Court Gives California’s Climate Disclosure Laws the Green Light

Key Takeaways

• Court Clears the Way: A federal judge declined to halt California’s climate disclosure laws, keeping 2026 enforcement on track.
• Deadlines Stand: Companies must prepare for climate risk reporting under SB 261 and emissions disclosures under SB 253.
• Mixed Scrutiny, Same Result: SB 253’s emissions data was deemed purely factual, while SB 261 faced tougher review but still survived.
• Litigation Not Over: Broader constitutional challenges remain, but businesses can’t bank on delays.

Deep Dive

California’s ambitious climate disclosure laws just dodged a major legal roadblock. On August 13, 2025, a federal judge in Los Angeles refused to press pause on the state’s landmark Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261). Translation: businesses caught by these rules should brace themselves, the countdown to 2026 compliance is officially on.

For companies doing business in California, this ruling isn’t just legal fine print. It’s a wake-up call. Starting January 1, 2026, firms meeting the financial thresholds will need to disclose climate-related financial risks under SB 261. SB 253 follows closely, requiring public reports on Scopes 1, 2, and 3 greenhouse gas emissions once CARB finalizes its rulemaking.

The Chamber of Commerce and several business groups had hoped to buy time, arguing that forcing companies to report on emissions and climate risks amounted to unconstitutional compelled speech. They leaned hard on the First Amendment, saying businesses shouldn’t be forced into commenting on the “controversial” issue of climate change. But the court wasn’t convinced.

Breaking Down the Ruling

The opinion split the two laws into different buckets.

• Emissions Data (SB 253): The judge said this is straightforward, factual reporting. Numbers are numbers, and Scopes 1, 2, and 3 have clear definitions and methodologies. Requiring companies to publish them doesn’t mean they’re making a political statement.
• Climate Risk Reports (SB 261): These disclosures involve judgment calls about future risks and financial impacts, which aren’t purely factual. That meant the court applied a higher level of scrutiny. Even so, California cleared the bar by showing a strong interest in making sure investors and consumers get reliable information.

The Chamber also argued the laws would cause irreparable harm, but the court saw it differently. California’s interest in protecting its residents, investors, and markets outweighed industry discomfort.

Why This Matters Beyond California

For risk and compliance professionals, this isn’t just another California quirk, it’s a signal. The ruling suggests that climate disclosure frameworks, when tied to investor protection, can survive constitutional challenges. It also shows that courts won’t necessarily equate emissions data with political speech, a key point that could shape how other states and even federal agencies draft disclosure regimes.

That doesn’t mean the courtroom battles are over. The Chamber’s claims under the Clean Air Act and Dormant Commerce Clause are still in play. Litigation could stretch on for years. But companies can’t afford to sit on the sidelines waiting for a final verdict. The deadlines are set, and the regulators have their marching orders.

This case also further demonstrates the growing collision between business, regulation, climate accountability, and corporate governance. Companies may not love the idea of publishing their emissions data or putting climate risk scenarios on paper. But investors, consumers, and policymakers are demanding it, and now at least one federal court has said those demands pass constitutional muster.

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