A federal judge refused to block California’s new climate disclosure laws. This decision solidified the state’s role as a national leader in corporate climate accountability. The laws require companies to report on their greenhouse gas emissions and climate-related financial risks.
The ruling, issued by US District Judge Otis Wright II, denied a motion by the US Chamber of Commerce and allied business groups seeking to halt enforcement of Senate Bills 253 and 261. The plaintiffs had argued that the laws impose “subjective speech” and compel unrealistic supply chain reporting, but the court found they were unlikely to succeed on First Amendment grounds.
The decision paves the way for the nation’s first enforceable corporate climate reporting regime, requiring thousands of US and multinational firms doing business in California to quantify and disclose their emissions and risks, including indirect value chain emissions.
The Laws in Detail
SB 253 (Climate Corporate Data Accountability Act): Applies to companies with more than $1 billion in annual revenue. Requires disclosure of Scope 1 and 2 emissions from 2026, and Scope 3 supply chain emissions starting 2027.
SB 261 (Climate-Related Financial Risk Act): Requires companies with revenue above $500 million to publicly report climate-related financial risks and mitigation plans, with first filings due January 2026.
The court applied different scrutiny standards to the statutes. SB 253 was deemed to involve “purely factual, uncontroversial disclosures,” whereas SB 261 fell under a higher intermediate scrutiny standard because it compels risk-related analysis. Even so, the court concluded that both laws advance a substantial government interest, particularly in ensuring investors receive reliable information.
Compliance Urgency for Companies
The outcome removes immediate legal uncertainty. Businesses that meet the revenue thresholds — public or private, inside or outside California — must now prepare for reporting obligations starting with fiscal year 2025 emissions data. Notably, Scope 3 calculations, spanning suppliers, logistics, product use, and waste, are considered the most challenging requirement.
Implementing regulations are still being finalized by the California Air Resources Board (CARB) and are expected later this year. CARB will hold workshops in August to refine definitions, reporting standards, and phasing for Scope 3 requirements.
Broader Implications
The decision highlights California’s divergence from federal political currents, positioning the state as the first U.S. jurisdiction to enforce mandatory climate risk and emissions disclosure at scale. It also marks a setback for corporate lobbying groups, whose repeated attempts to pause or derail the laws have so far failed.
With SB 253 and SB 261 now effectively locked in, companies face a tight compliance timeline — and the prospect that California’s framework could become a model for other states or even federal action.
