News & Insights
Navigate California laws using contracts
- Fast-moving regulation requires adaptive guidance. California’s climate disclosure laws are still evolving; static, one-off outputs risk becoming obsolete before they are used
- Process matters as much as content. This guide was built through iterative testing, practitioner engagement and external review, not as a definitive interpretation of unfinished law
- AI supported speed, not authority. Human legal judgement, practitioner input and third-party validation shaped what we’re sharing here.
- The California guide is part of a broader approach to building tools that can evolve alongside climate regulation.
experimental Contracting for California climate disclosure
For legal, compliance and ESG teams, the challenge with climate regulation is no longer what to pay attention to but how to keep up.
California’s climate disclosure laws – the Climate Corporate Data Accountability Act (SB253) and Climate-Related Financial Risk Act (SB 261) – are amongst the most consequential climate reporting regimes globally. They apply to large companies doing business in California, reach deep into value chains and are already shaping expectations far beyond the state’s borders.
But crucially, they are still evolving: implementation details remain unsettled, guidance continues to emerge and enforcement timelines have shifted in response to litigation and regulatory processes.
Against this backdrop, the risk for organisations is not inaction but false certainty. Static guidance can quickly become outdated, yet waiting for perfect clarity is rarely an option. Our work on the California contracts guide started from that tension: how do you produce legal guidance that is useful now, without pretending the law has stopped moving?
The resulting pilot guide, focused on using contracts and internal policies to support compliance, is linked below.
Why traditional guidance struggles with fast-moving regulation
The default response to regulatory complexity is often more guidance: detailed notes, toolkits and explainers. These have real value, but they tend to assume that regulation can be interpreted once and then relied upon forevermore.
For California’s climate disclosure laws, that assumption breaks down. Key elements, including reporting formats, assurance expectations and enforcement sequencing, are still being clarified by the California Air Resources Board (CARB). Scope 3 emissions reporting introduces further uncertainty, relying on supplier data, estimation methodologies and judgements that only become visible once organisations begin implementation in earnest.
In this context, the gap is not expertise but the absence of processes that allow guidance to evolve alongside the regulation itself.
How we built the California guide
Rather than starting with a fixed output, we focused on building a process that could absorb uncertainty, surface judgment calls and improve through use. In practice, that meant:
Step 1: Foundations
We used AI to generate a set of 5 deliberately rough first drafts of possible guidance. Its purpose was not to be authoritative, but to map the landscape, expose areas of uncertainty and identify where interpretation and discretion were likely to matter most.
Step 2: Human Validation
Thomson Reuters reviewed these drafts and selected the most accurate and appropriate version. Human legal expertise acted as the first quality filter, grounding the content in established doctrine and emerging regulatory signals.
Step 3: User Engagement
We convened a small working group made of senior legal professionals with experience in US-based companies, including Chris Perzan, Environmental & Sustainability Lawyer at Kyndenos, LLC; Helena Hutton, Senior Director, Strategic Purchasing at Cummins Inc.; and Julie Goldman Ryan from ImpactGC, LLP. Their role was to stress-test usability: would this actually help teams make decisions under real organisational constraints?
Step 4: Iteration
We incorporated that feedback using our internal large language model, iterating on structure, language and emphasis to reflect how the guidance would be used in practice, not how it looked in theory.
Step 5: Openness
The guide was released publicly as pilot guidance, with an explicit invitation for further practitioner feedback. It was framed not as a final answer, but as a snapshot within an evolving regulatory and market context and to support legal professionals during this interim period.
Throughout, technology supported speed and iteration but authority came from human judgement, practitioner expertise and external validation – the core principles of our human-in-the-loop approach.
Regulatory uncertainty as a design constraint
This process was not linear. There were false starts, pauses and course corrections as regulatory signals shifted and litigation progressed. At several points, the temptation was to wait and hold back any active work until the picture felt clearer. Even now, at the beginning of 2026, which is when both laws were meant to come into play, there are still many unknowns as to how SB261 and SB253 will look moving forward.
However, we chose not to. With reporting deadlines approaching and internal teams already being asked for answers, imperfect but transparent guidance felt more valuable than limited alternatives. Where uncertainty remained, we named it. Where assumptions were being made, we made sure to keep the conversation moving.
As deadlines drew closer, expectations sharpened, and scrutiny increased, we applied an additional layer of quality assurance. Our approach is to always seek third-party input on complex, fast-moving regulation in order to pressure-test it against independent expertise and emerging market practice while ensuring we’re legally correct.
For the California guide, that meant working with the LexisNexis team and incorporating input from a US-based Regulatory ESG expert, Danielle Reyes. Their role was to challenge the interpretations in the guidance, sense-check assumptions and validate that the guidance remained defensible as expectations around SB253 and SB261 continued to evolve.
This step is a core part of how we manage legal and reputational risk. In a regulatory environment where guidance can quickly be overtaken by events, external review helps ensure that what we publish is not only useful but responsibly framed – clear about what is known, what remains uncertain and where professional judgement is required.
California as a test case for a broader problem
We chose California deliberately. Like the ISSB standards, its climate disclosure laws are fast-moving, globally relevant and materially consequential across many sectors. They affect financial institutions, corporations and their value chains, regardless of where those organisations are headquartered.
These characteristics make California a powerful stress test for any content-creation model. If guidance can remain useful here, it is more likely to work elsewhere. The experience reinforced our view that operationalising climate regulation is not a one-off translation exercise but an ongoing practice.
Why this matters now
For ESG and legal practitioners, regulatory complexity is becoming a constant rather than a transitional phase. Tools and methods need to reflect that reality. For us at TCLP, impact increasingly depends not just on what we are producing but whether the underlying model can adapt, scale and respond to change.
This iteration of the California Guide is not the end of the story but instead one output from an evolving process designed to support organisations navigating overlapping, ever-changing climate frameworks under real-world conditions.
We will continue to test and refine this approach and we welcome feedback on the guide itself and the process behind it, particularly from those working at the sharp end of climate regulation.