraph saying the company faces weather-related disruption, but it does not say when those effects are expected to show up. The risk team has separate notes for near-term, mid-range, and longer-range planning.
A company has identified a possible shift away from a carbon-intensive product line, but the draft only mentions a general strategic concern. It does not explain whether the issue could affect revenue, financing, or asset values.
A preparer has a draft that lists storm damage at one site and heat stress for warehouse staff, but the supply-chain team says a key supplier in another region could also be disrupted by the same weather pattern. The draft does not yet mention that supplier dependency.
Real reports
How 3 companies report it
Examples of full and partial reporting practice. These are evidence-led reviews, not exact disclosure templates to copy.
Owens Corning
CSX Corporation
Sands China Ltd.
| Field | Owens Corning | CSX Corporation | Sands China Ltd. |
|---|---|---|---|
| Capital and investment risk | Partial | Partial | Not found |
| Customer demand risk | Partial | Not found | Partial |
| Workforce health risk | Not found | Not found | Not found |
| Market stability risk | Not found | Not found | Not found |
| Operating disruption risk | Not found | Not found | Not found |
| Physical climate risk | Not found | Not found | Not found |
| Supplier disruption risk | Not found | Not found | Not found |
| Risk timing bands | Not found | Not found | Not found |
| Transition climate risk | Partial | Not found | Not found |
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Peer comparison uses examples on this card, not prevalence in the report corpus.
Advice, not assurance
Framework references
Relevant California requirements and related disclosures
California
SB261-CLIMATE-RISK
within California SB 261: Climate-Related Financial Risk Act
Related & explore
More in California SB 261 →Browse full catalogue →Search all disclosures →
FAQ
Questions this page answers
Start with the plain-language explainer, then work through the step-by-step preparation section and the datapoints list. The page also gives draft-output ideas, so you can turn the collected information into a narrative and a content-index line.
The page points you to nine datapoints: capital and investment risk, customer demand risk, workforce health risk, market stability risk, operating disruption risk, physical climate risk, supplier disruption risk, risk timing bands, and transition climate risk. Use those as the starting checklist for data collection.
Use the page’s datapoints list as your scope check and make sure each risk area is considered before drafting. The common reporting gaps section is there to help you spot omissions early.
The page does not assign roles, but it is designed for sustainability/ESG managers, HR or data owners, and assurance reviewers to use together. In practice, you would use the workbook and evidence pack to coordinate ownership and sign-off across those people.
The page includes an evidence pack with five items to support assurance readiness. Use it alongside the six assurance claims to verify that each claim, risk and evidence point is covered.
The page says there are six assurance claims to verify, each linked to a claim, risk and evidence check. Use the assurance section to test whether your draft is supported before it goes to review.
The page has a list of common reporting gaps and mistakes to help you avoid missing key risk areas or weak evidence. It is meant as a practical check before you finalise the draft.
The Download Centre includes a Prep & Assurance workbook in .xlsx format and a printable Library Card in .pdf format. Use the workbook to organise preparation and assurance checks, then use the Library Card as a quick reference while drafting.
Yes, but only as synthetic illustrations. The page’s example disclosures are there to show how the content can be presented, so you should adapt them to your own data and evidence rather than copy them.
The page says the closest ESRS correspondence is ESRS E1 (Climate Change). You can reuse data where it is relevant, but the page does not say the requirements are identical, so you still need to check the disclosure against your own reporting needs.
More questions this page can help with