US court pauses California’s climate-risk reporting law in legal battle
On Wednesday this week the US climate-disclosure landscape shifted yet again, as the Ninth Circuit Court of Appeals issued an injunction halting SB 261 – California’s new climate-risk reporting law – just weeks before the first filings were due on 1 January 2026.
The court stopped short of freezing SB 253, the state’s emissions-reporting law, which begins phasing in later in 2026.
The injunction responds to a challenge by the US Chamber of Commerce and allied business groups, who argue that mandating disclosure of climate-related financial risks forces companies to “speak” on the politically charged issue of climate impact, violating First Amendment protections. CARB’s reporting regulations would require thousands of companies doing business in California to publish detailed greenhouse gas emissions, including full value-chain Scope 3, and climate-related financial risk analyses. CARB has already identified more than 4,000 firms likely to fall in scope, even as litigation continues to swirl.
This latest ruling adds new uncertainty. Companies preparing climate-risk reports will now need to wait for further clarification on whether SB 261 is paused only for the plaintiff groups or more broadly, while emissions reporting under SB 253 appears to be moving ahead on schedule.
From a digital reporting standpoint, the California rules would create a significant mandatory climate disclosure framework, covering data that, if structured and tagged effectively, could dramatically improve comparability and usability of climate-related information for regulators, investors and the public.
From a digital reporting standpoint, California’s rules continue to represent the most ambitious attempt in the US to systematise climate data at scale, with enormous implications for structured, comparable, machine-readable disclosures. If the regime proceeds, demand for consistent taxonomies, standardised emissions tagging and robust data-quality tools will intensify.
For more details, read ESG Today’s breaking coverage of the ruling.
