California climate disclosure ruling reshapes reporting requirements

On November 9, 2026, the U.S. Court of Appeals for the Ninth Circuit issued an updated ruling on California’s climate disclosure laws, SB 253 and SB 261, which were enacted in 2023. The court allowed SB 253's Scope 1 and 2 emissions reporting requirements to remain in effect but blocked enforcement of the Scope 3 reporting requirement, which was scheduled to begin in 2027. The court also stayed enforcement of SB 261.

The ruling sets the stage for a pause in mandatory Scope 3 reporting and supports the existing pause in SB 261 reporting, subject to further court proceedings. Companies that have completed Scope 1 and 2 submissions of SB 253’s November 10th deadline are unaffected, as these reporting requirements remain in effect. No changes or resubmissions are needed as a result of this ruling.

What changed?

The court blocked enforcement of two key provisions:

• SB 261: Climate-related financial risk disclosures for companies with more than $500 million in annual revenue.
• SB 253: Scope 3 emissions disclosures, which would require companies with more than $1 billion in annual revenue to report emissions throughout their value chains, including suppliers and customers.

At the same time, California can continue partial enforcement of SB 253:

• Scope 1 direct greenhouse gas emissions from sources a company owns or controls.
• Scope 2 indirect emissions from purchased or acquired electricity, steam, heating, and cooling.

The enforcement of Scope 1 and 2 reporting for SB 253 will continue into 2027, when the limited assurance requirement begins.

The court's reasoning centered on First Amendment concerns, finding that some of the blocked requirements likely compel speech that goes beyond purely factual disclosures.

This is a preliminary ruling, not a permanent invalidation of either law. The district court must now determine whether the Scope 3 provisions can be separated from the remainder of SB 253 and what changes to the law's implementation may follow.

What this means in practice

While California's reporting requirements remain subject to legal uncertainty, the broader value of climate data extends beyond compliance.

Many organizations have invested significant time building greenhouse gas inventories, improving data quality, and establishing reporting processes. Those efforts continue to support a range of business objectives including risk management, operational efficiency, customer engagement, and strategic planning.

The most effective programs are those that have used climate data as a management tool in addition to compliance exercises. Organizations that establish reliable data collection processes, clear governance structures, and consistent reporting practices are often better positioned to make informed decisions and adapt to evolving market expectations.

As the legal process continues, companies should focus on maintaining the progress they have already made. Regardless of how California's reporting requirements ultimately evolve, organizations that continue investing in reliable climate data, governance, and reporting processes will be better positioned to manage risk, respond to stakeholder expectations, and support long-term business resilience.

Contact Brian Fox for more information.