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A US appeals court has paused a landmark California law that would require large companies to report the risks of climate change on their business operations.
Known as Senate Bill 261, the rule was meant to take effect on 1 January. A second rule, Senate Bill 253, which requires companies operating in California to annually report their carbon emissions, was allowed to stay in place. Oral arguments are scheduled for 9 January 2026.
The legislation is the first of its kind in the US and goes even further than reporting rules prepared by the Securities and Exchange Commission (SEC) which were themselves paused when US president Donald Trump took office.
An estimated 2,675 companies would need to comply with SB 261, while 1,971 companies are estimated to need to report under SB 253, according to an analysis by nonprofit Ceres. As a result, around half of companies that would have been subject to the SEC rules will still need to report their emissions under the California framework.
The Chamber of Commerce asked the ninth circuit court of appeals to pause the laws because it said they violate the first amendment rights of companies. The group had also asked the supreme court to weigh in but withdrew its emergency appeal after the lower court’s decision.
California’s disclosure rules have been mired in ongoing legal challenges since they were signed into law in 2023.
Exxon Mobil has also sued the state over the climate disclosure laws, saying they violate the oil company’s free speech as it would be required to “serve as a mouthpiece for ideas with which it disagrees”.
Daryl Joseffer, chief counsel at the Chamber of Commerce’s litigation centre, said they would continue to try and secure an injunction against California’s greenhouse gas emissions reporting rule as well.
“One state should not have the ability to impose this kind of burden on the entire country,” he said in a statement.
Lawyers from Ropes & Gray noted the pause could be temporary and expected California’s regulators to continue moving forward with initiatives related to the law. The California Air Resources Board, which is overseeing the laws, has continued to hold workshops and guidance documents despite the ongoing lawsuits.
This page was last updated December 1, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
