Note: This article is written in standard American English and reflects the status of California’s climate disclosure litigation and rulemaking as of March 24, 2026.
California’s climate disclosure laws have turned into the legal equivalent of a split-screen drama: one statute is paused, the other is still marching forward, and corporate legal teams everywhere are pretending they are totally calm while quietly updating spreadsheets at 11:47 p.m. The headline takeaway is simple enough to say and annoyingly complicated to live with: the Ninth Circuit would not enjoin California’s emissions disclosure law, SB 253, but it did halt enforcement of the state’s climate-risk disclosure law, SB 261, while the appeal moves ahead.
That distinction matters. A lot. It means California’s effort to require large companies doing business in the state to report greenhouse gas emissions is still alive and very much on the compliance calendar, even as the companion law on climate-related financial risk remains in legal limbo. For businesses, investors, compliance officers, sustainability teams, and outside counsel billing by the hour, this is not a mere technicality. It is the difference between “keep building the reporting machine” and “pause, but do not wander too far from the machine.”
This article breaks down what the Ninth Circuit’s move means, why the court treated California’s two climate disclosure statutes differently, what the California Air Resources Board, or CARB, has done in response, and what companies should realistically expect next.
What Actually Happened?
California adopted two major climate disclosure laws in 2023, later refined by follow-up legislation. Together, they created one of the most ambitious state-level corporate climate reporting regimes in the United States.
SB 253: The emissions disclosure law
SB 253, the Climate Corporate Data Accountability Act, applies to large U.S.-based companies doing business in California with annual revenue above $1 billion. It requires annual disclosure of greenhouse gas emissions, including Scope 1, Scope 2, and eventually Scope 3 emissions. In plain English, that means companies must report their direct emissions, emissions tied to purchased energy, and the harder-to-measure emissions associated with their value chain.
SB 261: The climate-risk disclosure law
SB 261, the Climate-Related Financial Risk Act, applies to companies doing business in California with annual revenue above $500 million. It requires covered entities to publicly disclose climate-related financial risks and the steps they are taking to reduce or adapt to those risks. That is less about raw emissions math and more about how climate change could affect strategy, operations, resilience, and money. In other words, the law asks companies to talk about what climate risk actually means for the business, not just how many tons of carbon appear in the ledger.
Business groups challenged both laws, arguing that California was compelling speech in violation of the First Amendment. The district court denied a preliminary injunction in August 2025. Then the fight moved to the Ninth Circuit. In November 2025, the appellate court granted an injunction pending appeal for SB 261, but not for SB 253. That created the odd but very real outcome we have today: one California climate disclosure law is paused, and the other is still operational.
Why the Ninth Circuit Would Not Enjoin SB 253
The most important point is that the Ninth Circuit did not issue a full merits opinion saying SB 253 is definitively constitutional. This was not a final victory lap for California. It was a refusal to stop the law from moving forward while the appeal continues. In legal terms, that is narrower than a final ruling but still powerful in practical effect.
The district court’s reasoning helps explain why SB 253 survived this stage. The court viewed SB 253’s emissions disclosures as closer to factual, commercial reporting. That matters because courts often apply a lower level of scrutiny to compelled commercial disclosures when the information is factual and not misleading. The judge treated SB 253 as more like a data-reporting law than an ideological loyalty oath. That is a rough simplification, but an accurate one.
SB 261 was different. The district court concluded that climate-related financial risk disclosure involves more predictive and judgment-laden content. Once a law moves from “state the number” to “explain the risk, strategy, and response,” First Amendment concerns become harder to dismiss. A risk assessment is not just math. It includes assumptions, narrative framing, materiality judgments, and strategic interpretation. Lawyers love to call that nuance. Businesspeople usually call it trouble.
At the Ninth Circuit oral argument in January 2026, judges reportedly pressed both sides on whether these laws compel commercial speech, whether the required disclosures are closely tied to commercial transactions, and whether parts of the statutes, especially Scope 3 reporting, may be unusually broad. But even with those questions hanging in the air, the court left SB 253 standing for now. That alone tells companies something important: waiting around for a judicial rescue is not a serious compliance strategy.
Why SB 261 Got Paused Instead
SB 261 drew more immediate skepticism because climate-related financial risk disclosure is less mechanical than emissions reporting. A company can measure fuel use, purchased electricity, and supplier estimates with varying levels of difficulty, but those exercises are still fundamentally about reporting data. By contrast, a climate-risk report asks a company to identify risks, evaluate significance, discuss mitigation, and present a narrative that may sound a lot like opinion blended with analysis.
That difference is why SB 261 became the law the Ninth Circuit chose to freeze. The first reports under SB 261 were originally due on January 1, 2026, so the timing pressure was intense. By enjoining enforcement pending appeal, the court effectively told California: not so fast.
For companies, the pause was a temporary sigh of relief, not a permanent hall pass. CARB has already said that SB 261 reporting is voluntary while the injunction remains in place, and companies may still choose to post reports through a public docket. That means businesses are not required to publish the reports today, but neither should they assume the subject has vanished into a legal fog forever.
CARB Did Not Hit the Brakes on Everything
If you expected California regulators to curl up under a blanket after the Ninth Circuit order, that did not happen. CARB continued building the implementation framework and, in February 2026, approved initial regulations for SB 253 and SB 261.
Those rules matter because they move the story from abstract litigation into actual deadlines, definitions, and fees. CARB established an August 10, 2026 deadline for the first-year SB 253 disclosure of Scope 1 and Scope 2 emissions. It also adopted definitions that help determine who is covered, including how “doing business in California” and revenue thresholds should be understood for compliance purposes.
The regulations also use a flat-fee structure to fund administration of the program. That may sound like dry bureaucracy, but it signals that California is not merely theorizing about climate disclosure. It is building an operating system around it.
At the same time, CARB has acknowledged the practical burden companies face. The agency has emphasized enforcement discretion for the first reporting cycle and indicated that good-faith compliance efforts matter. For first-year SB 253 reporting, CARB’s approach is more “show us what you reasonably have” than “produce cosmic perfection by Tuesday.” That is still compliance, just with fewer fireworks on day one.
Another key point: CARB’s February 2026 rules do not finish the entire climate disclosure regime. Additional rulemaking is expected, especially for future reporting cycles, assurance requirements, and the details surrounding Scope 3 reporting. So if your company was hoping for one tidy rulebook and a nice clean ending, California has instead handed you a binder with tabs labeled “more to come.”
Why This Split Decision Matters Beyond California
This fight is bigger than one state and two statutes. It is part of a national argument about who gets to require corporate climate disclosures, what kind of climate information counts as factual, and when disclosure becomes compelled ideology in the eyes of the First Amendment.
California is not acting in a vacuum. Large companies already face climate-reporting pressure from investors, lenders, customers, insurers, foreign regulators, and trading partners. Some multinational businesses are also dealing with disclosure systems in Europe and other markets. That is why California’s rules matter even to companies headquartered far from Sacramento. In modern commerce, supply chains are interstate, investor expectations are global, and regulation has a habit of traveling faster than corporate comfort.
The Ninth Circuit’s refusal to enjoin SB 253 also sends a signal to other lawmakers and regulators: emissions reporting may be easier to defend than more interpretive climate-risk narratives. If that view holds, future disclosure regimes may lean harder into metrics, methodologies, and standardized data points while treating qualitative narrative requirements more cautiously.
That does not mean climate-risk reporting is dead. It means lawmakers may need to draft it more carefully, regulators may need to provide clearer guardrails, and courts may keep drawing lines between hard numbers and judgment-heavy discussion. Welcome to the thrilling intersection of constitutional law and carbon accounting. Bring coffee.
What Companies Should Be Doing Right Now
For companies covered by SB 253, the answer is simple: keep going. Build the emissions inventory, document methodologies, align internal teams, and prepare to report Scope 1 and Scope 2 data by August 10, 2026. If Scope 3 reporting is not due until later, that does not make it a future-you problem. Scope 3 takes time because it depends on vendors, customers, procurement data, logistics assumptions, and a surprising number of awkward internal meetings.
For companies that may be covered by SB 261, the smarter approach is to keep preparing even while the injunction remains in place. No, you do not necessarily need to publish the report today. Yes, you absolutely should know what your climate-risk governance, strategy, and reporting story would look like if the pause disappears tomorrow.
Private companies should pay special attention here. One of the most important features of California’s regime is that it is not limited to public companies. That means businesses that have historically treated climate disclosure as “something the SEC people worry about” may need to update that worldview rather quickly.
Examples of How This Plays Out in the Real World
Imagine a national retailer with stores and distribution operations in California, more than $1 billion in annual revenue, and a supply chain that stretches across multiple countries. Even without a final appellate ruling, that company should already be organizing utility data, fleet fuel records, refrigerant tracking, and emissions factors for direct operations and purchased energy. It should also be deciding who owns the data, who signs off on it, and how much outside assurance support may be needed later.
Now imagine a large private manufacturer with more than $500 million in revenue, California sales, and facilities in drought-prone and wildfire-prone regions. For SB 261, the real challenge is not just writing a climate-risk report. It is deciding how climate risk is evaluated across operations, insurance, capital planning, procurement, and board oversight. That is a governance issue disguised as a disclosure issue.
Or take a technology company with a relatively light direct emissions footprint but a large value chain. SB 253 may look manageable at first glance until Scope 3 enters the chat, dramatically, carrying purchased goods data, cloud infrastructure assumptions, business travel figures, and supplier engagement problems in a giant reusable tote bag.
What the Experience Looks Like Inside Companies Right Now
The lived experience of this legal moment is less glamorous than the headlines suggest. Inside many companies, the response to the Ninth Circuit’s split decision has not been dramatic celebration or doom. It has been a strange mix of relief, confusion, urgency, and spreadsheet-based character development.
For legal teams, the first experience is triage. Counsel have to explain to executives that “one law is paused and one is not” is not the same as “the whole thing is on hold.” That conversation rarely lands cleanly. Someone in the room inevitably asks whether the company can just wait for the final court decision. Someone else asks whether California can really regulate an out-of-state business this aggressively. Then someone from finance asks the most painful question of all: “How much is this going to cost?”
For sustainability teams, the experience is more operational. They are often the ones assembling emissions inventories, reconciling facility data, coordinating with procurement, and trying to create a reporting process that is rigorous enough for regulators but simple enough that the business will actually use it. Many are discovering that climate disclosure is not just an ESG project. It is a data governance project, an internal controls project, and occasionally a corporate therapy session.
For boards and senior leadership, the experience has been a crash course in the difference between emissions data and climate-risk narrative. Scope 1 and Scope 2 reporting may be technical, but it tends to fit inside familiar control structures. Climate-risk reporting is more personal to leadership because it touches strategy, resilience, capital allocation, and reputational risk. It forces directors and executives to ask whether the company has truly thought through physical risks, transition risks, insurance exposure, supply-chain fragility, and long-term planning. Those questions are healthy, but they are not always comfortable.
For private companies, the experience is often surprisingly jarring. Many private firms are not accustomed to public-style disclosure expectations. California’s laws changed that conversation. Suddenly, private entities with substantial California business are talking about greenhouse gas accounting, reporting frameworks, documentation standards, and whether their current systems can support external scrutiny. That is a big cultural shift, especially for companies that once treated climate disclosure as an investor-relations issue for somebody else.
And for consultants, auditors, software vendors, and outside law firms, let’s just say nobody is complaining about a lack of calendar activity. The practical experience around SB 253 and SB 261 has created a booming ecosystem of readiness assessments, gap analyses, data reviews, governance memos, and cautious PowerPoint decks with titles like “Preparing for a Dynamic Regulatory Environment.” Translation: everyone knows the rules are moving, but nobody wants to be the person caught flat-footed when they stop moving.
That is why the Ninth Circuit’s refusal to enjoin SB 253 matters so much in practice. It tells companies that whatever the final legal outcome may be, California’s emissions-disclosure train is still on the track. You can debate the destination, challenge the route, and argue over the timetable. But standing on the platform insisting the train is not real is no longer a particularly persuasive management strategy.
Conclusion
The Ninth Circuit’s decision not to enjoin California’s emissions disclosure law, while pausing the state’s climate-risk reporting law, created a messy but meaningful roadmap. SB 253 remains a live compliance issue. SB 261 remains a live legal issue. And CARB, rather than waiting for perfect judicial clarity, has kept building the regulatory machinery that companies will need to navigate.
The smart reading of this moment is not that California won everything or that challengers lost everything. It is that the battle lines are now clearer. Courts appear more comfortable with standardized emissions disclosures than with broader, more narrative-heavy climate-risk mandates. Regulators are proceeding where they still can. Companies, meanwhile, have entered the least glamorous but most consequential phase of all: implementation.
In other words, the climate disclosure story in California has not ended. It has simply advanced to the chapter where everyone realizes the footnotes now require workflows, governance, and actual data. That is usually the point where policy stops being theoretical and starts showing up in quarterly planning meetings.
