U.S. Court Blocks California Climate Risk Law Ahead of 2026 Reports

Washington, D.C.- A U.S. appeals court has temporarily halted California’s landmark climate-related financial risk disclosure law, just weeks before the first mandatory reports were due, delivering a major win for business groups challenging the rules.

The Ninth Circuit injunction pauses implementation of SB 261, which would have required U.S. companies with over $500 million in revenue to report on climate-related financial risks and mitigation strategies. However, the court declined to block SB 253, the law mandating greenhouse gas (GHG) emissions reporting - including Scope 1, 2, and 3 emissions - set to start in 2026.

The move comes after the U.S. Chamber of Commerce argued the laws violate the First Amendment, claiming they compel companies to engage in “subjective speech” and impose massive compliance costs.

Signed into law by Governor Gavin Newsom in October 2024, SB 261 and SB 253 aim to make California the first U.S. state to require comprehensive climate disclosure for most large companies. SB 253 targets firms with revenues above $1 billion, covering emissions across supply chains, business travel, procurement, waste, and water usage.

The California Air Resources Board (CARB) has identified over 4,000 companies likely to fall under the new rules. Initial SB 261 reports were due by January 1, 2026, while emissions disclosures under SB 253 will begin in August 2026, with Scope 3 reporting starting in 2027.

Daryl Joseffer, executive VP and chief counsel at the U.S. Chamber of Commerce, said:
"Stopping this law before its January 1 deadline was critical to businesses and the protection of their First Amendment rights. One state should not be able to impose this kind of nationwide compliance burden."

The case is now set for appeal in January 2026, with the potential to reshape the future of U.S. corporate climate reporting, especially as federal rules from the SEC climate disclosure regulations face delays.