California’s sweeping new climate disclosure laws survived a legal challenge this week, as a U.S. District Court judge refused to block their enforcement. The decision clears the way for the […]

California’s sweeping new climate disclosure laws survived a legal challenge this week, as a U.S. District Court judge refused to block their enforcement.

The decision clears the way for the state to implement some ambitious corporate requirements regarding value chain greenhouse gas emissions and climate-related risks reporting.

The lawsuit, brought by the U.S. Chamber of Commerce and a coalition of business groups, marked the third attempt in less than a year to halt the regulations. Plaintiffs argued that the laws compel companies to engage in “subjective speech” and impose unrealistic demands, particularly around reporting supply chain emissions.

For the record, the regulations, SB 253 (Climate Corporate Data Accountability Act) and SB 261(Climate-Related Financial Risk Act), were approved by Governor Newsom in 2023 and signed into law in October 2024.

•  SB 253: Requires companies with more than $1 billion in annual revenue doing business in California to disclose Scope 1 and 2 greenhouse gas emissions starting in 2026, and Scope 3 supply chain emissions beginning in 2027. Scope 3 covers a broad range of indirect emissions, including those linked to suppliers, travel, commuting, procurement, waste, and water use.
•  SB 261: Mandates that companies with revenues exceeding $500 million report on their climate-related financial risks and outline mitigation strategies, with the first disclosures due by January 1, 2026.

The Chamber of Commerce argued that calculating supply chain emissions is “nearly impossible” and that the laws would force companies to disclose speculative judgments about climate risks. Therefore, they sought a preliminary injunction to stop enforcement while the case proceeded on First Amendment grounds.

However, U.S. District Judge Otis Wright II rejected the request, stating that “Plaintiffs have not shown a likelihood of success on the merits concerning either of its facial First Amendment challenges to SBs 253 and 261.”

The ruling underscores the growing divide between U.S. states on climate policy, with California positioning itself at the forefront of corporate climate accountability. The outcome not only affirms the state’s authority to impose far-reaching disclosure rules but also signals potential friction with federal political forces opposed to expansive climate mandates.

Source:

https://www.esgtoday.com/california-climate-reporting-law-survives-court-challenge/

https://natlawreview.com/article/district-court-rejects-first-amendment-challenge-california-climate-disclosure