TCFD Decoded: Why U.S. States Are Adopting It—and How Early Alignment Pays Off

California’s Climate Accountability Package (Senate Bills 253 & 261) gives companies a clear, shared playbook for climate reporting. Beginning with fiscal-year 2025 data, firms that do business in the state must report their greenhouse gas (GHG) emissions (SB 253) and provide a concise, business-focused discussion of how climate could affect their finances (SB 261) using the four sections of the Task Force on Climate-related Financial Disclosures (TCFD).

The timeline is tighter than many teams realize. California’s Air Resources Board (CARB) will publish the final rule on July 1, 2025, which gives companies roughly six months to organize existing utility bills, supplier data, and board materials into a TCFD-aligned climate report and a GHG emissions baseline in time for the first 2026 filings.

California is only the beginning. New York lifts its TCFD language almost word for word, and draft climate bills in Washington, Colorado, Illinois, and New Jersey would require Scope 1-3 GHG emissions reporting, with most signaling future climate-related financial risk disclosure.

Because CA SB 261 is the template other states are adopting, it makes sense to master its TCFD workflow first and reuse it everywhere else. In this article we zero in on California’s climate-related financial risk disclosure rule, and show why aligning to the TCFD framework now is the smartest way to hit the 2026 deadline and stay ahead of every copy-cat state rule coming next.

TCFD 101

The Task Force on Climate-related Financial Disclosures (TCFD) was formed in 2015 to translate climate issues into the language of finance and give boards a simple way to explain risks and opportunities to the market. Since then, climate shocks have become far more expensive; NOAA counts more than 400 U.S. weather disasters topping $1 billion each since 1980, and 2024 supply-chain interruptions alone are estimated to have cost businesses about $100 billion. 

That price tag is exactly why investors are pushing for decision-useful climate data they can trust. And, is why the TCFD framework has grown from a voluntary guideline into the backbone of virtually every new climate-disclosure rule, from California to New York and beyond.

The framework is also showing up in mainstream sustainability reports, too: 90% of public companies disclosed information aligned with at least one TCFD recommendation for fiscal-year 2022, and 58% covered five or more; triple the share just two years earlier. Adoption is also deep on the capital-markets side with over 80% of the world’s largest asset managers and half of the biggest asset owners referencing TCFD in their 2023 reporting. 

Climate Disclosure by Industry

A 2023 ESGAUGE analysis of Russell 3000 filings shows that climate-related financial risk disclosure is no longer limited to heavy emitting industries. 

Utilities lead at 93 % of companies reporting risk, followed by real estate (77 %) and energy (75 %). Consumer staples (62 %) and materials (58 %) are moving fast as supply-chain pressure rises, while lagging sectors such as health care (15 %) and information technology (24 %) are starting to catch up. 

If your company sells into any of these supply chains, customers will soon expect the same level of disclosure.

With adoption rising across sectors, it’s worth pausing to see exactly what the TCFD asks companies to disclose.

The Four Core Elements of TCFD Reporting

The TCFD has developed a voluntary, consistent, climate-related financial risk disclosure framework for companies to provide information to stakeholders. Following is a snippet of a TCFD report with a few example responses from mid-market companies for each of the four reporting pillars.

Which U.S. States Are Copying California’s TCFD-Based Climate Rules

California set the pace in 2023 when it enacted the Climate Accountability Package—SB 253 for full Scope 1-3 emissions disclosure and SB 261 for a biennial, TCFD-aligned climate-risk report. Missing either filing could trigger fines of up to $500K per reporting year.

Lawmakers in New York (SB 3456 & SB 3697), Washington (SB 6092), Colorado (HB 25-1119), Illinois (HB 3673) and New Jersey (S 4117) have introduced look-alike bills that copy the California language—some start with GHG reporting and signal that a TCFD risk section will follow.

For finance and legal teams, a single, well-built TCFD workflow covers SB 261 today and positions you for each new mandate without reinventing the wheel.

Current & Pending U.S. State Climate Bills

Oregon and Maryland are drafting similar measures. Given the copy-and-paste trend, a TCFD risk-report requirement is likely to bolt onto any future state emissions rule—making SB 261-style compliance a question of “when,” not “if.”

Roadmap to a TCFD-Aligned Climate Report

In conversations with mid-market companies, we kept hearing the same refrain: data is everywhere and people have no time. Data is siloed between accounts-payable folders and email chains, and no one owns a clean master file, meanwhile state timelines keep shifting. 

BDO’s 2025 CFO Sustainability Outlook Survey found that more than four in five mid-market CFOs cite limited in-house expertise and bandwidth as their biggest roadblock to producing audit-ready reports.

Getting from scattered data to an audit-ready filing takes a clear sequence—one we’ve refined with dozens of clients. Here’s exactly how Good.Lab’s Climate Regulation Solution guides you through each phase, start to finish:

1. Assess: We begin with a rapid diagnostic against the four TCFD pillars—Governance, Strategy, Risk Management, Metrics & Targets. A short survey and interviews with up to five team members highlight gaps in policy, data, and oversight. You get a quantified readiness scorecard on day one.
2. Benchmark: Next, we tap an AI-assisted research engine to scan peer disclosures—TCFD filings, CDP responses, and annual reports—so you see where leaders in your sector are setting the bar. The result is a maturity range that clarifies what “good enough” looks like versus “industry leading.”
3. Roadmap: Using the assessment score and benchmark range, we map a prioritized action plan. Each gap becomes a clear task—assignable, time-bound, and trackable. A working session with your team locks ownership and deadlines, so progress starts immediately.
4. Outline: Before pen meets paper, we hold a calibration workshop to define the scope and ambition of the first report. Whether you aim for minimum compliance or a higher-visibility leadership stance, the outline spells out narrative themes, required metrics, and supporting evidence.
5. Publish: We draft a concise, five-page TCFD-aligned report tailored to California’s submission portal (and any forthcoming CARB formatting rules). Our team packages underlying worksheets and guides your staff through the upload process.

Good.Lab also provide execution support for: Greenhouse gas emissions calculations, target-setting, climate risk assessment, CDP filing, etc.—so you can tackle roadmap actions without hunting for new vendors.

Climate Regulation Ready with Good.Lab

Good.Lab’s Climate Regulation Solution is built for this sprint: we offer a pragmatic, right-sized approach for mid-market businesses that need to move quickly and efficiently—without over engineering the path to regulatory compliance. Whether you need a full TCFD-aligned report for California SB 261 or a multi-stakeholder roadmap, we’ll help you:

• Understand exactly what regulators and investors are asking for—and why
• Conduct an accurate Scope 1-3 greenhouse gas emissions baseline 
• Pinpoint compliance gaps across CA, NY, CDP, etc.
• Produce TCFD-aligned report that satisfies state regulations

👉 Don’t wait for the next state deadline to sneak up.  Let Good.Lab help you meet rising customer expectations, stay ahead of regulation, and build long-term business value through a smart, right-sized climate-risk strategy.