On January 9, the U.S. Court of Appeals for the Ninth Circuit heard arguments regarding California’s climate change accountability package (specifically SB 261 and SB 253). While SB 261 reporting is currently paused and voluntary following a temporary court order, SB 253 remains in effect.
Based on the oral arguments and written submissions, the Ninth Circuit will now consider whether the plaintiffs’ First Amendment challenge will be successful and the potential harm caused by not granting the injunction. The court is expected to finalise its verdict in the next six months, but court challenges could continue to delay the regulations.
“California’s greenhouse gas emissions and climate risk disclosure mandates (SB 253 and SB 261, respectively) are likely to survive legal challenge,” writes our friend Michael Littenberg, at Ropes & Gray. “However, expect the challenges to drag on into 2027. Following their expected adoption in late February, the SB 253/261 regulations adopted by the California Air Resources Board (CARB) are likely to be challenged in court.”
The bills represent landmark climate legislation. SB 253 requires companies with over $1 billion in annual revenue to report their greenhouse gas emissions (Scope 1 and 2 in Year 1, with Scope 3 phasing in later) following Greenhouse Gas Protocol standards. SB 261 requires companies with over $500 million in revenue doing business in California to disclose climate-related financial risks and mitigation plans aligned with the TCFD framework.
Here’s the latest on both SB 261 and SB 253.
SB 261 (Climate Risk Disclosures)
- Current status: Paused, injunction in place. Pending decision by Ninth Circuit Court during 2026.
- Preliminary injunction on enforcement extends into summer 2026 or beyond
- Voluntary compliance remains minimal — only 51 reports submitted to CARB’s public docket to date
- Most companies holding off on voluntary submissions
SB 253 (GHG Emissions Reporting)
- Current status: In effect
- First compliance deadline: August 10, 2026
- Another preliminary injunction request expected as deadline approaches
- Despite legal uncertainty, most companies continuing preparation work
- Companies incorporating CARB’s enforcement guidance into compliance planning
What's next from CARB
CARB will hold additional public workshops on both laws as early as Q1 2026. Also expected this year: a finalized Year 1 GHG emissions reporting template, a second round of proposed regulations addressing reporting details, and additional guidance and FAQs.
What companies should do now
SB 261’s climate risk disclosure requirements remain on pause, but companies still face the possibility of enforcement if the Ninth Circuit rules against the injunction. And SB 253’s August 2026 GHG emissions reporting deadline is very much alive (albeit the requirement to assure data has been dropped for year 1), with most companies continuing preparation despite the expected legal challenge. Don't mistake a pause for a reprieve.
Even with California’s requirements in flux, the broader disclosure landscape keeps moving forward. New York, the UK, and Australia are advancing their own climate-related mandates, while global frameworks like TCFD and IFRS S2 continue shaping what credible disclosure looks like. More immediately, investors, lenders, and customers expect reliable emissions data and decision-useful climate insights regardless of legal requirements. Companies that use this time to build disclosure capabilities—rather than waiting for regulatory clarity—will be better positioned no matter how the litigation resolves or which laws ultimately take effect.
