Disclosures
SB 261 Disclosure
This inaugural climate-related financial risk report is prepared for Littler Mendelson (“Littler” or “the Firm”) in accordance with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD, 2017) in response to the requirements under Section 38533 of the California Health and Safety Code, known as the “Climate-Related Financial Risk Act” or “California SB 261” (California State Legislature, 2023). A Climate Risk Assessment and Scenario Analysis were conducted to evaluate climate-related risks. The assessment addresses both physical and transition risks using reputable data sources, including the Federal Emergency Management Agency (FEMA), Climate Central, Climate Impact Lab, and the World Resources Institute (WRI). Physical risks are assessed across multiple timeframes and climate scenarios (RCP 4.5 and RCP 8.5), while transition risks are informed by Sustainability Accounting Standards Board (SASB) industry risk categories.
This Climate-Related Financial Risk Report is prepared in conformance with the Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD, June 2017), one of the approved frameworks under HSC § 38533. The TCFD framework was selected because it is globally recognized, directly referenced by the California Air Resources Board’s (CARB) draft checklist, and provides a clear structure aligned with the required disclosure pillars: Governance, Strategy, Risk Management, and Metrics & Targets.
Governancea. Describe the board’s oversight of climate-related risks and opportunities b. Describe management’s role in assessing and managing climate-related risks and opportunities | Littler’s Board of Directors sets the strategic direction of the Firm, provides oversight of management’s execution of the Firm’s business strategy, and maintains governance practices that align long-term business performance with stakeholder interests. The Management Committee is responsible for overseeing the Firm’s general operations, including ensuring that appropriate processes are in place to evaluate and address material environmental impacts. Day-to-day management of climate-related risks and opportunities is delegated to the Environmental Committee, established in 2023 and coordinating with the Management Committee. The Environmental Committee coordinates closely with Compliance and Legal teams to translate the Firm’s direction into operational strategy, integrating climate considerations into the Firm’s broader risk management framework. The Environmental Committee leads the Firm’s effort to develop and monitor environmentally responsible practices, assess climate-related risks, set and track environmental performance targets, and review disclosure reports for regulatory compliance. |
Risk Managementa. Describe the processes for identifying and assessing climate-related risks b. Describe the processes for managing climate-related risks c. Describe how processes for identifying, assessing, and managing, climate-related risks are integrated into the organization’s overall risk management | Littler conducts forward-looking climate risk modeling across its global office portfolio using standardized scenarios aligned with the Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCPs). The analysis evaluates both:
Risks are assessed across three planning horizons to capture both near-term operational and long-term strategic implications:
Each office location is evaluated for exposure to seven physical climate hazards: extreme heat, drought, hurricanes and tropical storms, sea level rise and coastal flooding, inland flooding, wildfire proximity, and water stress. Beyond physical hazards, Littler evaluates transition risks stemming from policy, regulatory, market, technology, and reputational factors associated with the transition to a low-carbon economy. This includes assessing exposure to carbon pricing, rising insurance premiums, client disclosure expectations, and employee satisfaction. Locations receive a risk rating for each hazard across the scenario-time horizon combinations, creating a matrix of potential future conditions. The Firm embeds climate-related risks alongside operational, financial, and compliance risks within its risk management framework. The Compliance team captures risks in a centralized risk register, assesses likelihood and impact, and monitors them to completion. Climate risks assessed as “High” or greater ($2M impact or higher) are reviewed with Firm leadership to determine an appropriate action plan. Cross-functional teams work with sustainability experts to address emerging risks through mitigation strategies, scenario analysis, and contingency planning, ensuring climate risks are managed in the context of business continuity, operational resilience, and long-term strategic objectives. |
Strategya. Describe the climate-related risks and opportunities the company has identified over the short, medium and long-term b. Describe the impact of climate-related risks and opportunities on the company’s businesses, strategy, and financial planning c. Describe the resilience of the company’s strategy, taking into consideration different climate-related scenarios | Below are the risks and opportunities identified over the short- (1 year), medium- (5 year), and long-term (25 year) horizons: Risks
Opportunities
Littler recognizes that climate change presents both risks and opportunities that can influence business operations, client delivery, and operational costs. Strategic planning considers a range of potential impacts, evaluating physical risks such as extreme heat, wildfires, hurricanes, and drought, as well as transition risks linked to regulatory changes, client expectations, market shifts, and emerging technologies. The Firm leverages cross-functional partnerships to strengthen climate resilience and support sustainable operational practices. In the medium-term under a moderate cuts scenario, risks are moderate as some emissions reductions and adaptation efforts lessen exposure to climate and transition pressures, though not fully aligning with global targets. Over the long term with moderate cuts, risks increase because partial decarbonization leaves lingering vulnerabilities to evolving regulations, market shifts, and physical climate impacts. In the medium-term under a business-as-usual scenario, risks are high as limited climate action exposes operations to policy changes, stakeholder pressure, and early physical disruptions. Over the long term, risks become severe as continued inaction amplifies exposure to extreme weather, regulatory penalties, and reputational damage. These risks and opportunities are shaping Littler’s strategy and financial planning. Compliance obligations and client expectations are driving investments in emissions tracking and assurance as the Firm refines its environmental policies and commitments to address physical and transition impacts that are likely in the short and medium terms. |
Metrics & Targetsa. Describe the metrics used to assess climate-related risks and opportunities in line with strategy and risk management process b. Disclose Scope 1, 2, and if appropriate Scope 3 Greenhouse Gas (GHG) emissions and the related risks c. Describe the targets used by the Organization to manage climate-related risks and opportunities and performance against targets | Littler systematically monitors its office locations for exposure to upper quintile physical climate risk and integrates this analysis with financial performance metrics at each site. By linking climate vulnerability with personnel data, the Firm is able to identify which offices may face the greatest potential financial impact from climate-related hazards such as extreme weather events, flooding, or prolonged heat stress. This approach enables Littler to prioritize resilience planning, allocate resources more effectively, and proactively manage risks to both operations and long-term financial stability. Littler does not currently track GHG emissions but plans to begin reporting for calendar year 2025 in 2026. While formal quantitative GHG reduction targets have not yet been established, Littler has implemented sustainability initiatives focused on:
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This SB 261 Report includes forward-looking statements. Forward-looking statements include statements about the Firm’s business and future performance. These statements are not historical facts, but instead represent only beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of Firm control.