How US peers tackle California SB 261 and CSRD at once – without doubling the work

How peers see the increasing regulatory pressure

For US companies with EU exposure, the EU’s CSRD and California’s SB 261 redefine sustainability reporting as a financial-grade exercise, requiring financial relevance, traceability, and audit readiness.

The traditional narrative ESG approach is no longer enough.

Recent surveys of US-headquartered firms reflect the resulting pressure:

• While nearly 90% have collected ESG data for more than a year, only 17% describe their data as audit-ready for CSRD (Source: Semarchy CSRD Readiness Research)
• Despite the regulatory pressure, 74% of practitioners admit their reporting process still relies on manual spreadsheets and fragmented data (Source: Workiva Sustainability Report)
• 57% of US senior executives cite poor data quality as their primary compliance challenge, with documentation and approval close behind (Source: Deloitte 2024 Sustainability Action Report) 

The challenge peers increasingly face is how to meet both requirements without multiplying manual work or audit risk.

Why CSRD and SB 261 are increasingly handled together

CSRD and California’s SB 261 differ in scope, but they converge on the same practical requirements: audit-ready justification of materiality and financially relevant sustainability data.

This convergence is explicit:

• SB 261 allows companies to satisfy its requirements using reports prepared under other international standards, including CSRD, if they are “substantially similar.”
• CSRD’s financial materiality is intentionally aligned with TCFD and IFRS / ISSB S2, enabling a “report once” approach for global companies.

As a result, many companies are structuring sustainability reporting around a single, updatable double materiality assessment that can support both CSRD and SB 261.

How an AI-enabled double materiality assessment reduces rework while strengthening assurance

Upright’s AI-era double materiality assessment is designed to support this convergence. It treats double materiality assessments as reusable, evidence-based data, rather than as a one-off reporting exercise.

In practice, this means you get:

• a single double materiality baseline supporting both CSRD and California SB 261, updatable any time
• documented evidence and traceability designed to hold up under limited assurance
• financial materiality aligned with TCFD and IFRS / ISSB S2
• Quantification of risks and opportunities in monetary ($) terms, satisfying the financial data requirements of CSRD, SB 261 and ISSB

…in weeks, not months, using the latest reporting technology.

The table below shows how Upright’s approach differs in practice from more fragmented ways.

Traditional vs. Upright way of handling CSRD and SB 261